1 00:00:00,320 --> 00:00:03,440 Speaker 1: This is Dana Perkins and you're listening to Switched on 2 00:00:03,760 --> 00:00:06,440 Speaker 1: the B and EF podcast. Today, we're going to talk 3 00:00:06,480 --> 00:00:10,000 Speaker 1: about food companies and how they're looking up their value 4 00:00:10,080 --> 00:00:13,680 Speaker 1: chains to meet nature and climate goals because of how 5 00:00:13,680 --> 00:00:18,079 Speaker 1: their value chains are structured where farming is highly fragmented. Meanwhile, 6 00:00:18,120 --> 00:00:21,360 Speaker 1: there are a few influential private companies in the middle 7 00:00:21,360 --> 00:00:23,599 Speaker 1: of the value chain. It can be pretty tricky for 8 00:00:23,640 --> 00:00:26,360 Speaker 1: food companies and the brands you and I recognize to 9 00:00:26,440 --> 00:00:30,520 Speaker 1: tackle their scope three emissions. Scope three being those indirect emissions, 10 00:00:30,560 --> 00:00:34,120 Speaker 1: the ones that aren't a result of their direct business activities, 11 00:00:34,240 --> 00:00:37,720 Speaker 1: but instead the responsibilities of those they're doing business with 12 00:00:38,080 --> 00:00:41,440 Speaker 1: at various points on this value chain. So what are 13 00:00:41,600 --> 00:00:45,199 Speaker 1: agri food companies doing, What are they measuring beyond just 14 00:00:45,280 --> 00:00:48,200 Speaker 1: emissions when it comes to things like nature, and how 15 00:00:48,240 --> 00:00:52,120 Speaker 1: well positioned are they to make a discernible change. To 16 00:00:52,240 --> 00:00:55,120 Speaker 1: tell us more, I get to speak with Helen Ramsbottom 17 00:00:55,200 --> 00:00:59,680 Speaker 1: and Alistair Purdy from bnaf's Food, Agriculture and Nature Team 18 00:01:00,040 --> 00:01:03,080 Speaker 1: VF Clients will be able to access related research at 19 00:01:03,160 --> 00:01:07,040 Speaker 1: BNF go on the Bloomberg Terminal and at BNF dot com. 20 00:01:07,120 --> 00:01:11,000 Speaker 1: The research notes I recommend include corporate sustainability in the 21 00:01:11,040 --> 00:01:16,840 Speaker 1: agrifood system and sustainable and regenerative agriculture company targets. Right now, 22 00:01:17,040 --> 00:01:20,800 Speaker 1: let's talk about agrifood companies and how they're transforming the 23 00:01:20,920 --> 00:01:32,880 Speaker 1: value chains that bring food to your plate. Ellen, thank 24 00:01:32,880 --> 00:01:36,400 Speaker 1: you for joining us today. Hi Dana, thank you, and Alistair. 25 00:01:36,480 --> 00:01:37,520 Speaker 1: Good to have you on the show. 26 00:01:37,720 --> 00:01:38,240 Speaker 2: Thanks Na. 27 00:01:38,440 --> 00:01:42,399 Speaker 1: So we're here to talk about corporate sustainability in the 28 00:01:42,760 --> 00:01:45,480 Speaker 1: agriculture space and food. I mean, this is something that 29 00:01:45,520 --> 00:01:48,160 Speaker 1: we all very much should care about if we don't already, 30 00:01:48,200 --> 00:01:52,040 Speaker 1: it impacts us every single day. And let's set the backdrop. 31 00:01:52,120 --> 00:01:54,920 Speaker 1: Thinking about food in context of emissions is so important. 32 00:01:55,040 --> 00:01:59,080 Speaker 1: So what impacts broadly speaking, does the food system and 33 00:01:59,240 --> 00:02:03,080 Speaker 1: supply chain have on biodiversity and the environment. 34 00:02:03,840 --> 00:02:07,120 Speaker 2: So, as you mentioned, meeting the nutrient requirements of about 35 00:02:07,120 --> 00:02:10,320 Speaker 2: eight billion people is a hugely difficult undertaking. The system 36 00:02:10,320 --> 00:02:13,320 Speaker 2: itself is responsible for about a third of global emissions, 37 00:02:13,800 --> 00:02:18,120 Speaker 2: ninety percent of forestation, almost three quarters of fresh water withdrawal, 38 00:02:18,200 --> 00:02:20,880 Speaker 2: and four of the top five plastic polluters are from 39 00:02:20,960 --> 00:02:23,880 Speaker 2: that space. So ensuring that the system is well prepared 40 00:02:23,919 --> 00:02:27,240 Speaker 2: and managed in its environmental footprint is absolute essential to 41 00:02:27,280 --> 00:02:28,919 Speaker 2: meeting a lot of our climate and nature goals. 42 00:02:29,120 --> 00:02:32,480 Speaker 3: Yeah, some context on what sort of amount of the 43 00:02:32,480 --> 00:02:35,240 Speaker 3: total emissions from the agrifood supply chain come from and 44 00:02:35,480 --> 00:02:37,760 Speaker 3: sort of energy use further downstream. So, if we think 45 00:02:37,760 --> 00:02:40,480 Speaker 3: about emissions in the agrofood supply chain, it comes from 46 00:02:40,560 --> 00:02:45,600 Speaker 3: manufacturing inputs like fertilizers, actual on farm activity, transporting that food, 47 00:02:45,639 --> 00:02:49,120 Speaker 3: manufacturing food, and food waste from consumers. There's a lot 48 00:02:49,160 --> 00:02:52,760 Speaker 3: of different pockets across the whole supply chain. About seventy 49 00:02:52,840 --> 00:02:56,400 Speaker 3: percent of the total emissions produced by the agrifood system 50 00:02:56,440 --> 00:02:59,240 Speaker 3: are generated on farm, so that means things like applying 51 00:02:59,240 --> 00:03:02,000 Speaker 3: fertilizer to the land. A huge chunk of that is 52 00:03:02,120 --> 00:03:05,560 Speaker 3: methane emissions from cows, for instance. Now, naturally we're talking 53 00:03:05,560 --> 00:03:08,400 Speaker 3: about this because you spent the time to put this 54 00:03:08,440 --> 00:03:10,560 Speaker 3: in a report and you had to break down this 55 00:03:10,800 --> 00:03:13,959 Speaker 3: entire agricultural food system into different categories. When you think 56 00:03:13,960 --> 00:03:16,919 Speaker 3: about the value chain, there's a lot of different areas 57 00:03:16,919 --> 00:03:19,120 Speaker 3: that you assessed in this report, and I'd really love 58 00:03:19,200 --> 00:03:22,200 Speaker 3: to better understand which of those you really want to highlight. 59 00:03:22,320 --> 00:03:26,120 Speaker 3: So everything from upstream to downstream, what were the aspects 60 00:03:26,120 --> 00:03:30,040 Speaker 3: that you found most surprising and you know how much 61 00:03:30,080 --> 00:03:33,160 Speaker 3: time did you spend on certain parts of the supply 62 00:03:33,240 --> 00:03:35,880 Speaker 3: chain versus others, depending on what it is that you found, 63 00:03:35,880 --> 00:03:38,840 Speaker 3: and you know what really warranted going into more detail. 64 00:03:39,200 --> 00:03:42,480 Speaker 2: Sure, so there's tens of thousands of public and private 65 00:03:42,520 --> 00:03:45,400 Speaker 2: companies operating in this space, and to look at it 66 00:03:45,440 --> 00:03:47,920 Speaker 2: from a higher level, the system is broken down into 67 00:03:48,080 --> 00:03:51,200 Speaker 2: roughly six segments. Upstream, you have the input providers. These 68 00:03:51,200 --> 00:03:54,800 Speaker 2: are companies that provide chemicals such as fertilizers and pesticides 69 00:03:54,840 --> 00:03:57,200 Speaker 2: as well as seeds, and that they supply them to 70 00:03:57,240 --> 00:04:01,320 Speaker 2: the primary producers, the farmers. The farmers them selves highly fragmented. 71 00:04:01,400 --> 00:04:03,840 Speaker 2: There's one hundreds of millions of people engaged in that 72 00:04:03,880 --> 00:04:07,040 Speaker 2: space and they do what you'd expect. They have soy 73 00:04:07,080 --> 00:04:10,040 Speaker 2: and palm plantations, there is cattle, they grow other forms 74 00:04:10,040 --> 00:04:10,560 Speaker 2: of crops. 75 00:04:10,840 --> 00:04:13,040 Speaker 1: So this really is an important part of the value 76 00:04:13,120 --> 00:04:15,120 Speaker 1: chain for us to focus on when you're thinking about 77 00:04:15,360 --> 00:04:18,880 Speaker 1: improving environmental impacts and in some cases also reducing emissions. 