Companies operating in the food system are highly dependent on biodiversity and ecosystem services, but a recent report by reputable think tank Chatham House highlighted the food system as the principal driver of biodiversity loss. As many of the risks associated with the decline of nature are concentrated in the agricultural supply chain, it is imperative that companies develop a comprehensive understanding of how biodiversity underpins their business model, and take urgent steps to protect it.
Ingredients from nature
Biodiversity is the reason we can have varied and interesting diets. As well as diversity between species (think of a courgette versus an orange), biodiversity includes genetic diversity within a single species. For example, there are over 120 known species of coffee and over 7,000 varieties of apples.
Biodiversity at all levels facilitates adaptation and ensures that species are resilient to changes in external conditions. We need these qualities to enable various food sources to survive increasing temperatures, changing precipitation patterns, and more extreme weather events. Agronomists can breed new, more resilient crop varieties, but we need to protect genetic diversity to secure this opportunity for the future.
However, climate change is one of the five main drivers of biodiversity loss and is already threatening species and food production around the world. A study found that at least 60% of coffee species are threatened with extinction due to a combination of climate change and habitat destruction. The production of other crops that are sensitive to changes in temperature and water availability, such as avocadoes, bananas, and cocoa, is also at risk.
Soil health and pollination
The food system is almost completely dependent on a range of ecosystem services. Firstly, global food security is directly linked to soil health. Soils, especially the upper layer called topsoil, are often described as “living” because of the high density of fungi, bacteria, earthworms, insects and other species for which they provide a habitat. An estimated one quarter of the planet’s biodiversity is contained within soils. Interactions between these organisms facilitate the breakdown of nutrients for uptake by plants, enable water purification and storage, and support pest control. Organic matter within soils is a critical carbon store, thought to be the second largest carbon store after the oceans. It takes centuries to form just an inch of healthy topsoil, which is why healthy soils are considered a non-renewable resource.
However, soil quality around the world is under threat, with potentially disastrous consequences for people, companies and their investors. A third of soils are already considered moderately to highly degraded, driven mainly by intensive agricultural practices and land use change. Tilling, compacting and excessive use of pesticides, for instance, damage soil processes and productivity. Conversion of forests to farmland can reduce the soil’s carbon uptake by up to 75%.
A large-scale transition to climate-smart and regenerative agricultural practices, which increase biodiversity, protect watersheds, enrich soils, and enhance productivity, is required. Climate-smart farming focuses on resilience to the physical impacts of climate change and mitigating the greenhouse gas emissions associated with growing food. We expect companies that rely on agriculture to identify soil health as a core focus area within their biodiversity and climate change strategies. We engage with General Mills, Danone and Ingredion, amongst other companies, on these topics.
Pollination is another key ecosystem service, enabling between US$235bn-577bn of annual global food production. Pollination is required to varying degrees by 75% of the world’s food crops. Studies in Europe show declines in the abundance and diversity of pollinator species, with 9% of bee and butterfly species threatened with extinction and 30% of species facing population declines. These trends are largely driven by habitat loss, exposure to agrochemicals and climate change.
Assessing biodiversity impacts
The World Bank recently warned that a collapse of ecosystem services could result in a decline of $2.7tn of global GDP annually by 2030, so action to protect and restore biodiversity must be accelerated. Companies with agricultural supply chains should assess and disclose their biodiversity impacts and dependencies, as outlined in our engagement framework within Our Commitment to Nature. This process will help the company to identify material risks and design meaningful interventions. Other focus areas for engagement include ensuring effective governance of nature-related risks and opportunities, and encouraging companies to commit to having a net-positive impact on biodiversity by 2030 at the latest.
Throughout this series, we will explore some of the main transformations required within the food system, and how companies and their investors can play a role. The next article will focus on the need for dietary changes, which is a critical part of the solution.