Food for Thought: Healthier Eating, Healthier Planet

Many of us in developed countries consume a traditional Western diet typically heavy on animal protein and refined carbohydrates. We tend to eat whatever we want without thinking about how our diet impacts the environment and climate change.

And although most of us are accustomed to seeing fully stocked grocery store shelves, ensuring that people everywhere have regular access to sustainably produced, nutritious food in a way that doesn’t deplete natural resources is one of the world’s greatest challenges.

This involves contentious issues such as the meat industry’s harmful environmental impacts and destroying forests to clear land for agricultural use. It also entails alarming levels of food waste and food insecurity in many parts of the world.

Addressing these problems requires innovative solutions that we believe also offer compelling investment opportunities — e.g., shifting to alternative proteins, upcycling and sustainable farming. We believe the food and agriculture industries worldwide can meet the food sustainability challenge.

What Is Food Sustainability?

How Food Production Affects the Environment

The primary environmental impacts of food and agriculture businesses include:

• Greenhouse gases (GHG).

• Land use.

• Freshwater use.

• Eutrophication (i.e., runoff from land that produces an overgrowth of plant life that kills aquatic animals due to diminished oxygen).

• Loss of biodiversity.

Figure 1 shows that agriculture is a significant producer of greenhouse gases, rivaling the energy used for transportation and buildings.

Figure 1 | Aside From Energy Production, Agriculture Is a Significant Source of GHG Emissions Globally

Animal-based foods tend to have higher carbon footprints than plant-based products. For example, producing 1 kilogram (kg) of beef emits 60 kgs of CO2e (carbon dioxide and other greenhouse gases), while producing lamb and cheese generates more than 20 kgs of CO2e per kg. Poultry and pork are less harmful but still generate 6 kgs and 7 kgs, respectively, per kg. Compare that to peas, which emit just 1 kg of CO2e per kg.¹

Half of the world’s habitable land is used for agriculture, and many agricultural practices harm the environment and are generally unsustainable. For example:

• Expanding the amount of land used for agriculture is one of the biggest contributors to an alarming loss of biodiversity. Agriculture threatens 24,000 of the 28,000 species designated as “threatened with extinction” on the International Union for Conservation of Nature’s Red List of Threatened Species™.

• Seventy percent of freshwater withdrawals (taken from ground or surface water sources) globally are used for agriculture, placing significant pressure on water resources in water-scarce regions.²

• Agriculture causes about 78% of the global ocean and freshwater eutrophication.³

Fighting Climate Change by Eating Better

Is it possible to address these problems by making healthy changes to our diets? Many of us don’t necessarily follow nutrition experts’ advice in making our food choices. But we may not realize that the impact of our suboptimal eating goes beyond our health by contributing to climate change.

Producing meat and dairy products, particularly from cows, accounts for roughly 14.5% of the world’s greenhouse gases each year. Many studies show that people who eat meat-heavy diets could shrink their food-related carbon footprints by one-third or more by adopting more sustainable vegetarian regimens. Giving up dairy would further reduce GHG emissions.

Of course, going full-blown vegan is not realistic for most people, and importantly, it’s not the only way to help improve this situation! Simply shifting our diet toward more vegetables, legumes, grains and fruits and consuming less dairy and meat (especially red meat) would significantly contribute to combating climate change. According to the World Resources Institute, the average American’s food-related carbon footprint would decline by around 13% if we replaced one-third of the beef we eat with pork, poultry or legumes.⁴

Of course, making this more readily achievable change in how we eat would also produce real health benefits and likely reduce medical expenditures. Studies show that eating a diet full of antioxidant- and fiber-rich foods like fruits, vegetables, whole grains and legumes can improve blood pressure, reduce heart disease, lower the risk of developing type 2 diabetes and reduce the risk of cancer.⁵

More Sustainable Food Production Means Less Food Waste

Given that producing food uses so many natural resources, we think it’s shocking that over one-third of the food produced in the United States is never eaten. Think about that in light of the United Nations’ prediction that the world population will grow to 9.3 billion by 2050.

