Sustainable Investing Podcast. The Future of Food - with Maria Lettini


Eva Cairns: Hello, I’m Eva Cairns, your host for today and you're listening to the abrdn Sustainable Investing podcast, discussing all things relating to sustainable and responsible investing.

I'm delighted to introduce today's guest Maria Lettini, Executive Director at FAIRR which stands for Farm Animal Investment Risk and Return. Maria joined the FAIRR initiative in September 2016, and oversees the creation and execution of fair strategy and work plans. Prior to this, Maria has worked for the United Nations Supported Principles for Responsible Investment, where she managed the PRI signatory relations and outreach strategy by raising awareness of material ESG issues amongst the institutional investor community.

Maria has over 20 years of experience in global investment banking, business and finance, and has worked at both JP Morgan and Deutsche Bank. Currently, she serves on the Sustainability Accounting Standards Board – SASB - and the Standards Advisory Group. She is also a member of the Intentional Endowment Network steering committee. Maria is based in London, but has lived and worked in San Francisco, New York and Madrid. She holds an MA with distinction in Environment, Politics and Globalisation from King's College London, and the BA in International Business, Latin American Studies and Spanish from San Diego State University. Maria, it's such a pleasure to have you with us, welcome.

Maria Lettini: Thank you so much Eva. And thank you for that nice long intro, hopefully, everybody is still awake. Obviously delighted to be here,

Eva Cairns: You've had such a diverse career across different industries, and then moving to the PRI, and, and FAIRR. Can you tell us a bit more about your personal journey, and what made you join FAIRR? And what is it really all about?

Maria Lettini: Yeah, of course, I mean, well, I've always had a real personal sort of interest in finance and in food and I think FAIRR just really genuinely brought those two together. So, as you alluded to, in my bio, I mean, I started out covering global equities and really specialising in emerging markets, this was a couple of decades ago. But even then sustainability issues really came to the fore there and you know, an investment risks around ESG were already affecting the markets and you know, whether it be El Nino and its effects on anchovy fishing, or human rights issues that that really had to be looked at deeply, when you know, a mining company was coming to privatise. So as I moved through my career, what I found is that it was really evident more and more that food system risk, was also going to start to be a mega trend. And I mean, even coming to FAIRR was quite serendipitous I was at PRI, as you mentioned, and I actually coincidentally saw Jeremy Coller our founder, launching FAIRR at a responsible investment conference at the Bloomberg headquarters in New York. And I was standing in the back of the room with an academic colleague - and maybe some of you have heard me tell the story, but it's the opposite truth - and he was going, what is this? Like, what, what is this guy even talking about? I mean, he was again, going through his, you know, his financial business case for why intensive animal agriculture was a risk to investors. And I was, I was listening intently. I had never seen Jeremy speak, and I frankly had never heard of FAIRR. And I was like, actually, this is going to be the next global mega trend - how we're producing animals for food. It has huge environmental impact. So it was again, quite serendipitous. But again, Jeremy's sort of business case really resonated with me.

Eva Cairns: Yeah. And as you say, this is, I mean, the challenges with the food industry, and the challenges the food industry is facing - so much is wrong, I think with the way we produce food. But I think it is often overlooked an importance when we talk about the net zero transition, for example, a lot of focus is on energy, but a quarter of global emissions come from food production. And I've heard you say before that the very sector we rely on to provide nutrients for our growing population, is doing more harm than good over the long term. And that I just think sums it up so well. Can you can you tell us more about what you mean with that sentence?

Maria Lettini: I mean, FAIRR was launched five years ago and when we first started speaking to the investor community about the risks and how we're producing animals for food, I think there was really a lot of gaps in the knowledge - and I mean, still today. Most people don't know that over 70% of the antibiotics we produce in the world today, actually are used in animal agriculture routinely. So not even to, to treat ill animals, but to prop up the system and to ensure that the animal's immune system is capable of defending itself, within the, within the farms and pens that they're living in, right. So, most of the time these animals are raised in in conditions where they have little ventilation, little light, and are very confined. And so, their immune systems they found actually needs some added support. And so, you'll find that in a way, also given to perfectly healthy animals in their feed and water, in order to ensure that they meet on slaughter weight, and they can get to our you know, grocery stores and onto our plates.

But actually, the use of routine use of antibiotics is threatening human health as we know it. Animal agriculture is also the number one user of freshwater on the planet. So let that sink in for a second, particularly with the backdrop of what we're seeing with drought conditions, as a result of climate change.

So, I just read even this morning - something from the global drought monitor - that last month, had some of the most severe widespread and persistent droughts across the top food producing regions in North and South America. So, from Canada, the US, across the nation, whether it be Midwest, West, and Southwest, and across South America. I mean, Brazil is going through, I think its third huge drought that it seen in the in the past couple of decades. And it's right across the continent. So, if you think of that, in the context of what that means to food system risks, and what that can be put to food basket prices, it's pretty amazing.

