Editing IPCC:AR6/SRCCL/Chapter-5 (section)

=== 5.7.2 Enablers for changing markets and trade ===

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‘Demand’ for food is not an exogenous variable to the food system but is shaped crucially by its ability to produce, market, and supply food of different types and prices. These market dynamics can be influenced by a variety of factors beyond consumer preferences (e.g., corporate power and marketing, transparency, the food environment more generally), and the ability to reshape the market can also depend on its internal resilience and/or external shocks (Challinor et al. 2018 <sup>[[#fn:r1264|1264]]</sup> ; Oliver et al. 2018 <sup>[[#fn:r1265|1265]]</sup> ).

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==== 5.7.2.1 Capital markets ====

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Two areas are often discussed regarding the role of capital markets in shaping the food system. First, investment in disruptive technologies might stimulate climate-smart food systems (WEF/ McKinsey &amp; Company 2018 <sup>[[#fn:r1266|1266]]</sup> and Bailey and Wellesley 2017 <sup>[[#fn:r1267|1267]]</sup> ), including alternative proteins, such as laboratory or ‘clean meat’ (which has significant ability to impact on land-use requirements) (Alexander et al. 2017 <sup>[[#fn:r1268|1268]]</sup> ) (Section 5.5.1.6). An innovation environment through which disruptive technology can emerge typically requires the support of public policy, whether in directly financing small and emerging enterprises, or funding research and development via reducing tax burdens.

Second, widespread adoption of (and perhaps underpinned by regulation for) natural capital accounting as well as financial accounting are needed. Investors can then be aware of the risk exposure of institutions, which can undermine sustainability through externalising costs onto the environment. The prime example of this in the realm of climate change is the Carbon Disclosure Project, with around 2500 companies voluntarily disclosing their carbon footprint, representing nearly 60% of the world’s market capital (CDP 2018 <sup>[[#fn:r1269|1269]]</sup> ).

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==== 5.7.2.2 Insurance and re-insurance ====

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The insurance industry can incentivise actors’ behaviour towards greater climate mitigation or adaptation, including building resilience. For example, Lloyd’s of London analysed the implications of extreme weather for the insurance market, and conclude that the insurance industry needs to examine their exposure to risks through the food supply chain and develop innovative risk-sharing products that can make an important contribution to resilience of the global food system (Lloyd’s 2015 <sup>[[#fn:r1270|1270]]</sup> ).

Many of these potential areas for enabling healthy and sustainable food systems are also knowledge gaps, in that, whilst the levers are widely known, their efficacy and the ability to scale-up, in any given context, are poorly understood.

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