Sustainable agriculture can unlock $2.3 trillion, report says

Friday 21 October 2016

Embedding sustainable business practices in the global food and agriculture industry could deliver an annual $2.3 trillion windfall, according to a major new study released by the Business and Sustainable Development Commission.

The research suggests that an annual investment of $320 billion in sustainable business practices aligned with the Sustainable Development Goals (SDGs) would create a sevenfold return on investment by 2030. Such investment would also create 80 million new jobs, mostly in developing countries, the BSDC said.

The SDGs, agreed in September 2015, consist of 17 time-bound targets for ending poverty and hunger, reducing inequality and tackling climate change. The research claims that tackling these goals would unlock 14 major business opportunities for the food and agriculture sector, from micro-irrigation to new farming technology and urban agriculture ventures.

"As the world's population is expected to increase by another one billion by 2030, the global food and agriculture system requires a new way of doing business, and new approaches to feed more than 800 million people who today suffer from chronic hunger as well as to meet future demand," Lord Mark Malloch-Brown, chairman of the BSDC, said in a statement. "This report makes clear both the social and economic incentives for companies to seize upon the SDGs as compelling growth opportunities. It is part of our larger argument for why the private sector must accelerate new business models that open truly sustainable and inclusive markets."

The research quantifies the added values that each of the 14 SDG-enabled business opportunities presents. For example, reducing waste in the food system could deliver $405 billion annually, while restoring degraded land could deliver up to $85 billion annually. More than two-thirds of this value would be generated in developing countries, the research noted, thanks to their large shares of arable land, high future consumption growth, and large potential efficiency gains.

Paul Polman, chief executive of Unilever, said his firm's experience of embedding sustainable business practices into its activities have created added value throughout its supply chain.

"At Unilever, we have helped hundreds of thousands of smallholder farmers improve agricultural practices, enabling them to double or even triple their yields," he said in a statement. "All stakeholders can share in the benefits: smallholder farmers improve their livelihoods; suppliers gain increased security of supply with improved quality; and we reduce volatility and uncertainty with a more secure and sustainable supply chain. The SDGs present a clear moral case for change, but companies must recognize that they represent the business opportunity of a lifetime too and must adapt to take advantage of it.

However, the researchers warned that much more capital investment is needed in these sectors to unlock the SDG opportunity. The current capital base in 31 leading agriculture funds stands at just under $4 billion per year, less than 1.5 percent of the annual investment needed to capture these growth opportunities. The report also stressed that partnerships between industry and governments will be crucial for putting the right policies in place to enable low-carbon, sustainable business practices to thrive.

But the increase in investment would have substantial business benefits, according to Fraser Thompson, director of Alphabeta, which directed the research.

"Many commentators have incorrectly perceived the SDGs to represent an additional headwind to growth and profitability. The reality is that in many cases the SDGs offer a new and higher-quality channel for economic growth and business profitability," he said in a statement. "This is particularly the case in these sectors. This study is the first attempt to provide a holistic assessment and quantification of the business opportunities related to the SDGs in food and agriculture."

The study is part of a larger piece of work from the BSDC, due to be released early next year, which will quantify the business opportunities presented by the SDGs across four key sectors: cities, health and well-being, energy and materials.

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