The global food system is at a critical moment requiring transformation to overcome significant challenges. Current food systems are not fit for purpose and we have to question everything we know about food. Agricultural practices require changing and the consumption patterns of the global population need to be altered.
Agriculture is one of the main causes of the climate crisis. We are caught in a cycle of producing cheap food, where low costs drive higher demand for food, produce more waste, while clearing more land and using large volumes of fertilisers and pesticides. But crucially, at the same time, agriculture is also one of the core answers to the crisis. Food security and Sustainable Agriculture is thus a critical ESG investment consideration in the context of solving these challenges.
There are three fundamental challenges to the existing food system:
•Firstly, climate change is threatening food systems – and conversely, food systems are causing climate change, in the form of increasing droughts, floods, shifts in the extent and severity of pest and disease outbreak, reduced predictability of seasons and plant and animal heat stress. Meanwhile, agriculture is responsible for 30% of the world’s greenhouse gas (GHG) emissions and this is only predicted to increase by 15-20% by 2050. Meat and dairy account for 14.5% of all global GHG emissions while agriculture uses one third of all land – creating a vicious circle of cause and effect.
•The second challenge is the immense increase in the demand for food. As the global population is set to reach almost 10 billion by 2050, the world will need 50% more food. The world is not on track to achieve Zero Hunger by 2030 but rather the opposite. 1 in 10 people globally are exposed to severe levels of food insecurity, and if trends continue, the number of people affected by hunger would surpass 840 million by2030.
• Lastly, the dichotomy between food insecurity and food wastage is a significant problem. One third of all food is wasted before it is even consumed, whilst millions go hungry.
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Globally, 15% of the population are persons with disabilities. The labor force participation rate globally for people with disabilities sits at 32.8% compared to 77.1% for those without disabilities. We believe it is imperative that investors use their shareholder voice to raise the awareness of this important diversity issue and help companies to improve their inclusion.
During February 2021 the Fund returned -0.08% versus the S&P/ASX 300 Accumulation Index of 1.48%, underperforming the market by -1.55%. An overweight position in Consumer Staples and an underweight position in Healthcare contributed to relative performance while an overweight position in Utilities and an underweight position in Materials detracted from relative performance.
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Ethical Partners has recently joined a range of stakeholders in creating 2021 Action Pledges that will contribute towards ending child labour by 2025. Backed by a resolution at the United Nations General Assembly, 2021 was declared as the International year for the Elimination of Child Labour.