United Nations Sustainable Development Goals
Goal number 12 of the United Nation’s Sustainable Development Goals (SDGs) - https://www.undp.org/sustainable-development-goals - is titled, responsible consumption and production, and it focuses on reducing our carbon footprint via changing the way in which we produce and consume food. Their target is to, by 2030, have moved to a more sustainable pattern of food consumption. (UN, 2015)
The UN (2019) estimated that 931 million tonnes of food waste was generated in 2019 with this food waste acting for approximately 8 to 10% of the world’s total greenhouse gas emissions per year.
European Commission
The European Commission’s farm to fork strategy is planning to develop food security, public health and nutrition, and as a result, that would provide access to nutritious, healthy and sustainable food. By reducing our food waste, consumers and operators will save money by not having to throw out gone off and out of date food products. It is estimated that by saving a quarter of the food that we waste, it would make it feasible to feed everyone that is currently undernourished. (Amicarelli and Bux, 2020)
Figure 1: The top food loss and waste producing countries in Europe (Cookedbest.com, 2020)
Sustainable Finance
“Sustainable finance refers to the process of taking environmental, social and governance (ESG) considerations into account when making investment decisions in the financial sector, leading to more long-term investments in sustainable economic activities and projects.” (European Commission, 2021)
Sustainable finance doesn’t simply observe financial gains and losses, it also involves looking at environmental and ecological impacts as well as altruism for the present and for the future. It’s much more than simply looking at the financial side of the matter. Sustainable finance has also given way to numerous new ways of financing business, including crowdfunding platforms and social impact bonds. (Lehner, 2016)
Sustainable finance is an expansion of green finance. Green finance aims to increase the amount of investment in sustainable development projects in areas such as biodiversity and restoration. Banks that invest in these sustainable projects are known as green banks as they try to encourage projects like turning food waste into profit and any other, similar innovative business ideas that a company may have. Green finance can inspire people to undertake sustainable projects as they’ll receive sensibly priced capital. (Sachs et al, 2019)
Europe is currently leading the charge in using sustainable finance as European issuers account for 62% of the market share for the first quarter of 2021. France is currently out in front of all the European countries on this front but others, including Ireland, are now seeing the benefits of it and beginning to catch up. (Godsil, 2021)
As a result, sustainable finance is becoming ever more popular with restaurants and supermarkets.
Case Study 1 - Ahold Delhaize
BNP Paribas is a French international banking group and the second largest bank in Europe as a result of their net worth of €2,164.71 billion. (Business Insider, 2021)
BNP Paribas has emerged as the bookrunner for one of the world’s leading grocery retail groups, Ahold Delhaize. Ahold Delhaize recently issued its first sustainability-linked bond with their performance directly linked to the reduction of their food waste as well as lowering their carbon emissions.
Figure 2: Ahold Delhaize’s commitment to food waste reduction as shown in their Annual Report for 2020 (Ahold Delhaize, 2020)
According to the Sustainability-Linked Bond Principles (2020), a sustainability linked bond is a bond whereby the financial and structural characteristics of the bond can differ, depending on whether the issuer attains their ESG objective.
Ahold Delhaize has made these bonds, based on their performance of reducing their carbon emissions and food waste. Their two main goals, to meet these performance related targets, are to reduce food waste by 32% in 2025, compared to 2016 and to reduce their carbon emissions by 29%.
Recently, Tesco, a leading British Multinational retailer who has stores in several countries across Europe and is the market leader in the UK, Ireland and Hungary, has also issued Sustainability-Linked Bonds, on condition that they meet two sustainability targets. The first of those targets is to reduce their greenhouse gas emissions by 60% by 2025 with respect to their 2015/16 baseline. If that is achieved, they will aim to further reduce their greenhouse gas emissions by 85% by 2030, with respect to their 2015/16 baseline. (Tesco, 2021)
These projects will hopefully encourage similarly, large supermarkets to invest in sustainability linked bonds, once they see that they are profitable, reduce food waste as well as improving the consumer’s view on the business. One of the best ways of encouraging business’s to cut down on their food waste and reduce their carbon footprint is by showing them that you can turn waste into profit. Sustainable finance is the future of financing and it is expected to become increasingly popular in the coming years, in line with the action being taken by the global population in tackling climate change.
