Investing in the fight against food waste

Investments that reduce food loss and waste can deliver two big wins: improving food security and reducing greenhouse gas emissions, according to the World Bank, which recently issued two bonds to raise awareness of the issue.

The World Bank’s new sustainable development bonds

The World Bank (International Bank for Reconstruction and Development, IBRD, Aaa/AAA) on October 15, 2020 issued a NOK 4 billion 5-year floating rate bond and a SEK 1 billion 5-year fixed rate bond. Both mature on October 23, 2025. The bonds are the first dual-tranche issuance for IBRD in Scandinavian currencies and the first time IBRD has issued a floating rate note in NOK. Nordea and SEB acted as joint lead managers for the transactions.

The bonds support UN Sustainable Development Goal 12.3: halving food waste by 2030. Investors include Deka Investment, the Folksam Group, Handelsbanken Treasury, Kommunalbanken (KBN) Länsförsäkringar Treasury, Nordea Asset Management, SpareBank 1 SMN, and Union Investment Privatfonds GmbH.

Food loss and waste is one of the most pressing issues of our time, and global attention to the issue is rising, including from financial market participants.

The World Bank recently issued two new sustainable development bonds, raising the equivalent of US$ 550 million to promote awareness of the importance of combatting food loss and waste. With Nordea as joint lead manager, the bonds drew in over 30 investors, primarily from Scandinavia but also Germany, Japan and the UK.

“Supporting countries to address the climate and social impacts of food loss and waste is a key priority for the World Bank as we work together to eliminate extreme poverty and increase shared prosperity,” said Jingdong Hua, World Bank Vice President and Treasurer, thanking investors for their support.

With the latest transactions, the World Bank has issued the equivalent of US$2.7 billion in over 35 sustainable development bonds to raise awareness for food loss and waste challenges. The bonds support the financing of sustainable development projects and programs in member countries, including $4.6 billion in lending to middle-income countries to fund infrastructure, access to markets and logistics and waste management.

Food waste: Third-largest greenhouse gas emitter

When it comes to food loss and waste, the statistics are staggering. One-third of all food produced for human consumption is lost or wasted globally. That’s roughly 1.3 billion tonnes per year, worth around US$1 trillion. At the same time, one in three people around the world suffers from some form of malnutrition.

What’s more, when food is produced only to be later thrown away, natural resources are used and unnecessary pollution generated. If wasted food were a country, it would be the third largest emitter after the US and China, accounting for around 8% of global greenhouse gas emissions.

The issue affects everyone, both developing and developed countries, urban and rural communities. While in developing countries, the losses tend to happen closer to the farm at the post-harvest and processing stage, developed countries experience most waste at the retail and consumer levels.

Attention to the issues of food waste and food security is growing. In October, the UN’s World Food Programme was awarded the Nobel Peace Prize for 2020 for its efforts to combat hunger and promote food security.

Screenshot from Nordea webinar: Fighting Food Waste in the Nordics

Nordea hosted a webinar on October 16, 2020 in honour of the 75th anniversary of World Food Day, featuring speakers from the World Bank, Swedbank Robur and Too Good To Go.

Food loss refers to food being lost in the supply chain between the producer and the market. This may be caused by harvest, storage or transportation problems.

Food waste refers to the discarding of already produced food. This may be caused by factors such as food being past the “best-before” date, food having an irregular shape or colour or food not being eaten.

Why tackling food waste is a win-win

Investments that reduce food loss and waste can deliver two big wins: both improving food security and reducing greenhouse gas emissions, according to Geeta Sethi, Advisor and Global Lead for Food Systems at the World Bank.

“Up until now, we only had anecdotal evidence. But now we can prove it, and we know that the links are very strong,” Sethi told the audience at a webinar hosted by Nordea on October 16 in honour of the 75th anniversary of World Food Day.

She cited new research from the World Bank, which looked at four developing countries and found that reductions in food loss and waste could yield tangible food security gains and emissions reductions, with solutions targeted to the specific country context.

Geeta Sethi, Advisor and Global Lead for Food Systems, World Bank

Geeta Sethi, Advisor and Global Lead for Food Systems, World Bank

While food loss and waste reduction is not yet a very well-utilised tool, it can help countries achieve their commitments under the Paris Agreement to reduce emissions while also improving food security, Sethi said.

She noted that the Covid-19 pandemic has exposed the underlying problems in the world’s food system, with its images of empty supermarket shelves and farmers having to destroy piles of unsold produce.

“Covid-19 is frankly a dress rehearsal for climate change,” Sethi said. “Suddenly, food shortages were no longer a developing or a low-income country phenomenon. Both high and low income countries got hit.”

Yet she still conveyed a message of hope. Regarding the World Bank’s recent bond issuances, she praised investors for helping to drive financing towards food loss and waste solutions.

“A trillion dollar problem annually, food loss and waste cannot be solved through public financing alone. Capital markets have and will continue to play a significant role in achieving results on the ground. We remain committed to developing additional products that will help to close this financing gap,” she added.

A need for data and investment opportunities

Representing the investor perspective on the webinar, Eva Axelsson, Chief Sustainability Strategist at Sweden’s largest fund asset manager, Swedbank Robur, noted that investors have started on the journey when it comes to combating food waste and loss.

Eva Axelsson, Chief Sustainability Strategist, Swedbank Robur

Eva Axelsson, Chief Sustainability Strategist, Swedbank Robur

Asset owners’ awareness of and interest in sustainability issues have grown dramatically, especially in the past year, Axelsson said. And that interest drills down to specific issues, such as land use, resource efficiency, biodiversity, food security as a human right as well as food loss and waste.

As an asset manager, “it’s not enough for us to focus on the general themes. We really need to go in depth into the different issues and report back to them, not only on the activity but also the output and effect of our investments,” she said.

When it comes to investing in the fight against food loss and waste, Axelsson says the main challenges are the need for high quality data, methods as well as investment opportunities.

“We need new products, new tools, new ways to meet the demand and set that into bankable, investible products,” she said.

Covid-19 is frankly a dress rehearsal for climate change. Suddenly, food shortages were no longer a developing or a low-income country phenomenon. Both high and low income countries got hit.

Geeta Sethi, Advisor and Global Lead for Food Systems at the World Bank

Innovative solutions

Philippe Schuler, Global Movement Coordinator, Too Good To Go

Philippe Schuler, Global Movement Coordinator, Too Good To Go

In addition to the issuer and investor perspective, the webinar also featured Philippe Schuler from Too Good To Go, a scaleup founded in Denmark that is using technology to tackle food waste. The company’s mobile app, which has more than 27 million users across Europe and in the US, helps connect consumers to restaurants and stores with unsold, surplus food.

Beyond the app, the company is also focused on finding innovative ways to save food across other parts of the chain.

When the coronavirus pandemic hit, for example, the Netherlands faced a massive oversupply of potatoes, when the usual demand for French fries from restaurants and hotels dried up. Within a week, Too Good To Go arranged for a logistics provider to go to the farms with a truck, pick up the potatoes and dump them in the city centre of Amsterdam where they were sold out within hours using the application. It was so successful, the company copied the initiative in 12 other cities in Holland as well as Belgium.

“It just comes to show that collaboration, and also thinking innovatively on the go can really have an impact going forward,” said Schuler.

Watch the full webinar, and find out more about how other Nordic entrepreneurs are taking a bite out of food waste.

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