The Research Lab
The Research Lab
The food system is the largest and most complex human-created system, and transforming it is no easy task. To succeed, we need aligned interventions from farmers, policymakers, consumers, entrepreneurs, and investors. That’s why science-based strategies are needed to determine when the timing is right for investments that can make significant changes at the systems level. The Research Lab explains the science behind our theory of transformation and how we’ve applied it in our daily investment work. We hope this can inspire targeted, science-based investing in the food and agriculture industry and other industries too.
After you’ve reviewed the building blocks, read about Re:food’s Investment Approach to learn how they are used daily in our sourcing, investing, and holding work.
The first building block of our theory of transformation is the Planetary Boundaries, developed by Johan Rockström and a team of scientists at the Stockholm Resilience Center. These scientists first identified the natural systems that regulate our planet and provide the right conditions to sustain human life, such as clean air, flowing water, stable ocean levels, predictable seasons, stable weather, healthy oceans, and radiation protection. They then calculated planetary boundaries, the quantified limits by which humans can alter these natural systems before reaching a tipping point of potentially irreversible environmental changes.
Unlike other industries serving specific demographics, everyone human and all our livestock are part of the food system - as a producer, supply chain participant, or consumer. Today, all stakeholders in this system are not treated equitably. Access to food is greatly divided, with millions of people starving each year in some parts of the world while other nations face staggering obesity rates. Smallholder farmers produce most of the world’s food while only receiving a fraction of the profits. Animals are raised and slaughtered in inhumane conditions.
The emerging food system transformation will unlock previously incomprehensible benefits to society and our planet. However, if not designed with an ethical framework in mind, this transformation could benefit a few at the expense of many others.
A truly sustainable food system does not just operate within the planetary boundaries. It also provides equal access to food, job opportunities, and innovation while ensuring that farm animals, at a minimum, live free of pain and fear. Our second building block incorporates the societal impact of transforming the food system by adding a social foundation alongside the planetary boundaries. This building block draws inspiration from Kate Raworth’s “Doughnut Economics” and the UN’s Sustainable Development Goals.
We’ve combined the planetary boundaries and the ethical foundation into a framework we call the Re:food Circle, which defines a sustainable and resilient food system.
When assessing a potential segment or investment, we first consider the magnitude of the potential positive impact on the components of the Re:food circle. We then map out the potential unintended negative consequences the innovation might have at scale from a planetary and social point of view. After investing, we monitor each portfolio company's impact on the Re:food circle and publish it in our annual impact report.
In 2019, The EAT-Lancet Commission published a report called “Food in the Anthropocene”, concluding that while the food system is the largest contributor to added planetary pressure, it also presents the largest opportunity to bring us back into a safe operating space. It introduces modified planetary boundaries specific to the food system, along with the most powerful shifts to reverse planetary pressure on these by 2050.
It’s easy to get overwhelmed with all the problems that need fixing across the food system, which is why applying science-based targets helps us prioritize what to invest in and why. Given the urgency and transformational potential of the EAT-Lancet shifts, we believe we must dedicate our full attention to investing in leverage points to propel them forward. Inspired by these shifts, we’ve defined four investment themes.
Systems thinking is an approach used to understand the interactions of different parts in a system and how a change in one part may impact the system as a whole. It explores concepts such as feedback loops and interdependencies that shape behavior and outcomes. We use the tools of systems thinking to understand the interactions of different parts of the food system and the systems that it interacts with, and how a change in one could impact the planetary and social systems as a whole.
For example, the food system is deeply intertwined with the climate system, depending on it for clean air, water, sunlight, and temperature control. In turn, the food we consume directly impacts our body's systems, in ways scientists have yet to uncover. Humans’ and animals' food ultimately re-enters the climate system after passing through our digestive systems. At the same time, food production is dependent on the energy system, where the environmental footprint of new technologies directly relates to access to renewable energy sources. The political system and, by extension, the financial system also hold tremendous power over what gets produced and where it goes. In short, the food system does not exist in isolation, but interacts with complex economic, political, ecological, infrastructural, health, and biological systems.
Reforming a major system requires mapping out short, medium, and long-term waves of change and understanding how these interact. McKinsey has developed a useful framework called “The Three Horizons,” describing waves of change where a dominant way of doing business ultimately gets replaced by another better way of working. We’ve applied a modified version of this framework to assess the impact of different innovations, which we classify as incremental, significant, or transformative. The way we see it, not all impact is the same, and we won’t be able to transform the food system into a sustainable state through incremental improvements alone. In fact, investing in solutions that only alleviate symptoms without addressing the underlying problems can hinder transformative change.
Horizon 1 describes how the global food system operates today, despite showing signs of being unsustainable in the long run (i.e. failing to provide an ethical foundation for everyone while violating planetary boundaries). Common practices are often "locked-in" due to regulations, policies, and vast amounts of capital tied up in machinery and industrialized production practices. Even though we've understood that today's way of working is bad and follows a harmful trajectory, it's difficult to change its overall direction due to this inertia.
In contrast, innovations that have the potential to guide us toward a new path are known as stepping-stone innovations. These encompass novel products, business model innovation, building future capabilities, and technological advancements that address critical problems and initiate transformative change but don’t directly resolve a root cause.
Horizon 3 innovations, also known as transformational innovations, represent a new potential future. These innovations introduce new markets, industries, and paradigms that could eliminate today’s root cause problems across the food system. We can experience glimpses of this future through current innovation and behavioral change, referred to as "pockets of the future in the present.”