The global food system generates enormous value but causes trillions in negative externalities.
- Institutional investors have a critical role in driving change through capital reallocation, active engagement with companies, voting and supporting policy reforms
- The 2025 EAT-Lancet Commission provides a definitive scientific framework for investor action, highlighting the importance of systemic change underpinned by extensive public policy reforms.
By Rachel Crossley, Head of Stewardship, Europe and Robert-Alexandre Poujade, Biodiversity Lead
The global food system is a complex and vital component of the world’s economy, generating approximately US$10 trillion in value annually.
In 2025, the EAT-Lancet Commission – comprising the world’s pre-eminent academic researchers in their fields – published a comprehensive scientific assessment outlining both the enormous impacts of the current food system and the changes necessary to create a sustainable, healthy, and equitable system capable of nourishing a projected global population of 10 billion by 2050.
The negative externalities caused by the current food system are estimated to be $15 trillion per year. The externalities include huge greenhouse gas emissions, nitrogen and other forms of chemical pollution, water stress and land use changes, and the proliferation of diet-related diseases and undernutrition. These pressures have resulted in five out of the nine planetary boundaries being breached– critical thresholds that regulate Earth’s resilience – highlighting the urgent need for systemic transformation.
Social inequalities further compound the crisis, and the current structure of the food system contributes to them. Disparities in access to healthy diets, resources, and decision-making power perpetuate injustice and undermine efforts to achieve sustainable development goals. Addressing these inequalities requires ensuring fair wages, collective bargaining, transparency, and regulatory reforms that promote social protection and equitable resource distribution.
The Commission’s findings provide a vital blueprint for action by policymakers, businesses and their investors to reverse environmental degradation and promoting healthier diets.
The food system’s impact and investment opportunity
While the investment needed to achieve a healthy, sustainable and just food systems is substantial – between $200 billion and $500 billion a year, according to the Food System Economics Commission – the return to society as a whole is estimated to be more than $5 trillion a year.1
Governments and international financial institutions are expected to provide much of this funding but institutional investors also have a critical role to play. Not only can they reorient capital flows, they can also influence corporate behaviour through active engagement with them, how they vote at annual general meetings, and by actively supporting policy reforms aligned with the Commission’s recommendations.
Central to the EAT-Lancet Commission’s vision is the Planetary Health Diet, a plant-rich dietary pattern designed to improve health and reduce environmental pressures. The diet emphasises whole grains, vegetables, fruits, legumes and nuts, with a low intake of red meat, sugar and saturated fats. Its adoption could prevent up to 15 million premature deaths annually and significantly lower greenhouse gas emissions, land use, and biodiversity loss, the Commission says.
However, global diets today are vastly out of alignment with these recommendations. Consumption of red meat, starchy foods and eggs greatly exceeds healthy boundaries, albeit with regional variations.
The challenge lies in transforming food production and consumption patterns at scale. For example, some sectors would need to contract – the Commission suggests a 33% reduction in ruminant meat production is required, which in value terms represents a contraction of revenues of $650 billion across the global terrestrial livestock sector by 2050. This would need to be accompanied by an increase in production of other foods, e.g., a 63% increase in fruit, vegetable, and nut production and an increase in sustainable fish and seafood production to 220 million tonnes per year (a 46% increase) from 2020 levels.
Implications for food companies and investors
The current operating models of food companies contribute significantly to the substantial environmental impacts and social inequality outlined, which in turn creates for them supply chain and operational vulnerabilities, regulatory risks, and potential brand and reputational damage. If companies do not make rapid and substantial changes to how they and the system operate, the externalities will escalate and the risks they face will intensify, threatening their ability to deliver shareholder returns.
It is therefore in investors’ interests to assess how the food companies in their portfolios contribute to these environmental and social impacts and evaluate their consequent exposure to the sector’s risks, particularly in sectors like animal agriculture and commodities linked to deforestation. Investors can also engage with food companies – either directly or through the many collaborative engagement initiatives that exist – to urge them to align their product offering to the recommendations of the Planetary Health diet and adopt genuinely sustainable agricultural production practices. Other strategies can also include voting against relevant items at the annual meetings of food company’s and advocating for government policy reforms that facilitate the transition towards sustainable food systems.
The path forward
The findings of the 2025 EAT-Lancet Commission underscore the urgency and necessity of systemic change. Achieving healthy, sustainable and just food systems requires coordinated efforts across sectors, incorporating scientific insights, policy reforms, corporate responsibility and investor stewardship.
The transformation requires institutional investors and other financiers to play a pivotal role in driving this transition, alongside other stakeholders. The transformation will entail making significant shifts to what, how, and where food is produced, and require substantial sums, but the long-term financial and economic returns, and benefits for planetary health and human wellbeing are profound.
By aligning their investment and stewardship strategies with the Commission’s recommendations, i.e., engaging with companies, supporting policy reforms, and integrating sustainability into their research and decision-making, institutional investors can help rebuild a food system that ultimately helps secure a healthier future for all.
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