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IPCC on land use: What do the latest warnings mean for businesses?

The headlines have been filled today with stark warnings from scientists about the state of the world's land masses — how will this impact the business community?

If the world is to get a grip on the climate crisis, radical changes need to be made in the way land around the world is used. In a stark warning last week, the world's top climate scientists said human activity is causing significant damage to the world's land masses, and action must be taken to stop deforestation, curb soil erosion and halt the destruction of natural habitats in order to avert catastrophic global warming.

But although the report was compiled by an international team of top climate scientists, the paper is not an abstract scientific discussion. Its findings will have very real implications for political and business leaders around the world.

The IPCC is a very influential scientific body. Its landmark report on the implications of 1.5 degrees Celsius of warming dramatically shifted the global conversation on climate action, sparking a wave of pledges from companies and countries promising to follow a 1.5C-aligned pathway and reach net zero by mid-century. There is therefore reason to expect today's report into climate change and land use to have global ramifications.

Yet even if it doesn't achieve the political and media cut-through of last year's 1.5C report, the scientific predictions of how business-as-usual will affect our climate pose a very real threat to business. Temperatures over land surfaces have increased at almost twice the global average, while many events such as heatwaves and volatile weather are becoming more intense and frequent, the scientists found. Yet at the same time, the capacity of land to store carbon may be reduced in a warmer climate. Desertification, for example, is expanding, and these areas are far less effective at storing carbon than soil, while extreme weather events will make managing crop production increasingly difficult.

Even if it doesn't achieve political and media cut-through, the scientific predictions of how business-as-usual will affect our climate pose a very real threat to business.
As a result the world is at serious risk of getting caught in a downward spiral of declining crop yields, increased food and commodity prices, reduced nutrition and potentially major disruptions to supply chains, scientists warned. Put simply, businesses — particularly those operating in the global food system — will not be able to rely on existing supply chains, production sites or sources of water in the future. Climate impacts could even decimate the value of land, scientists warned, raising the specter of a further expansion of the carbon bubble to include land as a stranded asset risk.

"Food security will be increasingly affected by future climate change through yield declines — especially in the tropics — increased prices, reduced nutrient quality, and supply chain disruptions," warned Priyadarshi Shukla, a co-chair of the IPCC's working group for the report, during the press conference.

But this stark prediction is based on the "do-nothing" scenario, which assumes no real political or social response to the threats raised in the paper. Given the headline coverage the report has enjoyed this morning around the world, not to mention the growing number of governments and businesses setting net zero emission goals, it is to be hoped more ambitious policy interventions will materialize in the coming years.

So what could be done to ensure the world's land works to help prevent global warming, rather than exacerbate it? And how will those actions affect businesses?

So what could be done to ensure the world's land works to help prevent global warming, rather than exacerbate it? And how will those actions affect businesses?
First and foremost, there are some clear implications for the food sector. Emissions from the food system as a whole, including production and consumption, represent up to 37 percent of total global human-induced greenhouse gas emissions, the IPCC found. Therefore reducing emissions from food is one of the major starting points for limiting environmental harm on land.

A key point from the IPCC report was the extent to which better management of food production can improve the land's ability to sequester carbon, prevent soil erosion and limit desertification, while also protect surrounding areas from floods and drought risks.

There is much farmers can do to improve land management, according to Debra Reports, another co-chair of the IPCC working group. During a press conference she emphasized that a number of measures would both improve the ability of the land to mitigate climate change and help combat inequalities, hunger and poverty, from "no till" crop production to agroforestry. Businesses further up the supply chain must be prepared to support their producers with training and funding to implement these measures.

But there is another piece to the sustainable farming puzzle. The consumption of meat has more than doubled in the past 60 years as land has been converted to agricultural use at an unprecedented rate in human history. At the same time, there is massive inequality in the global food system; billion adults are obese, while 821 million people are still undernourished.

Although the IPCC scientists stressed their role was not to advocate for shifts in diets, the report's conclusions made clear the environmental benefits of shifting food production away from meat and dairy and encouraging citizens to eat a plant-based diet.

The report suggests that "balanced diets, featuring plant-based foods" present "major opportunities" for adaptation and mitigation of climate change, as well as being of benefit to human health. It is not a new finding — earlier this year an international commission of scientists developed a "planetary health" diet they said would improve public health and help avert a climate emergency — but it is yet more eye-catching evidence diets need to change.

