by Neal Gutterson
The word this time is COP. And I don’t mean good cop, bad cop. Although no doubt there are “good cops” and “bad cops” involved in mitigating and adapting to climate change.
I mean COP28, a landmark event that, for the first time at a Convention Of the Parties, formally recognized the importance of food and agricultural systems transformation towards mitigation of and adaptation to climate change. While this could be one of those symbolic moments whose significance is wildly overstated today, it could, perhaps, be a moment we look back on after a decade as the inception of a new era…. an era marked by an increased investment cycle focused on companies with the best ideas for transforming food and ag systems in ways that address climate change, farmer and consumer needs.
For context, the COP28 Presidency held by the UAE released the “COP28 Declaration on Sustainable Agriculture, Resilient Food Systems, and Climate Action.” In late December, 159 countries representing more than 80% of the global population had signed the declaration. Notable non-signers as of early January 24 include India and South Africa.
Countries signing the Declaration have agreed to include food and ag systems transformation in their climate action plans by COP30 in Brazil in 2025.
However, not surprisingly, many emerged from COP28 frustrated with what hadn’t happened. For example, food system transformation in the final text of the Sustainable Ag Declaration only referred to adaptation, not mitigation. It also didn’t acknowledge the critical role of agricultural subsidies in maintaining the status quo, nor the opportunity that would be created by modified subsidies that still benefit farmers but are geared to more sustainable production systems.
A World Bank study in June found that $635 billion a year is spent by governments on harmful agricultural subsidies, driving the excess use of fertilizers and 14% of forest loss as farmers of commodities such as soy, palm oil and beef are incentivized to push into the forest frontier. Addressing the climate impacts of food systems will require major reforms to agricultural subsidies in the next few years, ones that are very carefully developed. Will a future COP declaration call for those changes?
What can we all do to make a difference in the meantime?
We know at Radicle Growth that if impact investors want to address climate change, they must first address global ag and food systems. If that’s not done, some 1/3rd of all GHG emissions will remain, even if energy and industrial sectors can achieve net zero. As important, the adverse impacts of climate change on agriculture for a population of some 10 billion by 2050 will add significantly to the 800 million people who are chronically malnourished and to the estimated 3 billion who do not have access to healthy diets.
It is a truism that large-scale innovation lies at the heart of the needed transformations in our food production and distribution systems. But while COP28 broadened critical awareness of the challenges we face, and we see new commitments, implementation of these commitments matters, and history tells us we must press for implementation from governments, large companies and emerging companies alike.
Radicle Growth has incorporated these issues into our investment theses for many years. All of our portfolio companies address at least 1, and most address 2, of 8 key SDGs relevant to our mission as a sustainable ag and food venture fund. With climate action (SDG 13) as a driver of broad investment interest, companies addressing opportunities to improve farmer economics, carbon balance, and overall environmental footprint continue to be high on our list of priority companies for investment.
We hope to find more and more impact investors in the coming years becoming our co-investors. This will be good for farmers, consumers and the planet. As we bring together insights on agriculture and climate, this will enable entrepreneurs to build the transformational companies of the future.