78 00:04:19,120 --> 00:04:21,279 Speaker 1: But so we've just talked about improt providers, and you 79 00:04:21,320 --> 00:04:24,120 Speaker 1: are going to come to the next category of companies 80 00:04:24,120 --> 00:04:26,240 Speaker 1: that you looked at when you took a closer look. 81 00:04:26,520 --> 00:04:29,080 Speaker 3: So The next sort of step down the value chain 82 00:04:29,120 --> 00:04:33,720 Speaker 3: would be the wholesalers. So there's really four major agricultural 83 00:04:33,760 --> 00:04:36,440 Speaker 3: wholesalers that control the bulk of the markets. Those would 84 00:04:36,440 --> 00:04:40,080 Speaker 3: be Louis Dreyfus, ADM, Cargill, and Bungie. So there are 85 00:04:40,120 --> 00:04:43,599 Speaker 3: obviously other traders, but this is quite a concentrated group 86 00:04:43,640 --> 00:04:46,479 Speaker 3: of large players that you know, these companies will influence 87 00:04:46,520 --> 00:04:48,760 Speaker 3: a lot of the emissions coming from that group. Some 88 00:04:48,800 --> 00:04:52,359 Speaker 3: of these upstream inputs providers and wholesalers, because there are 89 00:04:52,360 --> 00:04:55,040 Speaker 3: a few degrees removed from the average consumer, may be 90 00:04:55,160 --> 00:04:57,800 Speaker 3: less familiar to people. And then one step down from 91 00:04:57,839 --> 00:05:00,360 Speaker 3: that we have the food manufacturers, so these are large 92 00:05:00,400 --> 00:05:05,240 Speaker 3: publicly traded companies like Nesle, Unilever, donnown and perhaps companies 93 00:05:05,240 --> 00:05:07,800 Speaker 3: that the average consumer is more familiar with. And then 94 00:05:07,960 --> 00:05:11,040 Speaker 3: the final steps sort of connecting the food value chain 95 00:05:11,120 --> 00:05:14,680 Speaker 3: to customers are the retailers, which obviously people are a 96 00:05:14,720 --> 00:05:17,480 Speaker 3: lot more familiar with, being the final step towards the consumer. 97 00:05:17,560 --> 00:05:21,000 Speaker 3: And then also restaurants and food services. So restaurants again 98 00:05:21,080 --> 00:05:23,919 Speaker 3: pretty familiar to us, but food service companies tend to 99 00:05:23,960 --> 00:05:28,760 Speaker 3: serve things like other restaurants or hotels and things like that. 100 00:05:28,880 --> 00:05:31,320 Speaker 3: So these companies are maybe a bit less visible, but 101 00:05:31,800 --> 00:05:35,479 Speaker 3: all companies that have a significant emissions impact in terms 102 00:05:35,480 --> 00:05:38,680 Speaker 3: of their Scope three emissions. So this pesky problem of 103 00:05:38,720 --> 00:05:41,839 Speaker 3: Scope three emissions, so those emissions that actually come from 104 00:05:41,880 --> 00:05:45,160 Speaker 3: not your business activities, but the business activities of those 105 00:05:45,400 --> 00:05:47,960 Speaker 3: in the rest of your supply chain you're either selling 106 00:05:48,000 --> 00:05:49,320 Speaker 3: to or are purchased from. 107 00:05:49,680 --> 00:05:54,160 Speaker 1: How does scope three emissions feature in the agriculture value chain? 108 00:05:54,440 --> 00:05:57,880 Speaker 2: So as we move further downstream, scope three becomes a 109 00:05:57,960 --> 00:06:03,320 Speaker 2: larger proportion of companies emissions inventory. That's because embedded emissions 110 00:06:03,320 --> 00:06:06,480 Speaker 2: stag as you move down. So at the furthest upstream, 111 00:06:06,680 --> 00:06:09,640 Speaker 2: the input providers, they have a small proportion of their 112 00:06:09,680 --> 00:06:12,920 Speaker 2: total emissions comprise the Scope three. Those chemicals are those 113 00:06:12,960 --> 00:06:15,680 Speaker 2: seeds are then sold to the farms, and those emissions 114 00:06:15,760 --> 00:06:18,320 Speaker 2: become part of the farmer's mission. This continues as you 115 00:06:18,400 --> 00:06:20,600 Speaker 2: move further down, so that when you're at the retailers 116 00:06:20,680 --> 00:06:23,040 Speaker 2: or the restaurants, their direct operations are only about one 117 00:06:23,080 --> 00:06:26,039 Speaker 2: percent of their total emissions. That's got a couple of points. 118 00:06:26,120 --> 00:06:28,200 Speaker 2: Those companies are able to claim that they aren't able 119 00:06:28,200 --> 00:06:29,320 Speaker 2: to influence very much. 120 00:06:29,480 --> 00:06:32,919 Speaker 3: I think when you think of it from a margins perspective. 121 00:06:32,960 --> 00:06:36,280 Speaker 3: So we think of every dollar generated from the agrifood 122 00:06:36,320 --> 00:06:39,120 Speaker 3: system in the US, and the biggest sort of proportion 123 00:06:39,240 --> 00:06:42,200 Speaker 3: of the profits made goes to food processors, and the 124 00:06:42,240 --> 00:06:46,240 Speaker 3: second largest proportion goes to retailers. So although these organizations 125 00:06:46,240 --> 00:06:48,640 Speaker 3: are further downstream and may sort of claim they have 126 00:06:48,720 --> 00:06:51,560 Speaker 3: less influence on what's going on on farm, the reality 127 00:06:51,640 --> 00:06:53,919 Speaker 3: is they're making the majority of the profits from the 128 00:06:53,920 --> 00:06:57,760 Speaker 3: food system, and therefore you could argue that they have 129 00:06:58,040 --> 00:07:02,239 Speaker 3: more power and frankly more money to influence change on farms, 130 00:07:02,279 --> 00:07:04,599 Speaker 3: whereas as a lot of us know, a lot of 131 00:07:04,640 --> 00:07:07,919 Speaker 3: farmers are operating on very tight margins and simply do 132 00:07:08,080 --> 00:07:11,960 Speaker 3: not have sufficient income to allow them to implement large 133 00:07:12,080 --> 00:07:15,560 Speaker 3: changes in the way they're farming, implement new technologies, new practices, 134 00:07:15,600 --> 00:07:17,920 Speaker 3: pay for consultants to teach them how to farm in 135 00:07:17,920 --> 00:07:20,600 Speaker 3: a different way. So I think the thing with the 136 00:07:20,640 --> 00:07:24,440 Speaker 3: food system is the companies generating the most profits are 137 00:07:24,440 --> 00:07:27,600 Speaker 3: not the companies with the largest direct emissions footprints. So 138 00:07:27,720 --> 00:07:29,800 Speaker 3: there's a bit of a mismatch which is perhaps a 139 00:07:29,800 --> 00:07:33,480 Speaker 3: big difference between the agrifood system and the energy companies 140 00:07:33,480 --> 00:07:35,200 Speaker 3: have been af thinks about normally. 141 00:07:35,040 --> 00:07:38,960 Speaker 1: So upstream much more emissions intensive, but the margins much tighter. 142 00:07:39,040 --> 00:07:43,480 Speaker 1: So then that brings us to solutions and really thinking 143 00:07:43,520 --> 00:07:46,400 Speaker 1: about that from an upstream perspective, right, because that's where 144 00:07:46,440 --> 00:07:48,520 Speaker 1: you're going to make the biggest gains. So what are 145 00:07:48,600 --> 00:07:51,200 Speaker 1: some of the solutions that exist or are merging as 146 00:07:51,240 --> 00:07:52,320 Speaker 1: being the most promising. 