The Markets Institute @ WWF’s Top Issues, Trends, and Tools for 2021
The Markets Institute at WWF identifies global issues, trends, and tools around the most pressing challenges of our time. Each year we release a list of what we see as the top emerging industry developments that may not yet be apparent to help stakeholders stay ahead of the curve and shift our thinking and actions faster.
The lists are identified through research, interviews, data analysis, gleanings from others, and discussions with our Thought Leader Group. Here are the top issues, trends, and tools to keep an eye on in 2021.
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ISSUES
Market scale for food security.
Global, regional, or local markets — what is the right scale? Some commodities need to be traded globally because a few countries or regions dominate production. That will not change, though climate change will likely make it important for companies to spread supply risks over different regions. Commodity trading that is dominated by a few regions and a few companies makes global food systems more vulnerable while regional and local markets are less efficient and more susceptible to climate change.
The Arctic — The Next Frontier.
While the world’s attention has been focused on deforestation in the Amazon under Brazil’s current president, there has been far too little concern about the Arctic. Here are some reasons to be concerned: there are some 42,000 projects, mostly about infrastructure and resource extraction, that are in various stages of development for a region with only four million people; wheat, corn, and soy were planted this year on what was until recently Russian permafrost; ‘zombie’ bacteria from thawing reindeer corpses caused an anthrax outbreak in Siberia; fisheries are moving north but management systems do not yet reflect this; and fish species are now moving between the Atlantic and the Pacific Oceans.
The problem with averages.
Much of the thinking about food globally is based on averages — of both productivity and impacts. The problem with averages is that they are misleading when it comes to both impacts and leveraging change. If the top quartile of producers is responsible for most production but fewer impacts, working with them on improvements does not help shift the curve. Whereas if the bottom quartile is responsible for 50% of the impacts but only 10% of production, then working with them has the potential to produce more effective results.
Producer incentives.
We know that the best way to get producers to change is to provide incentives, ideally for measurable improvement. However, we cannot now effectively measure and reward individual improvement. We have no way to reward those that directly improved performance. Recent experiences with net-zero dairy in the US suggest that producers must currently sell their carbon credits to finance their journey to net-zero. The problem is if they sell their credits, then they are no longer producing net-zero dairy. The issue is double counting. Without markets that pay for the reduction of carbon in net-zero dairy, farmers are left with no other choice than to sell the credits to the markets that will pay for them.
Food security in Africa.
After the successful launch of the African Orphan Crops Consortium, the mapping of the genomes of 101 key food crops, and the successful graduation of the fourth class of the African Plant Breeders Academy in Nairobi, it is critical that we create the follow-up group — the people who produce the seeds and cuttings within each country to make the fruit of all this labor available to farmers. This is the perfect opportunity to engage smallholders and, particularly, women in these grow-out schemes.
TRENDS
Efficiency and. . . .
To date, the focus of industrial food systems has been on production efficiency with some emphasis on reducing key impacts and costs. That will not stop, but additionally, people will manage supply chains with an eye on redundancy (for production and distribution) due to climate change and uncertainty, as well as resilience. We will add issues like nutrition and micronutrients but also try to anticipate issues of production and distribution — rather than addressing them after the fact.
Eating in.
This trend reflects shifts in shopping and cooking that accelerated and pivoted due to the pandemic but will likely maintain after it is over with implications for brick and mortar stores, as well as food distribution. E-commerce for food will continue to increase, and there will be less face-to-face interaction in both grocery retail and restaurants. This will also be influenced by more remote working, living, and high-speed internet connectivity. There will be increased purchases of at-home cooking equipment. The trend may plateau, but it will not likely decline nor go away.
Fisheries climate migration.
There is anecdotal evidence that fisheries are beginning to move in response to warming oceans. In several cases, they have moved beyond traditional management jurisdictions. This would be bad enough if all the fisheries were previously well managed. But they haven’t been. In fact, 15–30% of global fishing is IUU, and 90% of fisheries have been fished at or beyond capacity — it is the “beyond capacity” (33%) that is critical. Many countries do not have the money or the will to invest sufficiently in fisheries management. Imagine the issues now, but when fisheries are moving faster than the ability of government management systems to keep up.
