Ceres guides food-sector investors on sustainability-related risks

SUBSCRIBE to our fortnightly e-newsletter to receive more information like this. Infographic depicting the key risks associated with producing and bringing to market eight major ag commodities, according to Ceres' new investor guide Engage the Chain.

Global sustainability organisation Ceres has released a peer-reviewed resource guide to help investors better understand and evaluate the environmental and social impacts that drive financial risk in the world’s food sector.

The tool was released as the number of sustainability shareholder resolutions filed with food companies rose to several dozen in the first half of 2017, according to data compiled by Ceres.

The organisation’s recently-launched investor guide Engage the Chain gives a comprehensive overview of the environmental and social challenges associated with bringing eight commonly sourced commodities to market: wheat; corn; beef; dairy; soybeans; sugarcane; palm oil; and fibre-based packaging

The guide also gives specific examples of the various risks – from market and regulatory risks to litigation – food companies may have to contend with as a result of these impacts on their supply chains.

“Commodity sourcing is an increasingly challenging business function for food companies,” noted David Bennell, director of food and capital markets at Ceres.

Engage the Chain was designed with investors, for investors, to help them reduce their exposure to the mounting reputational, operational and other material risks embedded in agricultural supply chains.”

The guide was developed with peer review support from investors, companies and NGOs.

Aerial shot showing deforestation on pastoral land near Rio Branco, Acre, Brazil: deforestation is a key driver of risk in food production investment, says Ceres' guide.
Aerial shot showing deforestation on pastoral land near Rio Branco, Acre, Brazil: deforestation is a key driver of risk in food production investment, says Ceres' guide.
Kate Evans/CIFOR. Flickr CC

What’s in the guide?

Engage the Chain incorporates:

  • an overview of the key drivers of financial risk in agricultural supply chains, including
    • climate change;
    • deforestation;
    • land use and biodiversity;
    • water scarcity and pollution;
    • livelihoods;
    • land rights; and
    • working conditions.
       
  • detailed briefs on each of the eight commodities that include
    • global production data;
    • a visual depiction of the value chain from production to processing to retail for each commodity;
    • a list of key companies involved in each stage; and
    • an assessment of how the seven key drivers are impacting each of the commodities.
       
  • an interactive table detailing the exposure of major US food and beverage companies to each of the commodities; and
     
  • practical investor guidance, outlining the steps prospective and existing investors in food and beverage companies can take to evaluate the material risks that may flow from these non-sustainable supply-chain impacts.

How will it help food-sector investors?

Engage the Chain is designed to help international investors, such as Domini Impact InvestmentsSM, which manages three mutual funds with a combined US$2.2 billion in assets; and Robeco, with EUR 148 billion in assets under management, which conducted a social risk assessment of more than 10 soft commodities in 2014 to guide engagement with food companies in its portfolio.

“If a company cannot trace its supply chain, it cannot begin to address the substantial risks, including potential involvement in illegal practices, that lie hidden several tiers down,” noted Adam Kanzer, managing director at Domini Impact Investments. “We hope that Engage the Chain will provide one more link in the chain of accountability.”

Peter van der Werf, senior engagement specialist at Robeco, welcomed the new resource guide. “We are extremely pleased to see that Ceres has prepared the Engage the Chain investor resource and hope that it will result in meaningful and broad engagement that moves the food and agricultural supply chain to more sustainable production of food globally,” he said.

Backers and partners

Engage the Chain was funded in part by the Gordon and Betty Moore Foundation as part of a ‘conservation and financial markets’ collaboration that included the foundation, Ceres, the World Business Council for Sustainable Development and the World Wildlife Fund (WWF).

About Ceres

Ceres is a global sustainability non-profit organisation that works with globally influential investors and companies to “build leadership and drive solutions throughout the economy”. For further information, visit Ceres official global website or follow the organisation on Twitter @CeresNews.

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