147 00:07:52,560 --> 00:07:55,600 Speaker 3: Yes, So one of the primary tools that a lot 148 00:07:55,640 --> 00:07:58,400 Speaker 3: of agrifood companies are relying on to address the on 149 00:07:58,640 --> 00:08:01,960 Speaker 3: farm emissions, so the emissions coming from actually farming crops 150 00:08:01,960 --> 00:08:06,440 Speaker 3: and livestock, is regenerative agriculture. So regenerative agriculture does not 151 00:08:06,560 --> 00:08:10,760 Speaker 3: have an industry standard definition. What companies usually mean by 152 00:08:10,760 --> 00:08:14,000 Speaker 3: this is improving the health of the soil and improving 153 00:08:14,040 --> 00:08:17,280 Speaker 3: the ecosystem as a whole. So having a healthier soil 154 00:08:17,320 --> 00:08:20,320 Speaker 3: on a farm means you're more resilient to drought and floods, 155 00:08:20,400 --> 00:08:24,120 Speaker 3: it increases the biodiversity on your farm, and in theory, 156 00:08:24,240 --> 00:08:27,160 Speaker 3: a healthier soil allows you to sequester more carbon in 157 00:08:27,200 --> 00:08:31,800 Speaker 3: the soil, which is appealing to agrifood businesses obviously in 158 00:08:31,800 --> 00:08:35,600 Speaker 3: a couple of senses. In that if regenerative agriculture achieves 159 00:08:35,640 --> 00:08:39,080 Speaker 3: all its objectives. You have healthier soil that's more resilient 160 00:08:39,080 --> 00:08:41,160 Speaker 3: to drought and floods, so your yields are likely more 161 00:08:41,160 --> 00:08:44,120 Speaker 3: consistent over time. You're sequestering more carbon in the soil, 162 00:08:44,160 --> 00:08:48,120 Speaker 3: which can reduce your Scope three emissions footprint because you 163 00:08:48,120 --> 00:08:51,120 Speaker 3: can say, although we're releasing x amount of carbon, we're 164 00:08:51,160 --> 00:08:53,760 Speaker 3: capturing this amount of carbon and storing it within the soil. 165 00:08:54,160 --> 00:08:57,080 Speaker 3: And in theory, through healthier soil, you should be able 166 00:08:57,120 --> 00:09:00,320 Speaker 3: to decrease the need for things like fertilizers because because 167 00:09:00,679 --> 00:09:02,800 Speaker 3: a healthier soil will allow you to achieve the same 168 00:09:02,920 --> 00:09:07,080 Speaker 3: yields now. In practice, this may not always be the 169 00:09:07,120 --> 00:09:10,120 Speaker 3: case because there's huge variation in the mineral content of 170 00:09:10,160 --> 00:09:12,800 Speaker 3: soils around the world, depending on what crop you're growing, 171 00:09:12,960 --> 00:09:15,600 Speaker 3: depends on how changes in the soil might impact that. 172 00:09:15,960 --> 00:09:20,079 Speaker 3: And from a company perspective, because there's no industry standard 173 00:09:20,080 --> 00:09:23,960 Speaker 3: for regenerative agriculture, there's no specific mandate on the number 174 00:09:23,960 --> 00:09:26,720 Speaker 3: of practices you have to implement, or how long you 175 00:09:26,800 --> 00:09:29,400 Speaker 3: have to implement them for, or what kind of carbon 176 00:09:29,440 --> 00:09:32,079 Speaker 3: sequestration you need to actually achieve in order to be 177 00:09:32,120 --> 00:09:34,720 Speaker 3: able to label your project regenerative. So a lot of 178 00:09:34,760 --> 00:09:39,800 Speaker 3: companies are claiming their operating regenerative agriculture projects, but unless 179 00:09:39,800 --> 00:09:43,440 Speaker 3: they provide external organizations with more details on what they 180 00:09:43,480 --> 00:09:47,120 Speaker 3: are actually doing, there's no real way we as an 181 00:09:47,120 --> 00:09:50,720 Speaker 3: outsider can determine exactly what is going on on that farm, 182 00:09:50,840 --> 00:09:54,240 Speaker 3: and how much carbon soil is actually sequestering, how much 183 00:09:54,280 --> 00:09:58,559 Speaker 3: they're actually impacting biodiversity, and what the climate in nature 184 00:09:58,600 --> 00:10:01,360 Speaker 3: impacts of that project are as all which really brings 185 00:10:01,440 --> 00:10:04,800 Speaker 3: us to the reporting standards part of this, which you 186 00:10:04,840 --> 00:10:10,080 Speaker 3: know are their targets and really clear reporting standards out there. 187 00:10:10,080 --> 00:10:12,040 Speaker 3: I mean, what you're saying is basically know that the 188 00:10:12,120 --> 00:10:15,120 Speaker 3: reporting standards are a little inconsistent, and so right now 189 00:10:15,160 --> 00:10:18,680 Speaker 3: we're seeing information coming out that may not necessarily enable 190 00:10:18,760 --> 00:10:21,320 Speaker 3: us to compare apples to apples or even really fully 191 00:10:21,400 --> 00:10:23,880 Speaker 3: verify what's happening on the ground. But this is a 192 00:10:23,880 --> 00:10:26,760 Speaker 3: space that is being talked about more and more. You're 193 00:10:26,800 --> 00:10:30,920 Speaker 3: definitely hearing about emissions and a focus on the agricultural 194 00:10:30,920 --> 00:10:34,240 Speaker 3: food system as a whole taking a much more prominent 195 00:10:34,280 --> 00:10:36,720 Speaker 3: place in the discussion around climate. 196 00:10:36,800 --> 00:10:40,640 Speaker 1: You saw last year at cop the agriculture and food 197 00:10:40,679 --> 00:10:44,280 Speaker 1: system actually feature in biodiversity feature at the Climate COP 198 00:10:44,440 --> 00:10:47,280 Speaker 1: not just at the Biodiversity COP. So there is the 199 00:10:47,440 --> 00:10:50,400 Speaker 1: COP focused on biodiversity and then the Climate COP which 200 00:10:50,440 --> 00:10:53,760 Speaker 1: is in its twenty ninth year, both with very important 201 00:10:53,800 --> 00:10:57,520 Speaker 1: dialogues that are increasingly starting to converge. So where do 202 00:10:57,880 --> 00:11:01,080 Speaker 1: the back to reporting, where do you core targets feature 203 00:11:01,280 --> 00:11:02,920 Speaker 1: and how does it work presently? 204 00:11:03,520 --> 00:11:09,439 Speaker 2: So there's difference across emissions disclosure and nature biodiversity disclosure. 205 00:11:09,520 --> 00:11:13,200 Speaker 2: Emissions reporting is far more developed than it is for 206 00:11:13,320 --> 00:11:17,200 Speaker 2: nature and biodiversity. That's because a lot of countries and regions, 207 00:11:17,320 --> 00:11:21,479 Speaker 2: namely the EU, have required companies to start disclosing their emissions. 208 00:11:21,559 --> 00:11:25,120 Speaker 2: There's still a lot of inconsistency between companies and how 209 00:11:25,120 --> 00:11:28,040 Speaker 2: they approach this issue. Some are engaged with just with 210 00:11:28,240 --> 00:11:31,719 Speaker 2: pure reporting of information, usually direct emissions, but the more 211 00:11:31,760 --> 00:11:35,560 Speaker 2: progressive players are involved with climate risk and opportunity management, 212 00:11:35,600 --> 00:11:40,400 Speaker 2: which there is report in their annual sustainability reports on nature. However, 213 00:11:40,600 --> 00:11:43,600 Speaker 2: most of this is still voluntary, although things are beginning 214 00:11:43,600 --> 00:11:46,680 Speaker 2: to change in the EU with regulation such as CSRD 215 00:11:46,840 --> 00:11:50,720 Speaker 2: Corporate Sustainability Reporting Directive, and we also have stuff such 216 00:11:50,760 --> 00:11:54,320 Speaker 2: as the EUDR that's the European Union regulation and deforestation 217 00:11:54,400 --> 00:11:57,440 Speaker 2: free products where companies trading in the block now have 218 00:11:57,559 --> 00:12:00,120 Speaker 2: to show that an you have seven soft commodit at 219 00:12:00,160 --> 00:12:02,960 Speaker 2: lease are not connected to deforestation whatsoever, and this will 220 00:12:02,960 --> 00:12:05,880 Speaker 2: apply from December thirtieth this year, and a lot of 221 00:12:05,920 --> 00:12:07,960 Speaker 2: these big food companies are starting to worry along with 222 00:12:08,000 --> 00:12:12,040 Speaker 2: their investors, because there are fairly significant financial poundies for 223 00:12:12,080 --> 00:12:14,720 Speaker 2: companies who don't operate in accordance with the low Up 224 00:12:14,720 --> 00:12:18,360 Speaker 2: to five percent of revenue can be fined per year differences. 225 00:12:18,679 --> 00:12:20,920 Speaker 1: So it seems like there's a fair amount of regulation. 