Our food system is unhealthy for the planet, and big changes in government subsidies are needed to rectify the dire situation.

An investor coalition managing $7.3 trillion in assets has signed a statement urging the G20 group to reform “harmful” agricultural subsidies by 2030 to transition to net zero GHG emissions and restore nature by 2050.

Backed by 32 investors, including Legal & General Investment Management (LGIM) and French financial company BNP Paribas, this initiative represents the coalition’s first effort before the G20 summit in India this September. Also, it’s the latest policy engagement from the $70 trillion-backed FAIRR Initiative, which has been warning of an “Apollo 13” moment for the meat and dairy industry since last year.

Jeremy Coller, founder of FAIRR, said: “Globally, governments are setting bold climate and nature goals, but in the same breath are undermining those ambitions with almost $500 billion in harmful agricultural subsidies for high-emitting commodities such as red meat. We need to realign subsidies to nature goals to support a transition for farmers and to ensure a level regulatory playing field for alternative proteins and other sustainable solutions.”

A broken food system

According to the European Court of Auditors, GHG emissions have not changed significantly since 2010, despite €100 billion invested globally for climate mitigation and adaptation.

At the same time, a report from the United Nations showed that $470 billion of subsidies are given annually to the agriculture sector. 87% of these subsidies are causing price distortions, prompting overconsumption, and negatively impacting human health and the environment. Moreover, subsidy regimes, such as the EU’s Common Agricultural Policy, caused $4-6 trillion in damage to nature each year, shows a 2021 UK report.

To fix this alarming problem, governments need to link financial support with environmental obligations, such as the Paris Agreement on global change and the global deal to preserve biodiversity, signed in Montreal last December, argues the coalition.

Helena Wright, policy director of FAIRR, says: “Governments are subsidising a broken food system which is the primary driver of biodiversity loss globally.”

Shift subsidies for change

In the statement, the group urges governments to align subsidies with climate and nature goals, including repurposing existing incentives to sustainable agriculture, shifting subsidies from dairy or red meat products, which have a high climate impact, and increasing funding to ensure workers have a fair transition.

For example, it cites the subsidies and incentives provided to the agricultural sector, which contribute to approximately 15% of worldwide agricultural production. This financial support leads to the overuse of resources and the production of farm products that generate significant GHG emissions. Environmental organisations report that livestock receives nearly 20% of EU agricultural subsidies despite accounting for 50% of the bloc’s agricultural emissions.

Finally, the coalition states that reforming subsidies is necessary for long-term investments because climate change and biodiversity loss are significant risks affecting investor portfolios.

Rachel Crossley, head of stewardship, Europe, BNP Paribas Asset Management, said: “The food system is responsible for more than a third of global greenhouse gas emissions and is the leading threat to 86% of species at risk of extinction. Countries’ agricultural subsidy regimes have been found to drive many of these impacts.”

Original source: https://vegconomist.com