Consumer demand for more environmentally friendly dietary options also might be backed by government intervention.
As a result the food industry's nascent focus on plant-based innovation looks set to intensify. It is already clear how this is playing out in the United Kingdom, with interest in veganism soaring and analysts predicting the market for plant-based foods is set to grow to $140 billion globally within the next 10 years, a tenfold increase. It is a trend that presents a major market opportunity for food brands, as CDP pointed out in a February report on green consumer trends.

Consumer demand for more environmentally friendly dietary options also might be backed by government intervention — German lawmakers proposed raising the country's sales tax on meat to help protect the climate. Indeed, investor network FAIRR warns companies not preparing for a rise in plant-based eating are flirting with financial risk

But although emissions from plant-based meat and dairy alternatives are lower, firms must be aware that a plant-based supply chain does not necessarily minimize adaptation risks. Plant-based dairy may be far less emissions-intensive than milk, but almond production is often grown in water-stressed regions, while soy production in Brazil is often associated with deforestation.

Supply chain management therefore will be a crucial skill for corporates to master, both within the food system and beyond. Firms will be under more pressure to ensure commodities, including common raw materials such as timber, rubber and palm oil, are not inadvertently fuelling deforestation or land degradation. In the context of meat consumption, soy — widely used as animal feed — is a key commodity the responsible brands should ensure they are sourcing sustainably.

The reputational risks for companies discovered to be profiting from the misuse of land could be severe, particularly as public awareness of the climate emergency grows.

The reputational risks for companies discovered to be profiting from the misuse of land could be severe, particularly as public awareness of the climate emergency grows.
Companies alive to this risk were quick to defend their sourcing policies in light of the report's findings. Will Gardiner, Drax Group CEO, said his firm sources its biomass from sustainable forests. "Our approach is aligned with the IPCC's view about the importance of sourcing biomass sustainably, from well-managed forests," he insisted.

But in the future firms not immediately in the firing line over their raw material sourcing will need to be up to speed on where their goods come from. Much improved supply chain traceability and a closer relationship with upstream suppliers will become essential, experts say. 

"I think companies are increasingly being aware that they have to work much deeper into their supply chain," Morgan Gillespy, global director of forests for CDP, told BusinessGreen. "The [corporate] leaders now are working all the way down to the farm now. And that's something I think companies really need to get their head around. That it's going to require consistent engagement, throughout the supply chain. You don't just get to stop at the processor or the trader anymore. You really have to work all the way through." 

Finally, throughout their press conference the IPCC's scientists repeatedly made clear that adaptation must go hand in hand with mitigation efforts. Cutting greenhouse gas emissions — whatever their source — will be essential for halting the climate breakdown engulfing the world's land masses.

Cutting greenhouse gas emissions — whatever their source — will be essentially for halting the climate breakdown engulfing the world's land masses.
That means all companies have a crucial role to play, regardless whether they work directly with the land, in reducing emission and averting chaos in the world's food and water systems. However, the scientists warned that some emissions response strategies actually may exacerbate land management challenges, such as increasing desertification land degradation and food security issues.

For example, the report reiterates long standing warnings that converting millions of square kilometers of land for growing bioenergy crops could increase risks of desertification, land degradation and food security, undermining sustainable development and emission reduction efforts in the process. Therefore the decarbonization strategy that companies pursue, such as considering where their energy comes from and what their fleets are powered with, could have serious knock-on impacts on land health. The risk posed by mass biofuel production is particularly pertinent to aviation and freight firms. 

Human activity is already wreaking devastating havoc on the world's land masses. The global economy is responsible for the rampant greenhouse gas emissions fuelling significant changes in temperature and weather patterns the world over. But this problem is compounded by the way businesses and governments use land to grow food and harvest natural resources — we are cutting down too many trees, rearing too many cows, sheep and pigs for slaughter, farming with too many pesticides, and with too little care for how much water we use.

The solution to this complex conundrum is not straightforward, but experts know what actions are needed. A shift to plant-based diets would free up land for afforestation and ease the pressure on developing nations to chop down their forests. Rewarding food producers for putting environmental services at the center of their operations would encourage more sensitive land management. Improving traceability in supply chains would make it much easier for companies to spot when raw materials are coming from unsustainable sources. These might seem difficult measures to deliver, but they are attainable and necessary.

Do nothing and the world is locked into a high-carbon future where water is scarce, food prices are volatile, and pressure on global order and security intensifies as a result. Take action and millions of people could live happier, healthier lives on a more sustainable planet, creating huge commercial opportunities in the process. For businesses, it should be clear which path makes the most ethical — and financial — sense.  

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