Systemic approach to switching on the green economy needed
Francesco Melara and Tim Jenkins
The recent IPCC report on climate change paints a stark picture for the future of our planet and species. Without immediate action we will continue to see natural disasters – droughts, flooding, severe weather events, the loss of habitats, and so much more.
For far too long, the onus to address climate change and pollution has been put on the backs of ordinary people. We’ve been asked to do everything from recycling to reducing our individual carbon footprints – all while private corporations across the globe have recklessly over-extended the natural environment.
We should no longer stand idly by and wait for action – we must demand it. If corporations won’t change voluntarily, then governments across Asia and the entire world must make them.
Here in the Asia-Pacific region, we are one of the main contributors to greenhouse gas emissions, producing 16.75 billion metric tons of carbon-dioxide emissions in 2020. Between 1960 and 2018, CO2 emissions increased from 1 metric ton per capita to 6.3. This steady increase is in alignment with the patterns of industrial advancement across the globe.
Food systems are among the main contributors to global warming, creating more than a third of total anthropogenic greenhouse gas emissions worldwide. Other research suggests that farm-to-fork life cycles alone, which include agricultural production, processing, packaging and distribution as well as consumption, account for 30% of the overall global energy consumption.
Given these facts, the food and beverage (F&B) industry and wider food systems are an important entry-point to reduce greenhouse gas emissions considerably.
In preparation for the development of the Switching on the Green Economy Project for the European Union’s Switch Asia Facility in Mongolia, we conducted, along with our NGO partners at Development Solutions, the Mongolian Sustainable Finance Association, and Caritas Czech Republic, an assessment to understand better the potential of making the Mongolian food and beverage industry, from farm to fork, more sustainable and greener.
A large-scale survey was conducted with retailers and micro, small, and medium enterprises (MSMEs) that are active economic agents in the sector.
We found on the supply side that 96% of MSMEs in the F&B industry are willing to invest in introducing circular economy practices and produce greener products. On the demand side, almost 80% of young consumers reported that they are willing to pay a premium price for greener products.
What does all this mean? In short, both consumers and small business owners want sustainability integrated into supply chains. And they’re willing to pay for it.
Despite the willingness to build a greener F&B industry, private investments in transitioning toward greener production are scarce.
A wide range of bottlenecks, preventing the uptake of circular economy practices in the food and beverage industry, were identified. Lack of technical know-how and capacities of stakeholders to introduce green and circular economy practices among MSMEs hinder their willingness to make this typology of investments.
The latter issue is exacerbated by the lack of financing mechanisms to make sustainable investments as well as a lack of supportive engagement from relevant business associations.
Another major impediment identified consisted of the limited availability of institutional and private-sector-led mechanisms to trigger the incentives of producers as well as consumers to produce and purchase greener products.
What we need are incentive-triggering interventions for food and beverage producers. Imagine establishing eco-labels for MSMEs and retailers to drive both consumers and business to be greener.
At the policy level, governments could begin the adoption of and transition to a circular economy – offering additional incentives to households and businesses that make the switch. In the banking sector, we could create new and enticing green financing models.
In Mongolia with our partners, we’re hoping to raise financing with the aim of boosting demand and uptake of eco-labeled products among retailers, as well as end-consumers, by leveraging the use of existing digital payment and loyalty platforms. By piloting initiatives like this in Mongolia, we can quickly develop and test these models to be scaled across Asia and beyond.
What became evident throughout the process is that supporting the transition toward greener business practices and building a mindset oriented toward a circular economy requires a robust systemic approach.
The complexity of the issue, which is exacerbated by stakeholders’ lack of technical know-how in green practices as well as limited incentives and weak regulatory frameworks, cannot be untangled and solved sustainably through stand-alone interventions.
Rather, a concerted effort involving a wide range of stakeholders from government to civil-society organizations is needed to enable a paradigmatic shift in both production and consumption practices.
In addition to this, we must acknowledge that large private corporations in the F&B industry have a much larger impact on the environment than MSMEs. At the same time, they are also in the position to set green standards in the industry and encourage the uptake of green practices both vertically and horizontally in their respective value chains.
Nevertheless, without a radical shift in the strategies of production and distribution among these actors, either pushed by more stringent regulation or end-consumers’ request, abating greenhouse gas emissions is practically impossible.