Food is not only nourishing and vital for our survival, but it also conjures up some of our most cherished memories. As the world contemplates food insecurity issues brought on by climate change, the inefficiency of our food supply system and political tensions, investing in a safe and secure food future resonates with all of us, governments and individuals alike.

Elysabeth Alfano

Kübra Koldemir

Russia’s invasion of Ukraine, the world’s 

 of sunflower seeds, the sixth producer of corn, and the ninth producer of wheat and soy, shows us, in addition to the devastation of the Ukraine war, that our food supply systems are fragile.

Food instability isn’t just a product of war. The Middle East, Singapore, China, and parts of Africa currently experience food insecurity. With valuable resources like water in short supply due to climate change and world angst at an all-time high, it is understandable that many countries would like to maintain a self-sufficient food supply and mitigate their food insecurity risk. Covid and its impact on supply chains has underscored the same need.

This is why governments worldwide are investing in alternative proteins that require less land, water, and time to produce than meat and dairy, while emitting fewer greenhouse gases and addressing several key food security issues. To build more robust food supply systems, Israel, Canada, the European Union, Singapore, and China are all putting money into alternative proteins: plant-based, cell-based, and precision fermentation technologies for developing food products.

A Global Consensus: Investing in Plant-based Innovation & Alternative Proteins

As the U.N. projects the global population 

 from 7.7 billion people to 9.7 billion people by 2050, many countries have begun planning for more mouths to feed and a more efficient, nutritious, faster, and prolific way to feed them. Investing in research into resource-saving technologies such as plant-based innovations, precision and bio-mass fermentation, and cellular agriculture is a path to food security. 

, for example, announced that it would invest $100 million in its plant-based industry. The 

 announced it would invest 10 billion Euros in a green transition program focusing on plant-based proteins.

For countries that naturally have food insecurity issues, finding a more efficient way to produce food is a strategic imperative. 

 can only produce 10% of its food and imports the rest. Because its food supply chain is very susceptible to pandemics and regional political squabbles, 

 is emerging as the Asian food tech capital, 

 in its ’30 by 30’ plan to produce 30% of its nutritional needs locally by 2030. Of note, Singapore 

 when, on December 2nd 2020, it became the first country in the world to give regulatory approval for the sale of cell-based meat by 

Israel is also taking a global leadership role in alternative proteins and plant-based innovation. Former Israeli Prime Minister Benjamin Netanyahu has directed government officials to appoint a body to support these innovation industries by connecting key stakeholders operating in this field, including but not limited to universities, government agencies, and entrepreneurs. According to the 

, the Israel Innovation Authority announced its plan to allot a portion of a $69M investment to a cultivated meat consortium composed of companies and research institutions.

The Netherlands, too, is championing the advancement of cultivated meat. A leader in food innovation and home to Most Meat, the first company to debut a cultivated meat burger, the Netherlands has just pledged 

 to develop a cellular agriculture ecosystem.

Food and Water Security Is Political Legitimacy

, in China, “Food security has long been regarded as a major source of political legitimacy for the ruling Communist Party.” China’s arable land is shrinking, making the country increasingly dependent on the rest of the world to feed its 1.4 billion people.

 in meat consumption and supports foreign and local investment in plant-based alternatives and even 

. Even while at the same time, it is also encouraging 

 in livestock and poultry breeding. Most recently, China’s five-year agricultural plan 

With national security and political strength in mind, U.S. Congressmen Khanna (CA) and Krishnamoorthi (IL) are proposing the Security of the Economy, Climate, and other U.S. interests with Recent and Existing Food Alternatives 

 Act. Further, there may be a first-ever White House action plan for global water security brewing, according to 

, because “External conflicts over water pose a threat to national security, as well as international relations.”

According to Thomas Schumann of Thomas Schumann 

, LLC, "Water Security is the single-largest impact investment opportunity in the history of mankind.” Roughly 

 of the world’s population is affected by water scarcity, much of which is linked to animal agriculture using 

Forget the Race To Space. We’re In a Race For Food and Water

With a growing global population, global warming, and dwindling resources, we are all in a race for food and water. With fewer countries potentially less willing or able to share or trade food in the future, the food supply may soon become a geopolitical issue and an environmental and health issue. Ultimately, it is possible to foresee that wars will be fought over food and 

, as is the case with Syria, and true geopolitical power will be held by those who control the global supplies. This hits home for governments and individuals alike.

From Covid to war and rampant inflation, many around the globe have been uncertain and fearful about the next steps, particularly when it comes to investing. Impact investing is a way to align one’s dollars with one’s vision and values for the present and future. 

Investing in Plant-based Innovation and Alternative Proteins

 allows people to invest for themselves and their families in a way that is meaningful with outcomes visible in their lifetimes.

As this investment sector grows along with the shift of the food supply system to be more sustainable and efficient, so will the capital that aligns with this early-stage secular trend.

We have no time to waste. To quote the recent IPCC report, “It’s now or never.”

