To keep animal protein in the global diet, sustainable investment has a role to play

This article is brought to you by the Food Systems, Land Use and Restoration (FOLUR) Impact Program.

Reducing greenhouse gas emissions while ensuring that the growing global population has access to adequate nutrition is a dual challenge. For the International Finance Corporation (IFC), which is part of the World Bank Group, one intervention is to help foster sustainable investment into transforming how we produce and consume protein, as was discussed at last month’s UN Climate Change Conference (COP27) in Sharm El-Sheikh, Egypt.

“We all know that global demand for protein isn’t going away,” said Esra Diker-Yilmaz, IFC’s global lead for Sustainable Protein Investments, at the session. “Populations are growing, and income in developing countries is also growing.”

However, she added, “the livestock sector has a large climate footprint, and that’s why we are trying to minimize that footprint and help our clients in the private sector make the right decisions. The only way to reduce global emissions and still have enough food to go around is by investing in sustainable solutions that intensify production in developing countries.”

IFC has recently published its Practices for Sustainable Investment in Private Sector Livestock Operations, which communicates its approach to investing in the sector and lays out seven fundamental practices that guide its investment approach in livestock and aquaculture projects. The practices state that companies must:

1. Implement robust animal health management and biosecurity protocols
2. Implement prudent and responsible use of veterinary antimicrobials and medicines
3. Implement animal welfare management systems codified by credible standards
4. Promote decarbonization pathways and enhance the climate resilience of operations
5. Prevent the loss of biodiversity
6. Provide safe food
7. Respect relevant national laws and regulations.

These methods will not only decrease the intensity of livestock farming’s greenhouse gas emissions and stop deforestation in a company’s supply chains, but at the same time increase productivity and efficiency. “Doing so,” the document states, can help producers “take advantage of market opportunities by becoming the producer of choice for consumers and retailers concerned about animal health and welfare, food safety, and the environment.”

The Practices document “shows how we assure sustainability in our livestock investments and work with clients to take them along this journey,” said Diker-Yilmaz. “So when clients upgrade existing animal protein production and processing facilities, or invest in new ones, there are lots of opportunities for climate mitigation.”

“If we are going to feed the world, we need to produce more with less,” echoed Ivan Ivanov, IFC’s global lead for Sustainable Protein Advisory Services, in an interview after the session, explaining how the platform he manages within IFC works with client companies in the meat and milk sectors to ensure that nutritious and high-quality foods are made available on local markets. “We will never be able to address hidden hunger and micronutrient deficiencies if we don’t sustainably intensify local production.”

“When we work with clients, we aim to increase productivity and efficiency at the client level and within their supply chain with farmer suppliers,” he said, “so that food is produced at the lowest cost possible to ensure meat and milk products become affordable and readily available to local consumers.” In Uganda, for example, IFC has trained the smallholders who supply milk to the company Pearl Dairy on how to produce better-quality milk in higher quantities, which ultimately increases the nutrition of consumers, he said.

Five multilateral development banks already comply with or have adopted the IFC’s Practices. These include the European Bank of Reconstruction and Development (EBRD), British International Investment (BII), the Dutch Development Bank (FMO), the Asian Development Bank (ADB) and IDB Invest, which is part of the Inter-American Development Bank (IDB).

Representatives from both the ADB and IBD Invest participated in the session, describing how those institutions are engaging with IFC’s Practices in the two developing world regions in which they work.

According to Guillermo Foscarini, head of the Agribusiness Unit at IDB Invest, since 2016 its investment in the private sector in Latin American and the Caribbean has grown to USD 7 billion annually and will continue to increase. Livestock production in the region accounts for almost one-third of global beef and chicken exports, and for between 20 to 30 percent of local employment in agriculture.

“We have a new set of tools that clarify our engagement in the sector,” said Foscarini, “so we scrutinize a company very carefully in a number of areas,” including the seven outlined in the IFC Practices document. “Starting next year,” he added, “100 percent of our projects have to be aligned with the Paris Agreement… These practices will allow us to work with our clients proactively and reduce their climate impact.”

Martin Lemoine, head of the Agribusiness Investment Unit at the ADB and based in Singapore, pointed out the importance of livestock for both food security and livelihoods throughout Asia, where 400 million smallholders are struggling to adapt to climate change. As such, the ADB has committed to spend USD 3.5 billion on food security annually and USD 10 billion on climate, and “the idea is to have the two overlap as much as possible,” said Lemoine, with ADB investments already following many of the IFC practices.

In terms of biosecurity, he pointed to a USD 40 million loan to New Hope Liuhe, a leading integrated animal protein producer in China, to help them deal with African Swine Fever.  Also in China, ADB is working with Tianzow, a company that operates 47 pig farms in 16 provinces across China. “We put together a road map for them to improve animal welfare best practices as well as biosecurity,” he said.

Regarding the responsible use of antibiotics, ADB signed an agreement last December for a USD 10 million investment in Zenex Animal Health India Private Limited to increase that company’s production and distribution of animal healthcare products that help improve farmer incomes by mitigating livestock disease risk.

“Combined with that, we provided technical assistance to small farmers in India, Nepal, Bangladesh, and Sri Lanka, specifically on the appropriate use of antibiotics,” he added, “in order to prevent antimicrobial resistance. India and South Asia are the hotspots for antimicrobial risk and the emergence of zoonotic disease.”

In terms of reducing the sector’s impact on climate change, IFC’s advisory team identifies technically feasible and economically viable solutions, said Ivanov. “We work hand-in-hand with our clients to decrease their greenhouse gas emissions. For example, we’re working with a beef sector client in Zambia to establish emissions baselines and build internal capacity to assess and identify decarbonization opportunities, such as converting dry cow manure into biochar.”

 “We are in the business of feeding people,” said Diker-Yilmaz, pointing out the research that shows that 2 billion people globally  are not eating the right kinds of food, and also how a lack of meat and dairy protein can cause stunting in children and lower academic performance. “No one talks about hidden hunger, and this is a sector that feeds the world.”