Food Systems I Lombard Odier

Our economic system relies on a healthy planet. Yet we are pushing our planet beyond its safe operating limits. Planetary boundaries define the space in which humanity and our economy can develop and thrive. Of the nine planetary boundaries that regulate the stability and resilience of the Earth’s system, we have already crossed six – and we are on course to cross more.

If we continue to cross these boundaries we increase the risk of large-scale abrupt damage, or even irreversible environmental changes.

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powerful forces at play.

In light of this, the global economy is transitioning towards greater sustainability. Numerous forces are driving this environmental transition, including consumer behaviour, investors, global disruptions, policy and winning market-based solutions.

Governmental ambition is driving increased investment, which in turn is leading to innovation and economies of scale. Consumers are becoming more willing to back businesses that have strong environmental records, creating further incentive for firms to bring forward environmental solutions. In turn, some suppliers are changing their production processes, opting for local, low-carbon energy supply, nature positive solutions and secondary materials. We believe that policy and regulation will continue to step up in response to growing social pressure and the economic opportunities offered by the transition.

agricultural insights.

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transforming key sectors.

To protect our economic health and long-term prosperity we must transition to a CLIC^® economy.
We believe that key system changes will enable this: Energy; Land and Oceans; and Materials.

Energy

We believe that to hit the Paris temperature targets we need to move from a 20% electricity supply to a 70% supply by 2050. We must decarbonise supply by ramping up electricity production from renewable or other zero-carbon sources. Supply and demand must be properly managed with flexible energy systems. And we must “green” demand: electrifying the energy demands of the building, transport and manufacturing sectors, while making energy efficiency improvements across industries.

Land and Oceans

Today, agriculture uses around 50% of all habitable land on Earth¹. This expansion of agricultural land-use has come at great environmental cost – deforestation, climate change, biodiversity loss, soil degradation. To allow nature to return to a place where it can keep offering stability and valuable ecosystemS services we must restore a large share of that agricultural land to its natural state. At the same time, society needs to ensure a stable and sustainable supply of food for a growing and increasingly affluent population using new agricultural models.

Materials

Over the last 50 years, economic growth has been tied to an increase in materials consumption, with severe environmental impacts. Global resource extraction and processing accounts for 90% of biodiversity loss and contributes significantly to greenhouse gas emissions². We estimate that, globally, we must reduce our primary material use and extraction by 28% within 10 years. Through alternative materials, more efficient recycling, low carbon secondary materials and service-based business models we believe we can decouple production from primary resource dependency and cut waste and pollution.

Modern agricultural techniques (accounting for 98% of land practices) rely on ploughing and tilling the land, releasing carbon stored in the soil and contributing to climate change. The overuse of fossil fuel-based fertilisers pumps further emissions into the atmosphere, and the overuse of synthetic pesticides causes agrochemical waste, which degrades soil and pollutes water.

So how do we tackle this? We believe it is essential to return 1 billion hectares of land to nature by 2030. A seemingly ambitious plan, many inroads are already being made as 115 countries have made land restoration commitments and 1 billion hectares have already been earmarked for restoration by 2030, with over 300 million hectares to be restored in the Americas, China and Europe – all of which are major agricultural producers.

challenges

24%

of global greenhouse gas emissions come from food production

90%

of forest degradation is driven by agriculture

25%

of biodiversity loss is caused by farming

safely feeding ten billion.

In order to sustainably feed an ever-growing population, there will be transition pathways to new food systems. As the transition unfolds, we believe business models will change, as will the way we produce, distribute and consume food.

Our key convictions:

Consumption patterns will change. There will be demand shifts towards alternative protein sources such as plant-based, microorganism based, animal-cell-based and insect-based. These alternative protein sources have much lower environmental footprints than meat and dairy – producing lower emissions, using less water, and requiring less land.

We will produce food for different species. Today, 36% of crop produce is used for animal feed, and only 55% of the world’s crops are eaten directly by people. We are using our crops to feed our cows. Simply put, we need to cut out the middle-cow.

Our food will be produced differently. Precision farming will harness technology to achieve “sustainable intensification.” GPS systems, drones and sensors will be deployed alongside data-based technology to intelligently target resources, reduce water wastage and minimise chemical and fertiliser use by ensuring they are deployed only where and to the extent they are needed. At the same time, regenerative practices that increase the use of alternative pesticides and fertilisers will boost the health and productivity of the soil.

Our food will be distributed effectively. New forms of logistics and delivery will reduce food waste. Innovations in logistics systems, powered by new software and the sharing of data between operators, will enable a better utilisation of space in distribution centres and warehouses, and the minimisation of empty runs.

opportunities

70%

drop in water-consumption can be achieved by hydroponic agriculture

40%

reduction in food-related GHG emissions could be achieved by precision agriculture

400%

increase in maize yields achieved through regenerative agroforestry

the roadmap towards new food systems.

We believe the transition towards new food systems is underway. Investment opportunities abound in sustainable food production for companies that are producing biological and synthetic inputs and food products such as animal feed, aquaculture and fertilisers. We favour companies that are enabling solutions across the value chain in industries such as farming and food equipment, food packaging and logistics. Furthermore, consumer-facing companies that manufacture, retail and serve food in ways that promote sustainable consumption offer attractive prospects.

Our strategy aims to capture the opportunities associated with the sustainability transition of Food Systems as they move towards a model where they can nourish the planet while operating within, or helping to restore, planetary boundaries.

Our strategy aims to capture the opportunities associated with the sustainability transition of Food Systems

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Our heritage is Swiss, yet our outlook and mind set are resolutely international. With over 25 offices globally, we are able to serve our clients all over the world.

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¹ https://www.ble.de/SharedDocs/Pressemitteilungen/DE/2022/220330_Versorgungsbilanz-Fleisch.html
² Carbon Pricing Leadership Coalition (2017) Report of the High-Level Commission on Carbon Prices

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food systems.

let's talk.

powerful forces at play.

agricultural insights.

sign up to our newsletter.

transforming key sectors.

Energy

Land and Oceans

Materials

safely feeding ten billion.

the roadmap towards new food systems.

our expertise.

where we are.

get in touch.

sign up to our newsletter.

let’s talk.

let’s talk.

let's talk.

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