Energy Voices is a democratic space presenting the thoughts and opinions of leading Energy & Sustainability writers, their opinions do not necessarily represent those of illuminem.

Forget The Race To Space: We’re In a Race For Food And Water

Trust makes the economy go ’round. There is a very good reason why financial statements must be audited by an external auditor: Because it builds trust. Sustainability and environmental, social, and governance (ESG) reporting is also undergoing external assurance in order to nurture trust. Ninety-one percent of 1,400 companies across 22 jurisdictions report some level of sustainability information and 51% offer some level of assurance.


Usman Hayat

 makes the economy go ’round. There is a very good reason why financial statements must be audited by an external auditor: Because it builds trust.

Sustainability and environmental, social, and governance (ESG) reporting is also undergoing external assurance in order to nurture trust. 

report some level of sustainability information

The State of Play in Sustainability Assurance

,” a recent report from the International Federation of Accountants (IFAC) and the Association of International Certified Professional Accountants.

How can ESG assurance build trust in ESG disclosures

 when the external audit, the most advanced form of assurance, is struggling with a trust deficit? Or will ESG assurance replicate the same mistakes and become old wine in a new bottle?

It wasn’t long ago that amid a spate of corporate scandals, 

Regulators, investors and the wider public have lost confidence in the audit market

 It was hardly the first time such audit-related declarations had been made and it likely won’t be the last. But for ESG assurance, many are looking beyond traditional audit firms for the necessary verifications.

That said, while engaging nontraditional assurance providers is a good step, it may not be good enough. After all, external assurance features many of the same stakeholders as external auditing — the reporting companies and investors, for example — and sustainability and 

ESG investing already face fierce criticism for alleged greenwashing

. Therefore, to avoid a replay of the confidence crisis in external audit, 

ESG assurance must chart a different path

mostly voluntary and have lots of built-in flexibility

. A company with assorted sustainability issues and multiple locations may pick and choose among the issues and geographies it reports on. Indeed, some firms may choose not to report on certain criteria or locations. Yet sustainability reporting is critical at a local level.

 covers the sustainability leaders featured in one or more sustainability indexes across 10 sectors and seven countries. Its integrated report on Coca-Cola İçecek (CCI) is a useful example of sustainability reporting in practice. CCI produces, distributes and sells sparkling and still beverages of Coca-Cola products for Azerbaijan, Iraq, Jordan, Kazakhstan, Kyrgyzstan, Pakistan, Syria, Tajikistan, Turkmenistan, Uzbekistan, and Turkey, where it is based. It is listed on Borsa Istanbul and reports its sustainability results separately for each of the countries in which it operates. Between 2011 and 2020, CCI sought external assurance on its water and energy usage, among other issues.

The 2020 report and earlier CCI sustainability reports refer to different frameworks and standards, such as the Global Reporting Initiative, the United Nations Global Compact, and United Nations Women Empowerment Program, AA1000, ISAE 3000, and so on. 

Assurance provider reports tend to give “limited assurance” and state that nothing has arisen to suggest that the selected information is not presented

, in all material aspects, “in accordance with CCI’s internally developed reporting criteria.”

External audit is different from sustainability assurance.

 There is nothing to pick and choose among: Reporting criteria is definitive and mandatory. CCI’s 2020 auditor’s report clearly states that the consolidated financial statements were prepared in adherence to the Turkish Capital Markets Board’s accounting standards. It attests that the audit was conducted in accordance with the applicable auditing standards and that the consolidated financial information is “fairly presented in all material respects.”

Robust global standards are required to make ESG and sustainability reports comparable within and across jurisdictions

 of such standards has lasted the better part of a generation with 

 were published in 2000 and established the framework for sustainability reporting. In 2004, “The Future of Sustainability Assurance” report from the Association of Chartered Certified Accountants (ACCA) highlighted the need for “a complementary set of Generally Accepted Accounting Principles for Sustainability (GAAPS) and Generally Accepted Assurance Standards for Sustainability (GAASS).” Fast-forward to 2021 and we’ve seen the creation of the 

International Sustainability Standards Board (ISSB)

We believe the current moment is a once-in-a-lifetime opportunity to set ESG assurance on the right course. As it evolves and catches up with external audit, 

ESG assurance needs to accomplish the following four tasks

, to avoid creating a trust deficit like the one that now plagues external audit.

1. ESG assurance must maintain its independence.

Independence is the cornerstone of external assurance

. But the audit practice has created its own concept of independence that is not so intuitive. Can the auditor truly be independent of the entity that appoints it, pays it, refers business to it, and, potentially, fires it? The obvious answer: Not really. Of course, the auditor’s answer has long been, Why not?

2. ESG assurance must go beyond offering audit-like boilerplate opinions.

It took the audit practice the global financial crisis (GFC) and a very long time to come up with a discussion of key audit matters in the auditor’s report. 

ESG assurance providers would do well to offer commentary on key assurance matters right away

3. ESG assurance must demand that management stand by its sustainability reports.

 signed by the CEO as well as the relevant board committee members declaring that the report contains material truth, the whole truth, and nothing but the truth.

