Sustainable Business Models Can Unlock Trillions

14 Oct 2016 --- Just ahead of World Food Day 2016 (Oct 16), companies are being told they could unlock US$2.3 trillion a year in food and agriculture sectors by 2030 if they investment in sustainability.

New research from the Business and Sustainable Development Commission shows sustainable business models could also generate 80 million jobs by unlocking opportunities across 14 areas, including food waste, low-income markets, aquaculture, farm technology, micro-irrigation, product reformulation, restoring land and forests, cattle intensification, changing diets, reducing package waste and urban agriculture.

Its new report, Valuing the SDG Prize in Food & Agriculture, estimates a range of value for each opportunity; the lowest in the range is US$15 billion per year (for cattle intensification) while the highest goes up to US$405 billion per year (for reducing food waste across the production process, or value chain).

The report estimates that 90 percent of new job creation would be in developing countries, including 21 million in Africa and more than 49 million in Asia, with a further breakdown of 22 million in India, 12 million in China, and the remaining 15 million in developing Asia. There could also be an additional 5 million new jobs in Latin America.

“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,” said Lord Mark Malloch-Brown, chairman of the Business and Sustainable Development Commission. 

“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.” 

Earlier this week FoodIngredientsFirst reported how the latest data from the 2016 Global Hunger Index (GHI) says that if hunger declines at the same rate as it has been since 1992, then more than 45 countries - including India, Pakistan, Haiti, Yemen and Afghanistan, will still have alarming hunger scores in 14 years’ time. A target to achieve zero world hunger by 2030, set by the United Nations, is not likely to be met if the current pace continues.

The report looks at how food and agriculture businesses can grow by pursuing sustainable and inclusive business models aligned with the Sustainable Development Goals (SDGs). Launched in 2015, the SDGs are 17 time-bound targets for ending poverty and hunger, reducing inequality and tackling urgent challenges such as climate change, by 2030.

The food and agriculture sectors directly relate to SDGs 2 (ending hunger), 3 (health & well-being), 8 (decent work and economic growth), 10 (reduced inequalities), 12 (responsible consumption and production), 13 (climate action), 14 (protect life below water) and 15 (protect life on land), but they are cross-cutting sectors that also affect the remaining Global Goals.

Developing countries, with large swathes of potential arable land, high future consumption growth, have the most to gain if they are to align with SDG business opportunities. For instance, in developing Asia the biggest opportunity is in cutting food waste across the value chain, while in developed Asian countries like South Korea and Japan, the best opportunities is in consumer waste. In India, low-income food markets are the strongest opportunity for businesses, and in Latin America and Africa, it is forest ecosystem services. 

Paul Polman, CEO of Unilever and member of the Business and Sustainable Development Commission, urges more food and agriculture companies to integrate sustainability practices into their models.

“Unilever’s experience clearly demonstrates that business can create value by putting sustainability at its very heart and adopting inclusive growth models. At Unilever, we have helped hundreds of thousands of smallholder farmers improve agricultural practices enabling them to double or even triple their yields,” he says. 

“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.” 

Unlocking social and economic rewards in food and agriculture will require closer collaboration among business, government and society, and new ways of working together to advance common social, economic and environmental objectives. And if the private sector can put these prerequisites in place, the social benefits, including food security, job creation and health outcomes, could be significant. Improving technology in smallholder farms and restoring degraded land, for example, could double the incomes of smallholder farmers in the world, who are among the poorest in the global economy, the report finds. 

“The best way to build an enduring business is to put sustainability at its heart. Value is then unlocked for all, from shareholder to supplier, and nature is not depleted. Values and value creation do not have to, and actually should not be, traded in the long-term.” said Sunny Verghese, Co-Founder and Group CEO of Olam, a global agribusiness with a portfolio of 47 agri-commodities, and a member of the Business Commission. 

“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,” adds Dr Fraser Thompson, director, AlphaBeta, which conducted the research for the Business Commission. “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.”