The business case for GMOs is rarely explored in depth.
In a report subtitled “An environmental investor’s view of the threat to our global food system”, Trillium Asset Management, a US-based employee owned investment manager with a focus on sustainability, looks at the environmental, social and regulatory risks as well as the reputational and financial risks of investing in genetically engineered crops.
Purveyors of transgenic products claim that GM farming boosts yields and farming incomes by saving on fossil fuels, pesticides, and labor. Another claim arising from this assumption is that GM farming represents a step toward environmental sustainability by decreasing emissions and the use of agricultural chemicals. GM advocates also maintain that GM crops pose no health risks to either the farmers or consumers.
None of these arguments have held up over extended periods of use or in the face of independent testing. Pesticide and herbicide-resistant crops (by far the most widely used GM varieties) actually lead to an increase in pesticide and herbicide use over time horizons of as little as four years.2 Financial gains, which farmers make through increased yields, are offset by increased spending on patented seeds, fertilizer, and herbicides or pesticides, leading to a net decrease in income for all but the largest mega-farms. These higher input costs are especially damaging when small, more marginal farmers experience crop failure. Elevated levels of bankruptcy and consolidation have frequently occurred following the deployment of GM crops.
Perhaps the most pervasive argument for GM crops is centered on the message that these crops are needed to “feed the world.” The underlying assumptions of this argument, however, are simply incorrect. At current levels of global production, there is enough food for every person on earth to have 3,000 calories per day. The problem lies with the varieties of crops being grown, lack of financial access and infrastructure, and food waste. One-quarter of all calories or, by weight, one-third of all food grown, goes uneaten. In the United States, this problem is compounded, with 60 million metric tons of food, equal to an estimated $162 billion in value, going uneaten every year. This equates to approximately 1500 calories of wasted food per person per day.
In fact, GM crops can actually exacerbate hunger issues by pressuring farmers in marginal areas to grow cash crops for export or extensive processing. Globally, approximately 80% of the GM crops grown are corn and soybeans, crops that are overwhelmingly used for animal feed and biofuels. The narrative that GM crops will lift poor farmers out of poverty by increasing crop yields is also specious. The more relevant barriers to economic growth and improved yields are lack of basic resources such as fertilizer, water, and transportation infrastructure.
We believe that for environmental, social, and governance (ESG)-focused investment strategies, agricultural biotech represents an unacceptable level of risk across a wide range of factors. The problem lies less with individual companies or products, but rather with how GM agriculture in its current iteration jeopardizes the whole agricultural system. Just as these risks are system-based, the consequences would manifest themselves by changing the very biological, economic, and social framework of food systems. Almost twenty years into the GM experiment, a range of these risks have become clear.
When taken together, we believe these risks form a very clear basis for exclusion of companies involved in agricultural biotechnology from an ESG investment strategy.
The original report was in 2014. Our link is to the updated version published in January 2018.
Resource type: Adobe Acrobat (.pdf)