Addressing Child Hunger: The Role of Capital Markets in Sustainable Solutions

Nearly 1 in 2 deaths among children under 5 years of age were linked to undernutrition in 2022, according to the Word Health Organization. It has also been estimated by the UN that 144 million children under the age of 5 were stunted, and 47 million were affected by wasting in 2019. 

The issue of child hunger might seem far removed from the world of capital markets. Indeed, accountancy firm PwC points out that Zero Hunger is one of the UN Sustainable Development Goals (SDG 2) most at risk of consistently failing to be prioritised by business. 

Yet a world with zero hunger is worth fighting for as it can positively impact our economies, health, education, equality and social development. Can capital market organisations contribute to solving child hunger while simultaneously strengthening the economy and their own business performance?

The benefits of tackling hunger and food waste

Addressing hunger can present a significant opportunity for businesses to expand into untapped and underserved markets. The economic impact of current malnutrition is substantial, potentially reaching up to 11% of a country's yearly GDP. Yet, the regions with the most promising market potential are experiencing the most rapid population growth, with projections indicating a possible doubling of food demand by 2050 compared to today's levels.

There is also a direct financial benefit to reducing food waste. Implementing sustainable farming practices and minimising food loss are each expected to generate annual economic value exceeding $650 billion by 2030. The Circular group highlighted the issue prior to COP26, as follows:

“Food loss and waste is an unseen, under-valued problem. If it were a nation, it would be the third largest emitter of greenhouse gases, behind China and the USA. Up to 10 per cent of greenhouse gas emissions originates from food loss and waste however the link between food waste and climate change is poorly understood. As such, the issue often doesn’t receive the attention it deserves in conversations on how humanity tackles the climate crisis.”

What can businesses do?

According to a report by the Blueprint for SDG Leadership Action Platform of the United Nations Global Compact, there are a number of things that businesses can do to address hunger:

• Enhance productivity, sustainability, and market access for small-scale agriculture, improving local food security and farmers’ incomes.

• Boost farmer productivity through innovation and knowledge-sharing, while restructuring supply chains to increase farmers' revenue share by reducing exploitative intermediaries.

• Improve food distribution to fight malnutrition in underserved areas and develop fortified foods aligned with health and environmental goals.

• Combat global food waste by developing technologies and processes to minimise waste throughout their operations, improving food availability worldwide

Financial exchanges can play a pivotal role in enabling companies to address food security and agricultural sustainability by providing a platform for capital allocation, fostering transparency and incentivising responsible practices across the food value chain. Markets that enable farmers and buyers to hedge their prices can create stable price formation as well as guarantee future income and production cost stability. This then introduces certainty in food supply and farmer revenues. 

The ripple effect towards sustainable global prosperity

The eradication of global hunger is within our grasp, but it requires a concerted effort from all sectors of society, including capital markets and financial institutions. By prioritising nutrition, food security, and waste reduction in their strategies, businesses and financial markets can create a ripple effect that strengthens economies, breaks cycles of poverty, and builds societal resilience against future challenges. This investment in human capital and sustainable practices is not just ethical—it's a cornerstone for sustainable global prosperity and represents a significant economic opportunity.