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

==== 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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