226 00:12:21,160 --> 00:12:23,120 Speaker 1: But because of the way that the market is structured, 227 00:12:23,160 --> 00:12:25,680 Speaker 1: with a number of companies in particular in the wholesaler 228 00:12:25,720 --> 00:12:30,200 Speaker 1: space not publicly listed, you don't have necessarily the same 229 00:12:30,320 --> 00:12:33,760 Speaker 1: movement around financial reporting that you have in other places. So, 230 00:12:33,800 --> 00:12:37,680 Speaker 1: staying on this topic of emissions and acknowledging that this 231 00:12:37,760 --> 00:12:41,720 Speaker 1: is inexact, how closely aligned are those companies that do 232 00:12:41,840 --> 00:12:46,280 Speaker 1: have targets to Paris Agreement goals which are really aiming 233 00:12:46,360 --> 00:12:50,319 Speaker 1: to limit warming to two degrees centigrade from pre industrial 234 00:12:50,400 --> 00:12:54,560 Speaker 1: levels or less. Are they aligned or is it really 235 00:12:54,720 --> 00:12:57,240 Speaker 1: too an exact for them to fall in line with 236 00:12:57,440 --> 00:13:00,000 Speaker 1: what the Paris Agreements actually outlined for the future. 237 00:13:00,400 --> 00:13:02,520 Speaker 2: So It's a really good question, and it's got a 238 00:13:02,640 --> 00:13:05,080 Speaker 2: range of different answers depending on what kind of target, 239 00:13:05,160 --> 00:13:07,800 Speaker 2: the ambition and the scope of those targets. Broadly as 240 00:13:07,800 --> 00:13:10,520 Speaker 2: a whole sector is not aligned with the Paris Agreement. Firstly, 241 00:13:10,559 --> 00:13:12,560 Speaker 2: if we take emissions as a whole, that's including the 242 00:13:12,600 --> 00:13:15,640 Speaker 2: direct and indirect emissions, and we apply all of the 243 00:13:15,679 --> 00:13:18,000 Speaker 2: targets that all of these companies have set to their 244 00:13:18,040 --> 00:13:20,080 Speaker 2: current emissions going all the way up to twenty fifty, 245 00:13:20,120 --> 00:13:23,240 Speaker 2: we'll see only about forty percent decreasing those emissions, and 246 00:13:23,280 --> 00:13:26,319 Speaker 2: that is not in line with the Paris Agreement. However, 247 00:13:26,600 --> 00:13:29,400 Speaker 2: there's some issues here with indirect emissions double counting, like 248 00:13:29,440 --> 00:13:32,040 Speaker 2: we discussed before, as emissions stag up as you move 249 00:13:32,040 --> 00:13:34,320 Speaker 2: down the value chain, so we take away those indirect 250 00:13:34,320 --> 00:13:37,520 Speaker 2: emissions and only look at the direct emissions and scope 251 00:13:37,520 --> 00:13:40,520 Speaker 2: two emissions, which is from companies generating the energy or 252 00:13:40,640 --> 00:13:43,920 Speaker 2: energy procremment. We've seen many companies roll back on their emissions. 253 00:13:43,960 --> 00:13:45,839 Speaker 2: They were over zalous when they set them in twenty 254 00:13:45,920 --> 00:13:48,360 Speaker 2: nineteen and twenty twenty, and the standard realize that it's 255 00:13:48,400 --> 00:13:50,680 Speaker 2: very easy to set them, but in practice it's very 256 00:13:50,720 --> 00:13:53,480 Speaker 2: difficult to design a roadmap and tangibly reduce them. 257 00:13:53,640 --> 00:13:56,640 Speaker 3: Part of the reason it's so difficult to implement these 258 00:13:56,679 --> 00:13:59,559 Speaker 3: targets is some of these companies further downstream have a 259 00:13:59,640 --> 00:14:02,319 Speaker 3: huge umber of supplieres. So Cargo we mentioned before, a 260 00:14:02,440 --> 00:14:04,920 Speaker 3: large wholesaler. According to their website, they have more than 261 00:14:04,960 --> 00:14:09,319 Speaker 3: two hundred and fifty thousand suppliers. Unilever, big packaged foods 262 00:14:09,360 --> 00:14:12,199 Speaker 3: company we've all heard of, has fifty four thousand suppliers. 263 00:14:12,360 --> 00:14:15,000 Speaker 3: That's a huge number of different companies that in some 264 00:14:15,040 --> 00:14:17,960 Speaker 3: cases it's very difficult to even locate these companies because 265 00:14:18,040 --> 00:14:19,960 Speaker 3: you know, you've got a bunch of small hold of farmers. 266 00:14:19,960 --> 00:14:22,840 Speaker 3: If you're talking a commodity like coffee and cocoa selling 267 00:14:22,920 --> 00:14:25,880 Speaker 3: to a trading house, which then sells onto a wholesaler, 268 00:14:25,920 --> 00:14:28,000 Speaker 3: which then sells on to Unilever, and that's about as 269 00:14:28,040 --> 00:14:30,600 Speaker 3: short as the chain is likely to be. So even 270 00:14:30,680 --> 00:14:34,520 Speaker 3: geolocating exactly which farm they're sourcing from is really challenging 271 00:14:34,560 --> 00:14:37,440 Speaker 3: for companies, let alone trying to influence what types of 272 00:14:37,440 --> 00:14:40,200 Speaker 3: farming practices are going on there. So it is a 273 00:14:40,200 --> 00:14:43,480 Speaker 3: massive challenge for these companies to address their in direct emissions. 274 00:14:43,720 --> 00:14:46,760 Speaker 3: So transparency is not just about it being difficult to 275 00:14:46,800 --> 00:14:50,000 Speaker 3: provide transparency outwardly on what they're doing, but actually have 276 00:14:50,120 --> 00:14:53,880 Speaker 3: transparency within their company on all of the different suppliers 277 00:14:53,880 --> 00:14:56,800 Speaker 3: that they're dealing with because the market is so fragmented. Okay, well, 278 00:14:56,800 --> 00:14:58,960 Speaker 3: then how about the energy part of the pie, which 279 00:14:59,000 --> 00:15:01,520 Speaker 3: is something that we talk of about at BNF quite frequently. 280 00:15:01,760 --> 00:15:06,400 Speaker 3: How much of a role in their emissions footprint comes 281 00:15:06,400 --> 00:15:09,200 Speaker 3: from the energy system. And really where I'm getting to is, 282 00:15:09,280 --> 00:15:13,480 Speaker 3: as we're seeing these climate and biodiversity cops converge and 283 00:15:13,520 --> 00:15:16,440 Speaker 3: the different things that they're both involved in, is greening 284 00:15:16,440 --> 00:15:19,840 Speaker 3: the energy system going to have a positive impact on 285 00:15:20,040 --> 00:15:21,520 Speaker 3: greening the agricultural system. 286 00:15:21,800 --> 00:15:23,600 Speaker 2: It's definitely going to have and it is having a 287 00:15:23,600 --> 00:15:27,360 Speaker 2: positive impact. Although, as we alluded to before, these scope 288 00:15:27,400 --> 00:15:30,600 Speaker 2: to emissions which come from the company's energy comprise a 289 00:15:30,720 --> 00:15:33,960 Speaker 2: very small part of their emissions inventory depending on jurisdiction, 290 00:15:34,160 --> 00:15:37,960 Speaker 2: and we've seen depending on the brand visibility of the 291 00:15:37,960 --> 00:15:42,120 Speaker 2: company commitment, some renewable energy differ significantly. About twenty eight 292 00:15:42,200 --> 00:15:44,040 Speaker 2: of the companies that we looked at at members of 293 00:15:44,040 --> 00:15:46,720 Speaker 2: something called are one hundred and which is a pledge 294 00:15:46,720 --> 00:15:49,080 Speaker 2: to ensure that all of your electricity is sourced from 295 00:15:49,080 --> 00:15:53,200 Speaker 2: renewable sources, usually by twenty twenty twenty five or twenty thirty, 296 00:15:53,280 --> 00:15:55,320 Speaker 2: and so many of these companies are doing well. A 297 00:15:55,320 --> 00:15:58,560 Speaker 2: lot of retailers, restaurants and food services have already achieved 298 00:15:58,600 --> 00:16:00,840 Speaker 2: one hundred percent renewable energy in the UK. We can 299 00:16:00,880 --> 00:16:03,760 Speaker 2: see Sainsbury's and Tescos, two of the largest retailers, reached 300 00:16:03,760 --> 00:16:05,880 Speaker 2: those targets a couple of years ago. So definitely they 301 00:16:05,920 --> 00:16:08,680 Speaker 2: are reducing their emissions, but because it's such a small 302 00:16:08,720 --> 00:16:11,840 Speaker 2: part of their total, how meaningful that is of debate. 