If you would like to learn more about sustainable finance, check out the video below!
Reference List
· Ahold Delhaize (2020). Annual Report 2020. The Netherlands: Ahold Delhaize. Available at: https://www.aholddelhaize.com/media/10540/ahold-delhaize-annual-report-2020.pdf [Accessed 13 October 2021].
· Amicarelli, V and Nux, C. (2020), ‘Food waste measurement toward a fair, healthy and environmental-friendly food system: a critical review’, British Food Journal. Vol. 123 (8): 2907-2935.
· Bakken, R (2021). What is Sustainable Finance and Why Is It Important?, Harvard Extension School, viewed 4 October 2021,< https://extension.harvard.edu/blog/what-is-sustainable-finance-and-why-is-it-important/ >
· BNP Paribas 2021, Sustainable finance applied to reducing food waste, BNP Paribas, viewed 4 October 2021,< https://group.bnpparibas/en/news/sustainable-finance-applied-reducing-food-waste >
· Business Insider 2021, Here are the top 50 biggest European banks in 2021, Business Insider, viewed 4 October 2021, < https://www.businessinsider.com/largest-banks- europe-list?r=US&IR=T >
· European Commission 2021, What is Sustainable Finance, European Commission, viewed 8 October 2021, < https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance/overview-sustainable-finance_en >
Godsil, J. 2021. Sustainable finance key to decarbonised economy. The Irish Times. 15 October, p.1.
· Lehner, O. (2016) Routledge Handbook Of Sustainable and Social Finance [Online], London: Routledge. Available at: https://www-taylorfrancis-com.queens.ezp1.qub.ac.uk/books/mono/10.4324/9781315772578/routledge-handbook-social-sustainable-finance-othmar-lehner [Accessed 6 October 2021]
· Sachs J.D., Woo W.T., Yoshino N., Taghizadeh-Hesary F. (2019) Importance of Green Finance for Achieving Sustainable Development Goals and Energy Security. In: Sachs J., Woo W., Yoshino N., Taghizadeh-Hesary F. (eds) Handbook of Green Finance. Sustainable Development. Springer, Singapore. https://doi.org/10.1007/978-981-13-0227-5_13 [Accessed 8 October 2021]
· Statista (2016), How much does food waste cost Britain each year?, Statista, viewed 12 October 2021, < https://www.statista.com/chart/4342/how-much-does-food-waste-cost-britain-each-year/ >
· Tesco (2021). Tesco Sustainability – Linked Bond Framework. UK: Tesco. Available at: https://www.tescoplc.com/media/756888/tesco-sustainability-linked-bond-framework.pdf [Accessed 4 October 2021].
· The International Capital Market Association (2020). The Sustainability Linked Bond Principles. Paris: The International Capital Market Association. Available at: https://www.icmagroup.org/assets/documents/Regulatory/Green-Bonds/June-2020/Sustainability-Linked-Bond-Principles-June-2020-171120.pdf [Accessed 4 October 2021].
· United Nations (2015), The SDGs In Action, United Nations, viewed 12 October 2021, < https://www.undp.org/sustainable-development-goals >
· United Nations (2021). UNEP Food Waste Index Report 2021. Nairobi: United Nations. Available at: https://www.unep.org/resources/report/unep-food-waste-index-report-2021 [Accessed 4 October 2021].
· Wrap (2001). Food surplus and waste in the UK – key facts. Banbury: Wrap. Available at: https://wrap.org.uk/sites/default/files/2020-11/Food-surplus-and-waste-in-the-UK-key-facts-Jan-2020.pdf[Accessed 4 October 2021].
Eye opening article David. It is fascinating to think that by just saving a quarter of the food that we waste, it would be feasible to feed everyone that is currently undernourished.
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