Transparent supply chains.
The focus of transparency to date has been more for consumers. But transparency is critical for supply chain management. Animal protein producers have had to address animal welfare and food safety issues. Now they are addressing where feed ingredients come from, who produces them, and how they are produced. This is critical for tracking problems quickly and efficiently. It is also essential for taking illegality out of supply chains and international trade as a first step in addressing social and economic justice issues.
Reducing embedded GHG emissions in food.
The private sector is stepping up to reduce their own GHG emissions as well as those emissions from primary production and processing. For food products, most of the GHG emissions originate from where and how the raw materials and ingredients are produced, or if, as with feed, the impacts are compounded because of the kilos of feed it takes to produce a kilo of animal protein. But it is quite hard under the current systems to measure and reward reduced emissions. The rules as laid out in the Science Based Targets initiative, for example, suggest that carbon emissions from deforestation be amortized over a 20-year period after the date of deforestation and that land use changes are averaged across commodities and different production systems. This makes it difficult to segregate production and measure individual performance much less reward it.
TOOLS
Common metrics.
This may seem an odd tool, but without agreement about what is key to measure and how to measure it, we cannot make progress globally on improving performance on any important issue. For food, areas where more precise metrics are needed and we see evidence of movement are for SDG and ESG performance, LCAs, GHG emissions, regenerative agriculture, ‘Build Back Better’ ambitions, illegality, habitat conversion, minimal performance for sustainable food production, and trade, impact investments or weighted accounts, costs of misinformation, impacts of climate change, and so on. We can’t measure everything, so what do we need to measure, and can we use fewer metrics as windows on multiple impact areas?
Open-source data.
The pandemic has shown that many of the world’s most pressing problems can be solved in a timelier fashion when previous research and learnings are readily available and can be applied more quickly to changing conditions. Data can be in the public domain or it can be shared across relevant platforms. To solve today’s global problems when we are living so close to the edge, we need to learn more quickly. Open-source data and pre-competitive groups that agree to share information and allow all to learn faster to solve common problems will become more common as companies, governments, and other organizations realize that sustainability and solving common issues are a benefit to everyone and that no one entity is smarter or more informed than all the others collectively. What holds this back are rigid interpretations of what constitutes collusion, especially when all the results are made available through open-source platforms.
New business models.
Current business models do not address social and economic equity issues. They do not redress past or present injustices. More importantly, they do not provide hope for those that are marginalized. We need to understand better the connections between capitalism and social and economic justice. This involves rethinking financial structures and subsidies, but also ownership models like ESOPs (employee stock ownership plans) and joint ventures (JVs) as well as Stewardship Trusts. Models that focus on increased productivity and hourly wages miss the point. Much has been written about environmental externalities, but far less about social externalities. How can we link social welfare to equity so that we acknowledge interdependencies but also align incentives from production to consumption? We need to use the current systems to support the investments needed to make them more resilient. Long-term contracts and carbon markets would help producers invest in more resilient and diversified production systems. But one thing is clear, if we don’t begin to address social and economic issues in business models, we will not be able to address environmental externalities.
Storytelling.
We know good storytelling when we hear it, but we don’t hear it often enough, especially in the discussion of science, global issues, and solutions. That will change. We have better science, improved technology, and problems that are both already present and rapidly approaching. The real challenge is using this tool to help bring people along a journey of continuous awareness about changing realities, but also what is possible — less about doom and gloom and more about what is and can be done. We need to talk about who is changing, why, and to what effect, and who is not, and what it means for them and others. Leaving aside morality, who is part of the solution and acting in our common interests, and who is not? What does it look like, and what are the impacts? What are the stories of local and community action that can inspire and inform others to act?
Supply chain automation.
Companies want more stable and less risky supply chains that work 24/7, address the social and safety issues that have been accentuated by the pandemic, and make food systems more flexible, digital, and resilient. But these automated systems will come at a cost; they will be more expensive, complex, subject to cyber threats and other forms of manipulation, and will displace labor in the global food system while potentially creating even more social and economic inequality.
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