Food & Climate
The Climate Bonds Initiative has established a technical working group to create robust criteria that will allow it to expand to include alternative proteins, with the aim of stimulating investment and accelerating the transition in agri-food systems.
This aims to unlock investment opportunities and accelerate the agri-food transition towards more sustainable and innovative protein sources, according to a report seen by “Food & Climate”.
Climate Bonds Initiative is an international organisation working to mobilise global capital for climate action through the development of the Climate Bonds Standard and Certification Scheme, Policy Engagement and Market Intelligence work, according to its website.
The climate bonds standard is expanding to include the fast-growing sector of alternative proteins, marking also a crucial advancement in addressing the rising demand for sustainable food solutions in response to global population growth.
This development is a key step in transforming food systems for a more resilient future.
What are climate bonds?
Climate bonds are fixed-income financial instruments linked to climate change solutions. They are issued in order to raise finance for climate change solutions, for example mitigation or adaptation related projects.
These might be greenhouse gas emission reduction projects ranging from clean energy to energy efficiency, or climate change adaptation projects ranging from building Nile delta flood defenses to helping the Great Barrier Reef adapt to warming waters.
Like normal bonds, Climate Bonds can be issued by governments, multi-national banks or corporations. The issuing entity guarantees to repay the bond over a certain period of time, plus either a fixed or variable rate of return.
Most Climate Bonds are use-of-proceeds bonds, where the issuer promise to the investors that all the raised funds will only go to specified climate-related programs or assets, such as renewable energy plants or climate mitigation funding programs.
Some bond types are obviously use-of-proceeds bonds:
Project bonds – where the money is in a separate company or special purpose vehicle for a particular project.
Asset-backed securities – where the money is for a portfolio of cash flows that are securitised in one bond, such as a portfolio of loans to renewable energy projects.
Covered bonds – where the investor has dual recourse to the issuer balance sheet (typically a bank) and also a pool of assets that are high quality (usually mortgages too).
Livestock agriculture
Livestock agriculture is a major driver of global greenhouse gas emissions and biodiversity loss, contributing approximately 60% of emissions from the food system and 12-20% of all greenhouse gas emissions worldwide.
Despite their considerable environmental footprint, animal source foods provide only 17% of the world’s calories and 38% of its protein.
With projections indicating a 50% increase in global meat consumption by 2050, the urgency to address these impacts cannot be overstated.
Alternative proteins, encompassing plant-based options like beans and tofu, as well as innovative solutions such as cultivated meat, offer a viable pathway to significantly reduce the environmental footprint of our food systems.
Climate Bonds new criteria
The climate bonds’ group will establish essential production best practice standards and procurement guidelines for alternative protein producers, food retailers and other stakeholders. These guidelines will ensure alignment with a 1.5°C climate pathway (reduce tembrature), paving the way for access to credible green finance and fostering sustainable growth within the sector.
This expansion of the Climate Bonds Standard to include alternative proteins is a decisive step towards aligning the agri-food sector with global climate objectives, guiding investments towards sustainable practices, supporting the greening of the financial sector, and fostering a climate-resilient future.
The alternative proteins criteria will focus on two primary areas:
Substitution of Animal Source Foods: Promoting the production and consumption of lower-impact alternative proteins to replace high-impact animal source foods, with a particular emphasis on ruminant meats like beef, which have the highest carbon and land footprints.
Mitigation of alternative protein Impacts: Reducing emissions associated with alternative protein production by focusing on renewable energy use, low impact raw materials sourcing, and effective waste management.
These criteria will prioritise climate and land-use impact while also addressing other environmental concerns such as water pollution. By aligning with existing standards and recent policy developments, the criteria aim to drive substantial progress towards food supply chains that safeguard both climate and biodiversity.
The development of these criteria is supported by a distinguished Technical Working Group (TWG) and the Industrial Working Group (IWG), composed of experts from diverse fields. Each member contributes to their personal capacity, providing critical insights to ensure the criteria are robust and comprehensive.