Food production would have to increase by over 50% versus 2010 levels to feed that many people. But by reducing food waste, we could greatly reduce the amount of new food production the world will need! That would decrease projected deforestation, biodiversity loss, greenhouse gas emissions, water pollution and water scarcity.⁶

Minimizing food waste is worth pursuing to reduce the food and agricultural sector’s environmental impact, but it would also improve profitability. The Business Case for Reducing Food Loss and Waste found that for every $1 invested in reducing food waste and loss, companies could save as much as $14 in operating costs.

In addition to reducing food waste, we believe there are several opportunities for the food industry to appeal to consumers and generate profits while reducing the environmental harm caused by agriculture. According to Grand View Research, the global dairy alternatives market was valued at $23.2 billion in 2021 and is expected to expand at a 12.5% compound annual growth rate (CAGR) from 2022 to 2030. The market is gaining momentum, with strong demand for sustainable food options reflecting a shift in consumer eating patterns and dietary trends.⁷

Leading alternative protein sources include plants, insects, mycoprotein (e.g., mushrooms) and cultured meat. Investors are taking note of the opportunity they represent, as retail sales of plant-based foods grew 6.2% in 2021 over a record year of growth in 2020. For example:

• In 2019, Tyson Foods sold its 6.5% stake in Beyond Meat and now manufactures its own plant-based products.

• Bill Gates and Chinese business magnate Li Ka-shing have stakes in Impossible Foods.

• Richard Branson and Tyson Foods have invested in Memphis Meats, a U.S.-based company now known as Upside Foods that produces “clean” meat by culturing animal tissue from cells.⁸

Some companies, such as Motif Foodworks (a Boston-based “foodtech” startup), are working to improve the texture, mouthfeel and flavor profile of plant-based meat alternatives to make them more appealing. Spain-based Novameat has been experimenting with 3D-printing technologies to imitate the fibrous texture of steak. Meanwhile, Good Catch Foods, Finless Foods and New Wave Foods are creating sustainable seafood alternatives.⁹

McKinsey predicts continued growth in alternative protein-based food sales from a growing number of new brands and food industry giants such as Kellogg, Nestle and others.

Upcycling Reduces Food Waste

Upcycling food is good for the environment, good for food and water security, and has nutritional benefits.¹⁰ According to the Upcycled Food Association, upcycled food is made with ingredients that otherwise would not have been consumed, are sourced and produced using verifiable supply chains and positively impact the environment.

Brands that have embraced this movement include Barnana (uses imperfect bananas to make snacks), Wtrmln Wtr (uses imperfect watermelons to make cold-pressed juice) and Barvocado (uses upcycled avocado seeds to make energy bars). According to Future Market, the upcycled food market is worth $46.7 billion, with an expected CAGR of 5% over the next 10 years.

Opportunities for Sustainable Farming Through Technology

Sustainable farming practices that reduce costs and boost yields are another way to reduce agriculture’s environmental harms while improving the food industry’s economics. For example:

• Farmers could use artificial intelligence (AI) to identify the best-performing regenerative agriculture practices to prevent soil exhaustion without conducting costly, time-consuming field trials.

• Digital and precision agricultural technologies could help farmers generate better results while reducing the amount of chemicals they use.

• Manufacturers could develop slow- or controlled-release fertilizers, which make nutrients available over a longer period while preventing leaching and groundwater contamination.¹¹

• AI algorithms could help with food sorting using images and data from cameras, X-rays, lasers and other technologies.¹²

• Manufacturers could develop new seeds and crops through breeding and hybridization, as well as genome editing to produce crops with advantageous characteristics.

• Farmers could switch to electric equipment to potentially realize cost savings of $229 per ton of carbon dioxide equivalent.

There has been a noteworthy shift in consumer preferences toward sustainable food options. Businesses could better satisfy consumer demand and build brand loyalty by rethinking their products in terms of sustainability and continuing to innovate to help mitigate climate change.

Investors may find opportunities by examining how companies adapt and innovate to capture a bigger share of consumers’ food spending based on growing preferences for healthy, good-tasting and planet-friendly food.