The world is at a critical juncture. Climate change, water scarcity, and poverty are just some of the global challenges we’ve seen through the lens of the know your nuts series. Realising that only great leaps in human ingenuity and collaboration will spur action, we have been asking leading thinkers as part of our 25th anniversary blog series to transcend boundaries (the meaning of Olam) and tackle the thorny issues facing global supply chains.
Jason Clay at WWF sets the scene in his look at 21st century commodity trading:
“Planetary limits are one boundary that we cannot afford to transcend.”
We live on a finite planet. Today, 7.3 billion people are consuming about 1.5 times what the Earth can produce. Not only is there increasing uncertainty about where all the raw materials will come from, but climate change complicates matters further.
The challenge for traders sitting rather anonymously in the middle of global supply chains is the $100bn question: how can they create a virtuous cycle where growing demand for sustainably produced goods —about $100bn annually—can be used to leverage investments into ever more sustainable production systems? In this context, sustainability is a pre-competitive issue.
“Half my profits last year came from the generosity of nature, and the only solution is a tax on natural capital” - Sunny Verghese, Olam CEO
Until Mother Nature sets up a back office with an invoice system, natural resources will be used indiscriminately, and putting a price on carbon and the like is the only answer, argues Verghese.
Martin Roberts, director of the Natural Capital Leaders Platform at CISL brings it home when he says “for each of the last 25 years we’ve lost an area of arable land the size of Scotland from soil erosion, waterlogging and salination and abandoned twice that due to soil degradation. Companies must extend their sphere of influence and engagement … beyond their direct operations to their supply chains and in particular the growing stage, where research has shown most of the impact on natural capital occurs.” However, this is no mean feat when you consider that Olam alone works with 3.9m smallholders around the world – a few of whom you can meet in our photo gallery of the cashew supply chain.
“The global food system is a strange and twisted thing” - Paul McMahon, author of Feeding Frenzy and CEO of SLM Partners
This is not a simple story of supply and demand. Consider that one in eight people go hungry while one in five is overweight, and US consumers waste the equivalent of all the food produced in Sub-Saharan Africa every year. Trade policies and open markets have their part to play in correcting this imbalance, but McMahon argues that policy environments supporting self-sufficiency may in fact be the answer.
“The stakes are high because food security relies on inter-connected markets and is closely linked to political risk” - Alejandro Litovsky, Earth Security Group
With global consumption of freshwater tripling over the last 50 years and global energy consumption expected to grow up to 80% by 2050, Alejandro reminds us that disruptions in markets can quickly develop into crises that are “inter-connected beyond national boundaries; global in scope but needing to be managed in local political contexts”.
“You can’t talk about reducing poverty in this world without talking about agriculture” - Simon Winter, TechnoServe SVP
Over half the global population relies on farming for their income, including 75% of rural poor; there is a unique connection between advances in agriculture and inclusive economic growth. As Teo Eng Cheong of IE Singapore says “a global company needs to be aware of local issues, communicate its intent clearly to the right parties and carry out whatever it does in a mutually beneficial manner”.
Helping farmers maximise their productivity, capacity and incomes can have a transformative effect on rural communities, while sometimes the greatest innovations in food security are born out of this adversity. And if anyone doubts the wider business benefits of sustainable agriculture, Christopher Ang of the Singapore Compact highlights that this “will also ultimately contribute to more equitable economic development … which can bring about stability and a more conducive business environment”.
The scale and inter-dependency of these challenges means there is a real risk they will be deemed “too hard”. Another big risk is that differently motivated groups will pick off ‘pet’ issues in isolation.
“We need a new way of working”, posits Mike Barry, director of Sustainable Business at M&S, “One that links markets (developed and developing); producers (big and small); policy makers, civil society and campaigners”, because we stand the best chance of making headway towards a sustainable future if we work together in a joined up way. Just as the problems and their consequences are interconnected, so will be the solutions. This is a call to others – to you - to share your perspectives. Please tweet us your thoughts @Olam.
Find out more
- Look out for upcoming contributions on Olam’s website from investor Jim Rogers, the Gates Foundation and more.
- In order to recognise truly innovative work in improving the availability, affordability, adequacy and accessibility of food, last year Olam launched the $50,000 Olam Prize for Innovation in Food Security. Find out more here.
Content on this page is paid for and provided by Olam International, sponsor of the know your nuts series