303 00:16:12,360 --> 00:16:15,560 Speaker 3: So whilst ari one hundred pledgures, et cetera, great and 304 00:16:15,640 --> 00:16:18,880 Speaker 3: a lot of companies further downstream have made significant progress 305 00:16:18,920 --> 00:16:22,800 Speaker 3: with respect to deploying renewables, switching away from using gas, etc. 306 00:16:23,320 --> 00:16:26,960 Speaker 3: That's seventy percent chunk of on farm emissions other than 307 00:16:27,360 --> 00:16:31,800 Speaker 3: deploying these regenerative agriculture projects here, and there're some investment 308 00:16:31,840 --> 00:16:35,680 Speaker 3: into green fertilizers and things like that. Broadly, these emissions 309 00:16:35,680 --> 00:16:38,400 Speaker 3: are not really being tackled. So the seventy percent of 310 00:16:38,440 --> 00:16:42,960 Speaker 3: the whole system's emissions that are not really accounted for 311 00:16:43,120 --> 00:16:47,400 Speaker 3: when thinking about deployment of renewable electricity. Obviously On some farms, 312 00:16:47,440 --> 00:16:51,160 Speaker 3: things like solar panels are being installed anaerobic digestors which 313 00:16:51,280 --> 00:16:54,720 Speaker 3: take the manure and can be used to make fuel sources. 314 00:16:54,800 --> 00:16:56,960 Speaker 3: That's another way you can sort of green some of 315 00:16:56,960 --> 00:17:00,760 Speaker 3: your on farm energy use. But applying fertilized to the land, 316 00:17:00,960 --> 00:17:04,800 Speaker 3: and just the fact that cows, through their existence through living, 317 00:17:05,040 --> 00:17:07,720 Speaker 3: produce a lot of methane, it's a lot more difficult 318 00:17:07,720 --> 00:17:10,080 Speaker 3: to tackle from of those emissions, and obviously with renewab 319 00:17:10,080 --> 00:17:12,680 Speaker 3: electricity won't help you tackle those. So that's where different 320 00:17:12,720 --> 00:17:14,200 Speaker 3: technologies need to be deployed. 321 00:17:14,359 --> 00:17:17,040 Speaker 2: Definitely, on the electrification of the system. If you look 322 00:17:17,040 --> 00:17:20,000 Speaker 2: at a palm producer in Indonesia, how do you electrify 323 00:17:20,000 --> 00:17:23,360 Speaker 2: your operations? But if your TESCO much of your emissions 324 00:17:23,359 --> 00:17:27,160 Speaker 2: is just the store, refrigeration, transport, you can easily either 325 00:17:27,359 --> 00:17:31,760 Speaker 2: procure renewable energy from local sources by evs. It's a 326 00:17:31,840 --> 00:17:35,040 Speaker 2: relatively simple undertaking compared to those primary producers. 327 00:17:35,119 --> 00:17:37,480 Speaker 1: And there's also this degree of our understanding of the 328 00:17:37,480 --> 00:17:40,840 Speaker 1: complexity of the system. And so I'd actually like to 329 00:17:40,840 --> 00:17:44,719 Speaker 1: pivot to the biodiversity question, which is where there is 330 00:17:44,760 --> 00:17:47,680 Speaker 1: so much complexity. So one of the things that comes 331 00:17:47,760 --> 00:17:50,560 Speaker 1: to mind is this meme that I see at least 332 00:17:50,560 --> 00:17:53,240 Speaker 1: in the climate space, of these waves kind of crashing 333 00:17:53,280 --> 00:17:56,879 Speaker 1: in on each other and slowly developing into a tsunami, 334 00:17:56,920 --> 00:18:00,920 Speaker 1: and the tsunami at the very back much more impactful 335 00:18:01,040 --> 00:18:03,959 Speaker 1: than climate because it's going to hit us potentially quite sooner. 336 00:18:04,119 --> 00:18:07,200 Speaker 1: Is this biodiversity loss and species extinction on this plan? 337 00:18:07,280 --> 00:18:09,080 Speaker 1: I mean, we are a part of nature. We are 338 00:18:09,240 --> 00:18:12,280 Speaker 1: living organisms here and very much dependent upon food, as 339 00:18:12,320 --> 00:18:14,080 Speaker 1: we highlighted at the very beginning. 340 00:18:13,720 --> 00:18:14,160 Speaker 2: Of the show. 341 00:18:14,280 --> 00:18:18,320 Speaker 1: So why is it that biodiversity is so important and 342 00:18:18,520 --> 00:18:20,440 Speaker 1: why is it being talked about so much more now? 343 00:18:20,800 --> 00:18:23,959 Speaker 2: From an economic perspective, which is why we're here, one 344 00:18:24,040 --> 00:18:27,320 Speaker 2: hundred percent of economic value generation is to some extent 345 00:18:27,440 --> 00:18:31,159 Speaker 2: dependent on ecosystem services or nature. Around half of that 346 00:18:31,320 --> 00:18:34,160 Speaker 2: is moderate or high dependence. So that means these companies 347 00:18:34,160 --> 00:18:37,440 Speaker 2: will all companies have some reliance and their revenue relies 348 00:18:37,480 --> 00:18:41,159 Speaker 2: on ecosystem services. When they degrade through nature loss or 349 00:18:41,160 --> 00:18:44,520 Speaker 2: biodiversity loss, it means these revenue streams are imperiled. And 350 00:18:44,560 --> 00:18:47,719 Speaker 2: that's what we call physical nature related risk, very similar 351 00:18:47,720 --> 00:18:52,240 Speaker 2: to climate sides, where you have increasing instances of wildfires 352 00:18:52,320 --> 00:18:55,280 Speaker 2: or floods or droughts that can likewise imperil company cash flow. 353 00:18:55,400 --> 00:18:58,280 Speaker 2: At the same time, we're seeing shifting regulation. And when 354 00:18:58,320 --> 00:19:01,919 Speaker 2: companies operations, and the interaction with nature are misaligned with 355 00:19:02,000 --> 00:19:05,720 Speaker 2: shifting regulation, then that also puts future cash flows at risk. 356 00:19:05,840 --> 00:19:09,360 Speaker 2: So through these two different understandings of nature, we can 357 00:19:09,359 --> 00:19:12,840 Speaker 2: see companies need to be better aware of their impacts 358 00:19:12,880 --> 00:19:15,760 Speaker 2: and dependencies on nature and manage the risks and opportunities 359 00:19:15,760 --> 00:19:16,520 Speaker 2: that stand from them. 360 00:19:16,560 --> 00:19:20,600 Speaker 3: And Agrifood businesses are an example of companies that are 361 00:19:20,640 --> 00:19:24,960 Speaker 3: obviously highly dependent on nature. If our soils are degraded 362 00:19:24,960 --> 00:19:26,919 Speaker 3: to the point that we can no longer grow crops 363 00:19:26,960 --> 00:19:30,880 Speaker 3: with them due to application of fertilizers reducing the bio 364 00:19:30,960 --> 00:19:33,880 Speaker 3: diversity in the soil, that generally means the soil structure 365 00:19:33,960 --> 00:19:37,040 Speaker 3: is less compacted and it can be more easily effectively 366 00:19:37,200 --> 00:19:39,520 Speaker 3: blown away by the wind for lack of a better word, 367 00:19:39,600 --> 00:19:42,040 Speaker 3: leading to things like desertification. But you know, if we 368 00:19:42,080 --> 00:19:44,000 Speaker 3: are no longer able to grow crops in the ground, 369 00:19:44,080 --> 00:19:47,159 Speaker 3: that is obviously a big problem for food systems, and 370 00:19:47,160 --> 00:19:49,200 Speaker 3: then all the animals that eat the crops we grow 371 00:19:49,200 --> 00:19:51,400 Speaker 3: in the ground, and so on and so on, And 372 00:19:51,720 --> 00:19:55,240 Speaker 3: in examples of marine systems. We can quite easily see 373 00:19:55,280 --> 00:19:59,960 Speaker 3: how ocean acidification and ocean warming will reduce fish populations. 374 00:20:00,119 --> 00:20:03,479 Speaker 3: That in many cases means that young fish can't survive. 