4. ESG assurance providers should be ready and willing to submit to regulatory oversight.

Unlike external audit, ESG assurance need not go through the prolonged and failed experiment of self-regulation. When stakeholders ask who audits the auditor, the answer from those who offer ESG assurance should be an 

, which may be the same as the pre-existing audit regulator.

 — an ambitious task in any context — 

ESG assurance must replicate the knowledge and experience of external audit while avoiding its pitfalls.

ESG Disclosure: How Can External Assurance Help Build Trust?

We all agree that finance has a key role to play in getting us to net zero. But we can’t ignore the elephant in the room: the inherent conflict between the “E,” the “S,” and the “G” in environmental, social, and governance (ESG) investing.

Andrea Webster

Paul Smith

As much as we might wish otherwise, the goals embedded in these initials don’t always align with one another. That’s why a compromise must be made. Investors, asset managers, and businesses have to agree on which of the three is the most important.

We believe social, the “S,” should be the highest priority. Why? Because sustainability is all about humanity.

The “S” factor is broad. It varies by country, culture, and context. Figuring out how these can be lined up within the boundaries of net-zero goals must come down to people.

Convincing manufacturers on tight margins to spend money to cut their greenhouse gas emissions is an enormous challenge. It comes with consequences.

Let’s make this real: A healthy environment, a living wage, and strong workers’ rights cost money. Clients want these outcomes, but at a reasonable price. The same goes for investors. They want their money channelled to good companies that treat their workers well. And they want good investment returns. But at the end of the day, none of this is free.

To reduce emissions, companies may have to sacrifice the profits they pay out as dividends to shareholders. At least at first. And with falling dividends come falling share prices, and both hurt the returns of those saving for retirement or for their children’s education.

This means we have to align multiple interests. Investors, asset managers and businesses are ultimately all about people. So we have to shift our thinking away from a focus on environmental issues in isolation and towards a more holistic approach that looks at outcomes from a broad social perspective.

In a post-pandemic world, this reset has huge ramifications.

When it comes to future liabilities — retirement, education, etc. — the pressure is on investors to achieve their required returns.

Their usual focus is on accumulation or income generation. This drives the prices of the assets being sought. Those seeking income to fund their retirements will chase high-dividend paying companies, especially in the current low interest-rate environment.

In Asia, many companies pay out much of their profits as dividends. If they reduce profits, and therefore dividend payments, to invest in greening their businesses, the market will punish them. Investors focused on income stocks will take their money elsewhere.

Part of the sustainability challenge is that the highest dividend companies are often in traditional, asset-heavy industries with large carbon footprints. To support them in their net-zero transition, investors will have to accept lower dividend payouts, otherwise these companies won’t survive the move to low carbon alternatives. While this green transition is desirable over the long term, in the short term it will create unmanageable economic dislocation.

The major challenge for the asset management industry is the saturated, highly competitive market in which it operates.

Fund managers are traditionally judged on performance. Now, however, their ability to incorporate ESG factors is another area of competitive pressure. How do they maintain performance while also meeting expectations around ESG?

Yes, ESG strategies outperformed in 2020, and demonstrated that sustainability can generate returns. But digging deeper, the data indicates that positively screened ESG companies have lower employee metrics and tend to be asset-light industries. Automation does not create jobs and white collar tech workers don’t need the same protections as those on an assembly line.

Investing in large ESG-positive businesses also has a destructive effect. It channels money away from asset-heavy and job-creating industries that support local communities. And what about small and medium-sized enterprises (SMEs) that score low on ESG and need to finance their net-zero transition? Is the market punishing or helping them?

Companies must tread a fine line. They must keep their business profitable in the near term while investing in going green over the long term. Sustainability is no longer a nice-to-have accessory, it is a way to future-proof their business.

But delivering on the “E” is expensive. If the cost cannot be passed on to the end customer, it will have to come out of the business, whether in staff salaries, bonuses, or head count. It may also render certain functions — and jobs — obsolete. The “E” comes at the expense of the “S.”

In Asia, the objective used to be squeezing the last drop of profit out of the business. Now it is slowly shifting to longevity and legacy. Paying out all profits in dividends is short-sighted, while playing the long game may increase margins over time. To accomplish this, companies need the right investors.

Stakeholders have to dispense with the quarterly mindset and build longer-term relationships and expectations. They need to move away from get-rich-quick investing.

Generating returns and being true to the “S” takes time. Short-termism is the antithesis of sustainable growth. For companies to meet the net-zero challenge, they need investors who understand what’s at stake and what it will take to achieve.

Now is the time to acknowledge the elephant in the room and start making that mindset shift. And that means embracing the S in ESG.

The Elephant in the Room: the Contradiction within ESG

Kübra Koldemir is a sustainability business writer at 

 as well as a sustainability researcher at 

You can’t miss it!

Kübra Koldemir

Kübra Koldemir

Recent publications

Readers also like

Want to know more about illuminem Voices?