It’s a waste to throw it out:
Circular Food Economy as an Investment Opportunity

Over 2 billion tons of food is expected to be lost or wasted by 20301. According to the World Food Program, this “lost” food would be sufficient to feed over 2 billion people - more than twice the number of undernourished people across the globe2. Today, the Food and Agriculture Organization (FAO) estimates that there are 828 million hungry people3, yet we produce enough food to feed 1.5x the global population4.

How is this possible?

Our inability to feed the entirety of the world’s population is mostly due to food waste. Globally, 30–40% of all food is wasted5, worth about 1.2 trillion USD per year.6

We can work to fix this by reducing the amount of waste from food production and consumption and turning it into a circular system – where valuable nutrients are recovered from waste and reinserted into the food value chain.

Reducing food waste – paying dividends in the long run

Reducing food waste has typically been described as a “triple win” – for the economy, for food security, and for the environment. But with respect to the wide-ranging implications of food waste for companies, we should consider adding a fourth “win” as investors can draw financial benefits from helping companies to curtail food spoilage, ultimately helping them to reduce costs and increasing production optimisation.

World Resources Institute (WRI) recently released a study showing that there is an overwhelming financial incentive to tackle food waste. In the 700 companies analysed, for every 1 USD invested in food-waste reduction, the median company realised a 14 USD return on investment.7

Policy tailwinds: Food waste moving up the political agenda

Globally, more and more governments are implementing mandatory food waste regulation around collection and disclosure.

For example, the UK government is implementing a compulsory food waste collection and disclosure – meaning that food will not be allowed to be set to landfill or incineration.

In the US, several states and municipalities have organic waste bans or mandatory organics recycling laws in place.

Already in 2016, France passed a law that obliges grocery stores to donate food that approaches sell-by date to charities and food banks instead of throwing it away.

These incoming or already existing regulations induce broad impacts for businesses may it be through taxes or additional capital expenditures. Companies that are prepared to meet these requirements are positioned to benefit in the long term.

Companies reimagining by-products

There has been a surge of innovation in food waste upcycling over the past 18 months. Some initiatives focus on the use of by-products to create new foods or functional ingredients or on the treatment of by-products of plant-based milk production such as soybean pulp, oat pulp and almond pulp, to make high fiber, gluten-free flours. Others look at the conversion of food waste into biodegradable and carbon neutral fabrics or into entirely new commodities such as converting animal fat into biofuel.

There are many ways we can make a difference. AllianzGI Food Security Fund invests in companies positioned to benefit from these regulatory tailwinds. We identify companies that offer solutions for more sustainable food production, investing all along the supply chain and aiming to reduce waste through supporting long-term solutions – such as upcycling. We are of the view that by upcycling these nutritious by-products, companies can lower their costs and improve the resiliency of their supply chains, both of which contribute to improved long-term returns profiles.

dog with veterinarian
Be a part of the solution

By identifying innovators in the field of sustainable food production, waste prevention and upcycling, we not only offer attractive angles for investors to participate in the growth opportunities along the how value chain of this future-oriented sector but also help to address pressing challenges related to food security and waste management.

  • Disclaimer
    Investing involves risk. The value of an investment and the income from it will fluctuate and investors may not get back the principal invested. Past performance is not indicative of future performance. This is a marketing communication. It is for informational purposes only. This document does not constitute investment advice or a recommendation to buy, sell or hold any security and shall not be deemed an offer to sell or a solicitation of an offer to buy any security. The views and opinions expressed herein, which are subject to change without notice, are those of the issuer or its affiliated companies at the time of publication. Certain data used are derived from various sources believed to be reliable, but the accuracy or completeness of the data is not guaranteed and no liability is assumed for any direct or consequential losses arising from their use. The duplication, publication, extraction or transmission of the contents, irrespective of the form, is not permitted. This material has not been reviewed by any regulatory authorities. In mainland China, it is for Qualified Domestic Institutional Investors scheme pursuant to applicable rules and regulations and is for information purpose only. This document does not constitute a public offer by virtue of Act Number 26.831 of the Argentine Republic and General Resolution No. 622/2013 of the NSC. This communication’s sole purpose is to inform and does not under any circumstance constitute promotion or publicity of Allianz Global Investors products and/or services in Colombia or to Colombian residents pursuant to part 4 of Decree 2555 of 2010. This communication does not in any way aim to directly or indirectly initiate the purchase of a product or the provision of a service offered by Allianz Global Investors. Via reception of his document, each resident in Colombia acknowledges and accepts to have contacted Allianz Global Investors via their own initiative and that the communication under no circumstances does not arise from any promotional or marketing activities carried out by Allianz Global Investors. Colombian residents accept that accessing any type of social network page of Allianz Global Investors is done under their own responsibility and initiative and are aware that they may access specific information on the products and services of Allianz Global Investors. This communication is strictly private and confidential and may not be reproduced. This communication does not constitute a public offer of securities in Colombia pursuant to the public offer regulation set forth in Decree 2555 of 2010. This communication and the information provided herein should not be considered a solicitation or an offer by Allianz Global Investors or its affiliates to provide any financial products in Brazil, Panama, Peru, and Uruguay. In Australia, this material is presented by Allianz Global Investors Asia Pacific Limited (“AllianzGI AP”) and is intended for the use of investment consultants and other institutional/professional investors only, and is not directed to the public or individual retail investors. AllianzGI AP is not licensed to provide financial services to retail clients in Australia. AllianzGI AP is exempt from the requirement to hold an Australian Foreign Financial Service License under the Corporations Act 2001 (Cth) pursuant to ASIC Class Order (CO 03/1103) with respect to the provision of financial services to wholesale clients only. AllianzGI AP is licensed and regulated by Hong Kong Securities and Futures Commission under Hong Kong laws, which differ from Australian laws. This document is being distributed by the following Allianz Global Investors companies: Allianz Global Investors GmbH, an investment company in Germany, authorized by the German Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin); Allianz Global Investors (Schweiz) AG; in HK, by Allianz Global Investors Asia Pacific Ltd., licensed by the Hong Kong Securities and Futures Commission; ; in Singapore, by Allianz Global Investors Singapore Ltd., regulated by the Monetary Authority of Singapore [Company Registration No. 199907169Z]; in Japan, by Allianz Global Investors Japan Co., Ltd., registered in Japan as a Financial Instruments Business Operator [Registered No. The Director of Kanto Local Finance Bureau (Financial Instruments Business Operator), No. 424], Member of Japan Investment Advisers Association, the Investment Trust Association, Japan and Type II Financial Instruments Firms Association; in Taiwan, by Allianz Global Investors Taiwan Ltd., licensed by Financial Supervisory Commission in Taiwan; and in Indonesia, by PT. Allianz Global Investors Asset Management Indonesia licensed by Indonesia Financial Services Authority (OJK).

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