375 00:20:03,640 --> 00:20:06,040 Speaker 3: So if you think about it in terms of where 376 00:20:06,080 --> 00:20:08,560 Speaker 3: do we source our food from, the agrifood system is 377 00:20:08,640 --> 00:20:13,080 Speaker 3: highly dependent on nature, but the emissions resulting from agriculture 378 00:20:13,280 --> 00:20:16,359 Speaker 3: are incredibly damaging to nature, as well as the land 379 00:20:16,480 --> 00:20:18,480 Speaker 3: use change that results from agriculture. 380 00:20:18,680 --> 00:20:21,480 Speaker 1: What are the data points then that people are rallying behind, 381 00:20:21,640 --> 00:20:25,680 Speaker 1: because if we think about climate, it's about carbon emissions 382 00:20:25,680 --> 00:20:28,320 Speaker 1: and everything is then put into carbon equivalent, so we 383 00:20:28,359 --> 00:20:31,240 Speaker 1: can all get behind this one data point within biodiversity. 384 00:20:31,359 --> 00:20:34,119 Speaker 1: What are the leading data points that are focused on 385 00:20:34,600 --> 00:20:37,399 Speaker 1: the most so that companies have something to focus on 386 00:20:37,480 --> 00:20:38,840 Speaker 1: when they think about their impact. 387 00:20:39,200 --> 00:20:41,879 Speaker 2: That's a really good point and a question that's often 388 00:20:41,920 --> 00:20:44,520 Speaker 2: brought up in this nature discussion pointing to climate and 389 00:20:44,560 --> 00:20:47,560 Speaker 2: the center. The universal metric of CO two E is 390 00:20:47,840 --> 00:20:51,760 Speaker 2: relatively quantifiable. When you consider nature, it's very multifaceted, so 391 00:20:51,760 --> 00:20:53,879 Speaker 2: there's several different approaches. One is to look at the 392 00:20:53,920 --> 00:20:57,560 Speaker 2: five different drivers of nature loss, our biodiversity loss, and 393 00:20:57,720 --> 00:20:59,919 Speaker 2: one of those is climate change. So we can consider 394 00:21:00,119 --> 00:21:02,159 Speaker 2: all the work being done on climate as part of 395 00:21:02,200 --> 00:21:07,240 Speaker 2: a broader nature space. Another pretty famous or respected framework 396 00:21:07,359 --> 00:21:10,920 Speaker 2: is as something called the planetary boundaries framework. Whether essentially 397 00:21:11,200 --> 00:21:14,280 Speaker 2: nine different indicators that show the state of Earth systems, 398 00:21:14,320 --> 00:21:17,199 Speaker 2: and presently six of these have been transgressed. These are 399 00:21:17,200 --> 00:21:20,360 Speaker 2: things like land use change, the integrity of the biosphere 400 00:21:20,400 --> 00:21:23,840 Speaker 2: as Helen mentioned, ocean acidification. These are indicators of how 401 00:21:23,880 --> 00:21:26,920 Speaker 2: healthy the Earth is. So any indicators or any metrics 402 00:21:26,920 --> 00:21:30,480 Speaker 2: which show how this underlying state of earth system is 403 00:21:30,480 --> 00:21:33,560 Speaker 2: is something worth measuring. Organizations such as the Task Force 404 00:21:33,600 --> 00:21:36,879 Speaker 2: on Nature Related Financial Disclosures or TNFD have up to 405 00:21:37,080 --> 00:21:39,800 Speaker 2: a thousand different metrics that companies are able to use 406 00:21:39,840 --> 00:21:43,399 Speaker 2: to assess both the dependence and impacts on nature. 407 00:21:43,800 --> 00:21:47,560 Speaker 1: So I definitely asked that question around what numbers we're 408 00:21:47,560 --> 00:21:51,240 Speaker 1: looking at much more from a policy and potentially even 409 00:21:51,520 --> 00:21:54,240 Speaker 1: financial player perspective on you know, what do I need 410 00:21:54,280 --> 00:21:56,280 Speaker 1: to think about? What if I'm a farmer, what are 411 00:21:56,280 --> 00:21:58,880 Speaker 1: the sort of things that I'm looking at to really 412 00:21:58,960 --> 00:22:01,560 Speaker 1: try and improve and push the boundaries of a more 413 00:22:01,760 --> 00:22:05,520 Speaker 1: environmentally and sustainable practice that I'm running within my business 414 00:22:05,520 --> 00:22:07,560 Speaker 1: which is so closely tied to nature. 415 00:22:07,480 --> 00:22:11,280 Speaker 2: It's very dependent on many things, the scale of the farm, 416 00:22:11,680 --> 00:22:14,280 Speaker 2: what region it's located in, and also things like the 417 00:22:14,359 --> 00:22:18,040 Speaker 2: generation that the farmers from all farmers of different understanding 418 00:22:18,080 --> 00:22:20,959 Speaker 2: and different opinions on the best way for them to 419 00:22:21,280 --> 00:22:24,879 Speaker 2: run their operations. Farmers understand that the farm depends so 420 00:22:25,000 --> 00:22:28,600 Speaker 2: much on nature and that maintaining soul quality or managing 421 00:22:28,640 --> 00:22:31,200 Speaker 2: their resources is good for the long term viability of 422 00:22:31,200 --> 00:22:33,399 Speaker 2: the farm, especially with climate change putting so much of 423 00:22:33,440 --> 00:22:38,000 Speaker 2: cropping at risk. Also, it's very dependent on subsidies. So 424 00:22:38,080 --> 00:22:40,040 Speaker 2: in the EU and the UK and the US, a 425 00:22:40,119 --> 00:22:43,280 Speaker 2: huge proportion of farm income comes directly from government support, 426 00:22:43,440 --> 00:22:46,520 Speaker 2: and that can either be direct payments which increase or 427 00:22:46,560 --> 00:22:50,160 Speaker 2: decrease the price, depending on whether it's producer or consumer subsidies. 428 00:22:50,280 --> 00:22:52,960 Speaker 2: For example, in the UK we've seen things like ELMS, 429 00:22:53,119 --> 00:22:53,600 Speaker 2: which is. 430 00:22:53,960 --> 00:22:56,320 Speaker 3: The environmental land management schemes. 431 00:22:56,400 --> 00:22:59,080 Speaker 2: Yeah, and that's where farmers receive payment not for the 432 00:22:59,119 --> 00:23:01,800 Speaker 2: amount of crops they produce or the size of their farm, 433 00:23:01,920 --> 00:23:05,720 Speaker 2: but changes they make that cause biodiversity uplift. And in 434 00:23:05,760 --> 00:23:07,879 Speaker 2: the few years since it's been going it's hard a 435 00:23:07,880 --> 00:23:10,560 Speaker 2: positive result, as studies showed over the last couple of months, 436 00:23:10,600 --> 00:23:13,399 Speaker 2: which is very encouraging, but it needs to be larger 437 00:23:13,440 --> 00:23:16,159 Speaker 2: scale and needs to roll out in areas beyond the 438 00:23:16,280 --> 00:23:18,280 Speaker 2: UK to be meaningful on a global scale. 439 00:23:18,440 --> 00:23:20,680 Speaker 3: Yeah, And we just did a piece of work regarding 440 00:23:20,720 --> 00:23:24,560 Speaker 3: agricultural subsidies and in that work we found across the 441 00:23:24,600 --> 00:23:28,440 Speaker 3: G twenty more than half of subsidies have the potential 442 00:23:28,480 --> 00:23:33,480 Speaker 3: to be environmentally harmful. So these agricultural subsidies, whilst in 443 00:23:33,520 --> 00:23:38,280 Speaker 3: many cases they are essential to keep the farm economically viable, 444 00:23:38,480 --> 00:23:41,680 Speaker 3: the subsidies are not necessarily structured around what is most 445 00:23:41,760 --> 00:23:45,640 Speaker 3: environmentally beneficial. Often across the G twenty it is more 446 00:23:45,680 --> 00:23:49,600 Speaker 3: focused on maintaining a domestic market for a specific crop, which. 447 00:23:49,440 --> 00:23:52,600 Speaker 1: Presents an incredible opportunity for policy makers given that they 448 00:23:52,680 --> 00:23:56,320 Speaker 1: have the opportunity to touch so much of the value 449 00:23:56,400 --> 00:24:01,560 Speaker 1: chain for agriculture specifically this important part upstream, the farming 450 00:24:01,640 --> 00:24:04,800 Speaker 1: part of things. So there's the opportunity for policy makers. 451 00:24:04,800 --> 00:24:08,520 Speaker 1: But then where is the innovation really coming from and 452 00:24:08,800 --> 00:24:11,520 Speaker 1: who are the players that are involved in actively making 453 00:24:11,800 --> 00:24:15,640 Speaker 1: changes beyond government where they are and are not necessarily 454 00:24:15,760 --> 00:24:19,199 Speaker 1: getting involved here? Is there innovation from the VC community, 455 00:24:19,320 --> 00:24:23,639 Speaker 1: Are there technology solutions coming out? Are there different offshoots 456 00:24:23,640 --> 00:24:26,119 Speaker 1: within some of the bigger players, you know, investing further 457 00:24:26,240 --> 00:24:29,040 Speaker 1: upstream to reduce their scope three emissions. In the long term, 458 00:24:29,119 --> 00:24:32,440 Speaker 1: you know, where do we see glimmers of innovation and 459 00:24:32,480 --> 00:24:35,800 Speaker 1: one one might even say hope that we revolutionize. 460 00:24:35,040 --> 00:24:37,960 Speaker 2: The system two points. Firstly, you would think it's an 461 00:24:38,000 --> 00:24:40,879 Speaker 2: opportunity for policy makers. However, as we seem from the 462 00:24:40,880 --> 00:24:43,240 Speaker 2: EU and even the UK, when you try and mass 463 00:24:43,280 --> 00:24:46,720 Speaker 2: with farm policy and take away farm support for rural communities, 464 00:24:46,720 --> 00:24:49,200 Speaker 2: you'll see huge resistance and we've had tractors on the 465 00:24:49,560 --> 00:24:52,040 Speaker 2: streets in the Netherlands and Franz seven in the UK. 466 00:24:52,280 --> 00:24:56,600 Speaker 2: Discussion of this issue is very tense, yeah, very tense 467 00:24:56,640 --> 00:24:59,320 Speaker 2: in the US as well, as they move to releasing 468 00:24:59,359 --> 00:25:02,040 Speaker 2: their updated farm build. It's a risky maneuver and generally 469 00:25:02,080 --> 00:25:04,479 Speaker 2: policymakers like to stay away from that. Although we are 470 00:25:04,480 --> 00:25:07,040 Speaker 2: seeing some hope in terms of the VC community and 471 00:25:07,400 --> 00:25:10,240 Speaker 2: tech or food tech as two of the examples of 472 00:25:10,320 --> 00:25:13,080 Speaker 2: emerging technology called there's a lot of innovation. Some of 473 00:25:13,080 --> 00:25:15,960 Speaker 2: the most promising things are quite well known to many consumers. 474 00:25:15,960 --> 00:25:19,320 Speaker 2: You've got plant based burgers such as Beyond and Impossible Foods, 475 00:25:19,359 --> 00:25:22,000 Speaker 2: although that's not quite there. It's somewhere in the trough 476 00:25:22,040 --> 00:25:24,600 Speaker 2: of despair on the fundraising stage, but there is a 477 00:25:24,640 --> 00:25:28,199 Speaker 2: lot of opportunity. Slightly more successful examples include things like 478 00:25:28,320 --> 00:25:33,240 Speaker 2: precision fermentation where you can grow proteins in a bioreactor, 479 00:25:33,400 --> 00:25:36,680 Speaker 2: genetically engineered microbes that are able to take a feedstock 480 00:25:36,760 --> 00:25:40,439 Speaker 2: and turn it into a molecularly identical protein which can 481 00:25:40,480 --> 00:25:43,480 Speaker 2: be used to make meat or milk products, and these 482 00:25:43,480 --> 00:25:47,200 Speaker 2: are being used, and the collaboration between many retailers and 483 00:25:47,600 --> 00:25:49,919 Speaker 2: consumer packaged good companies and these startups. 484 00:25:50,160 --> 00:25:52,240 Speaker 3: So obviously Alice has spoken a bit about some of 485 00:25:52,280 --> 00:25:55,520 Speaker 3: the food tech innovations that could help change the system. 486 00:25:55,560 --> 00:25:59,640 Speaker 3: In terms of agricultural technologies, we have things like precision 487 00:25:59,600 --> 00:26:05,600 Speaker 3: application of agrochemicals like pesticides or fertilizers, methane inhibitors so 488 00:26:05,960 --> 00:26:09,320 Speaker 3: feed additives or injections for cows to reduce the amount 489 00:26:09,359 --> 00:26:13,040 Speaker 3: of methane they produce, and green fertilizers so using green 490 00:26:13,119 --> 00:26:18,080 Speaker 3: hydrogen to make fertilizers. These specific technologies. Whilst as Alistair 491 00:26:18,280 --> 00:26:22,320 Speaker 3: alluded to, venture capital and private equity investment for things 492 00:26:22,359 --> 00:26:25,600 Speaker 3: like holt Hernet meats has dropped fairly significantly in twenty 493 00:26:25,680 --> 00:26:30,320 Speaker 3: twenty three. Investment in these agricultural technologies has remained relatively stable, 494 00:26:30,680 --> 00:26:34,840 Speaker 3: particularly as well things like biologicals. So a biological is 495 00:26:35,000 --> 00:26:38,199 Speaker 3: it's a pretty broad term for anything sort of biologically 496 00:26:38,280 --> 00:26:41,359 Speaker 3: based that you can use on a farm, be it 497 00:26:41,440 --> 00:26:44,560 Speaker 3: to enhance crop growth, to tackle pests. There's a whole 498 00:26:44,640 --> 00:26:48,639 Speaker 3: range of different things. But obviously, unlike pesticize and fertilizers 499 00:26:48,640 --> 00:26:51,200 Speaker 3: made from fossil fuels, they have much lower emissions footprints 500 00:26:51,240 --> 00:26:53,760 Speaker 3: that would be the benefit of using them. So we're 501 00:26:53,760 --> 00:26:57,480 Speaker 3: seeing a lot of further downstream companies collaborating with further 502 00:26:57,560 --> 00:27:01,400 Speaker 3: upstream companies to deploy some of these technologies. And I guess, 503 00:27:01,440 --> 00:27:05,320 Speaker 3: looping back to regenerative agriculture we talked about earlier, we're 504 00:27:05,320 --> 00:27:09,200 Speaker 3: seeing a lot of cross value chain collaboration, so you'd 505 00:27:09,240 --> 00:27:13,359 Speaker 3: see the likes of Nesle and Cargill collaborating on regenerative 506 00:27:13,359 --> 00:27:17,720 Speaker 3: agriculture projects, or General Mills and Walmarts Walmart big supermarket chain, 507 00:27:17,880 --> 00:27:21,919 Speaker 3: General Mills and our big manufacturing company ADM, one of 508 00:27:21,920 --> 00:27:25,879 Speaker 3: the big traders we mentioned, and Buyer, a big agrochemical producer. 509 00:27:26,000 --> 00:27:28,119 Speaker 3: So a lot of these companies are now working together 510 00:27:28,200 --> 00:27:31,520 Speaker 3: on regenerative agriculture projects, which could be a sort of 511 00:27:31,520 --> 00:27:35,080 Speaker 3: more optimistic sign of these companies working together to get 512 00:27:35,119 --> 00:27:38,280 Speaker 3: a better sense of the on farm emissions that are 513 00:27:38,280 --> 00:27:41,560 Speaker 3: contributing to both of their Scope three emissions footprints and 514 00:27:41,560 --> 00:27:43,840 Speaker 3: thinking about how they can tackle these collaboratively. 515 00:27:44,280 --> 00:27:46,040 Speaker 1: I've spent a lot of time trying to actually draw 516 00:27:46,080 --> 00:27:49,600 Speaker 1: this back to climate and a lot of what I'm 517 00:27:49,600 --> 00:27:52,439 Speaker 1: hearing is that it is very much a conversation then 518 00:27:52,480 --> 00:27:54,359 Speaker 1: to itself and what are some of the ways that 519 00:27:54,440 --> 00:27:58,360 Speaker 1: you really think about the agricultural food system, in particular 520 00:27:58,400 --> 00:28:00,880 Speaker 1: sitting here in Bena, before we talk about emissions so much, 521 00:28:00,920 --> 00:28:02,359 Speaker 1: what are some of the things that you think about 522 00:28:02,359 --> 00:28:04,240 Speaker 1: that are completely separate from that that make it so 523 00:28:04,359 --> 00:28:06,720 Speaker 1: incredibly important. I mean, the. 524 00:28:06,840 --> 00:28:09,920 Speaker 3: UN a few years ago at Copp said they thought 525 00:28:09,920 --> 00:28:13,600 Speaker 3: there were around sixty years left before our soils became 526 00:28:13,680 --> 00:28:16,199 Speaker 3: so degraded in many places around the world that we 527 00:28:16,200 --> 00:28:18,399 Speaker 3: can no longer farm in them. In some places of 528 00:28:18,440 --> 00:28:20,760 Speaker 3: the world, people think that's as little as thirty years 529 00:28:20,760 --> 00:28:23,280 Speaker 3: before our soil becomes so degraded and that we can't 530 00:28:23,320 --> 00:28:26,080 Speaker 3: farm there anymore. So, if you're an agri food business, 531 00:28:26,320 --> 00:28:31,120 Speaker 3: that is your supply chain potentially depleting. You know, irrespective 532 00:28:31,160 --> 00:28:34,320 Speaker 3: of the emissions benefits of some of these changes in 533 00:28:34,359 --> 00:28:38,120 Speaker 3: farming practices, in order to ensure we can keep farming 534 00:28:38,120 --> 00:28:40,520 Speaker 3: in certain locations, there will need to be a change 535 00:28:40,560 --> 00:28:42,320 Speaker 3: in the way we do things in the amount of 536 00:28:42,400 --> 00:28:45,240 Speaker 3: plowing and fertilizer use that is going on, which is 537 00:28:45,320 --> 00:28:47,719 Speaker 3: degrading the soil so much so, I do think that, 538 00:28:48,200 --> 00:28:53,000 Speaker 3: irrespective of the emission's footprint of farming, the way we 539 00:28:53,040 --> 00:28:58,040 Speaker 3: are degrading nature in sort of modern intensive agriculture is 540 00:28:58,200 --> 00:29:01,280 Speaker 3: just not a sustainable way of farming. Going to come 541 00:29:01,320 --> 00:29:04,120 Speaker 3: a point where we can no longer grow food if 542 00:29:04,120 --> 00:29:05,160 Speaker 3: we continue as we are. 543 00:29:05,600 --> 00:29:09,040 Speaker 1: So in this world of things that are so incredibly 544 00:29:09,080 --> 00:29:12,040 Speaker 1: important to life on this planet, one thing that is 545 00:29:12,240 --> 00:29:15,320 Speaker 1: intrinsically linked to the agriculture and food systems water And 546 00:29:15,360 --> 00:29:18,720 Speaker 1: when we think about a warming planet and climate change, 547 00:29:19,120 --> 00:29:21,120 Speaker 1: one of the things we know is happening is a 548 00:29:21,160 --> 00:29:24,600 Speaker 1: disrupted water system. This does lead us down a path 549 00:29:24,640 --> 00:29:28,800 Speaker 1: to another show someday on climate adaptation and how water 550 00:29:28,840 --> 00:29:31,200 Speaker 1: features in that space. But before we get to the 551 00:29:31,240 --> 00:29:35,520 Speaker 1: adaptation angle, what are some of the ways that agriculture 552 00:29:35,520 --> 00:29:38,440 Speaker 1: across this entire value chain are thinking about water and 553 00:29:38,480 --> 00:29:42,320 Speaker 1: water use and really the important role that water plays, 554 00:29:42,720 --> 00:29:45,520 Speaker 1: whether it's relating specifically to climate or it's just relating 555 00:29:45,600 --> 00:29:48,720 Speaker 1: to water use and better farming practices. 556 00:29:49,080 --> 00:29:52,040 Speaker 2: Well. As we noted at the start, about three quarters 557 00:29:52,040 --> 00:29:55,400 Speaker 2: of all global freshwater withdrawal is a result of the 558 00:29:55,440 --> 00:29:58,920 Speaker 2: agricultural system, largely through irrigation, which is used to grow 559 00:29:58,960 --> 00:30:01,440 Speaker 2: crops which are then use to feed livestock. So it's 560 00:30:01,440 --> 00:30:04,000 Speaker 2: a massively inefficient system in terms of water. Of the 561 00:30:04,000 --> 00:30:06,640 Speaker 2: one hundred and thirty or so companies that we assessed, 562 00:30:06,960 --> 00:30:10,640 Speaker 2: about sixty percent of them have a concrete target for water, 563 00:30:10,680 --> 00:30:13,200 Speaker 2: and that's not an aspirational Targets are hard time bound 564 00:30:13,280 --> 00:30:16,000 Speaker 2: commitment to do something either in terms of their water use, 565 00:30:16,080 --> 00:30:20,880 Speaker 2: water pollution, recycling intensity, or efficiency. But there's massive discrepancy 566 00:30:20,920 --> 00:30:24,240 Speaker 2: between different segments of that value chain. About forty five 567 00:30:24,240 --> 00:30:28,640 Speaker 2: percent of upstream companies, namely the input producers, have targets 568 00:30:28,640 --> 00:30:30,560 Speaker 2: on water use, and that's because it's such a material 569 00:30:30,560 --> 00:30:33,040 Speaker 2: issue for them. They use the most of it, so 570 00:30:33,280 --> 00:30:36,680 Speaker 2: it matters in terms of their strategic and financial decision making. 571 00:30:36,840 --> 00:30:39,200 Speaker 2: Only about five percent of the cohort that we assessed 572 00:30:39,200 --> 00:30:42,400 Speaker 2: have targets and water recycling reuse, which is very surprising. 573 00:30:42,640 --> 00:30:46,240 Speaker 2: We found generally that as you move further downstream, water 574 00:30:46,320 --> 00:30:49,080 Speaker 2: becomes less material in your operations, especially in terms of 575 00:30:49,120 --> 00:30:51,680 Speaker 2: water intensity, which is the amount of water use per 576 00:30:51,760 --> 00:30:54,520 Speaker 2: unit of revenue that you earn. These companies have a 577 00:30:54,560 --> 00:30:57,840 Speaker 2: smaller water footprint, so they don't need to factor it 578 00:30:57,840 --> 00:31:01,000 Speaker 2: in so much in their decision making. Obviously, water scarcity 579 00:31:01,200 --> 00:31:03,880 Speaker 2: becomes more of a pressing concern. These companies are increasingly 580 00:31:03,920 --> 00:31:07,440 Speaker 2: open to water risk, and we anticipate that more investors, 581 00:31:07,600 --> 00:31:10,320 Speaker 2: policymakers and consumers will put pressure in these companies to 582 00:31:10,400 --> 00:31:13,800 Speaker 2: integrate water strategy into their decision making. We did see 583 00:31:13,800 --> 00:31:17,480 Speaker 2: that about ninety five percent of companies acknowledge the importance 584 00:31:17,520 --> 00:31:20,440 Speaker 2: of water in their annual or sustainability reports, but far 585 00:31:20,480 --> 00:31:23,200 Speaker 2: few have a dedicated strategy to address it. 586 00:31:23,520 --> 00:31:25,800 Speaker 1: So we just barely touched upon that topic, and I 587 00:31:25,880 --> 00:31:27,800 Speaker 1: know that we will be able to revisit a number 588 00:31:27,880 --> 00:31:31,200 Speaker 1: of things you brought up today, including what's happening at 589 00:31:31,320 --> 00:31:34,040 Speaker 1: the biodiversity cop coming up. Thank you so much for 590 00:31:34,120 --> 00:31:37,000 Speaker 1: joining today, Helen Alistair. It was great having you here. 591 00:31:45,920 --> 00:31:49,040 Speaker 1: Today's episode of Switched On was produced by Cam Gray 592 00:31:49,240 --> 00:31:52,920 Speaker 1: with production assistants from Kamala Shelling. Bloomberg NEF is a 593 00:31:52,960 --> 00:31:56,080 Speaker 1: service provided by Bloomberg Finance LP and its affiliates. This 594 00:31:56,200 --> 00:31:58,880 Speaker 1: recording does not constitute, nor should it be construed, as 595 00:31:58,920 --> 00:32:03,320 Speaker 1: investment advicevestment recommendations, or a recommendation as to an investment 596 00:32:03,440 --> 00:32:06,200 Speaker 1: or other strategy. Bloomberg ANIAF should not be considered as 597 00:32:06,280 --> 00:32:09,680 Speaker 1: information sufficient upon which to base an investment decision. Neither 598 00:32:09,680 --> 00:32:12,680 Speaker 1: Bloomberg Finance LP nor any of its affiliates makes any 599 00:32:12,760 --> 00:32:16,280 Speaker 1: representation or warranty as to the accuracy or completeness of 600 00:32:16,320 --> 00:32:19,400 Speaker 1: the information contained in this recording, and any liability as 601 00:32:19,440 --> 00:32:21,960 Speaker 1: a result of this recording is expressly disclaimed.