And the list goes on - the number one cause of deforestation in the Amazon waste production, its a serious problem and the cause of class action suits in the US and communities who just can't survive next to these intensive farms. So, there's a number of really significant risks with the sector, all of which we believe can be material risks to financial portfolios.

Eva: Yeah, and I think some of the stats you mentioned are pretty shocking, and looking at, you know, water use, but also just said, greenhouse gas emissions that come from particularly animal agriculture and the impact of that. And how actually, you know, some reports suggest one of the most impactful things as an individual, you can do is think about your own diet, and how much, particularly red meat and dairy is being consumed and the emissions related - for example, methane emissions to the digestive tract, and so on. So again, I think that is something that's really difficult to address and not really being incorporated sufficiently into people's thinking.

Maria Lettini: That's right. So I mean, again, it's about changing the industry, but also changing our mindset on how consumers can address some of the significant climate challenges as well.

Eva Cairns: Yeah. So, how does FAIRR support investors and incorporating some of these issues into the investment process? Can you tell us a bit more about some of the research and tools that you've developed?

Maria Lettini: Sure, well, I mean, FAIRR is an institutional investor network, right. So, I mean, for those listeners who maybe are unfamiliar with us, we’re a member network that produces research and practical tools for investor members. And we really start by focusing in on what we think are some significant challenges that investors face, almost in their day jobs as analysts and portfolio managers, whether it just be trying to find robust data on the material financial risks of the food system, to incorporate into their financial models, or providing even our own proprietary models and data to help them in that process.

So, we have a couple of sort of flagship tools that we've produced in house at FAIRR. One is the Coller FAIRR Protein Producer index. And that really was the first benchmark, looking at the 60 largest listed, meat, fish and dairy producers globally. And assessing them across 10 ESG risk and opportunity factors. And so, you know, we're assessing things like I've mentioned before, such as policies around antibiotic use, how companies are addressing climate risks, and how they are, how they're managing water risks, etc. And, you know, we try to provide good robust research and data. We produce thematic research and we also facilitate collaborative investor engagements, meaning help coordinate meaningful dialogues with global corporates around material food system themes or risks, and to make sure that, that companies and investors understand the material business case for engaging on certain issues to transition the food system.

Eva Cairns: And I think that collaborative engagement, we've been involved in your sustainable proteins focused collaborative engagement, which I think has been really interesting and powerful in seeing what some of the companies in the food value chain are doing around that topic and the growth we're expecting to see in sustainable proteins that are not animal based, so I think that's a really fascinating topic as well, and maybe one of the solutions we need - but that was going to be my next question. Where do we start with, with transforming the food industry? As you say, there's so many different issues here that you explore in your research as well. So where do we start? What's really needed to transform the industry?

Maria Lettini: That’s I guess, the $10 trillion question, I suppose. I think, you know, what we really need is will, you know, we need to engage in some of the most difficult discussions, I think. There, we need to make a case for the financial imperative. And we also need to incentivize change in this industry. But there absolutely needs to be collaboration across actors. And frankly, from my own personal point of view, I mean, governments should really be incentivizing what is, you know, in fact, the inevitable policy response. So, we know that transition to a low carbon economy is inevitable. And we should be having these tough discussions about what percentage of our GDP is linked to AG, what this means to farmers in these systems who are increasingly becoming more intensive. And this needs to be a long game, right? Where we need to consider what policy will mean to international relations and trade and the impacts to global economy. And, you know, policy changes relatively slow, in inverted commas, right, um, and investor engagements and corporate leadership can really, you know, can really lead the way here, I think. So, you know, I think there's been some cynicism around net zero targets. I know they're coming fast and fierce. But I definitely think it's a great way to get some multi stakeholder engagement and to hold investors, industry and policymakers accountable. So, I think we need a bit of it all right? We need more sustainable AG, we need more regenerative AG, we need to embrace technology and drones, and as you also mentioned, think about a shifted diets to support this transition. So it's, it's a lot that has to be addressed. But this isn't going away right? So I think it's just time for us to have these difficult discussions.

Eva Cairns: Yeah, and maybe a clear roadmap and start somewhere, you know, and as you say, the policy having the right policy environment in place to support the Food Revolution that's needed is so important. On that topic, you know, we've got COP 26, coming up in a few weeks time. And obviously, global leaders will come together and, and discuss climate change targets and actions to be put in place. What are your main hopes and expectations for cop 26 - from a perspective of providing the right policy environment for addressing those challenges in the food industry?

Maria Lettini: Yeah, I mean, gosh, we've, you know, we've already said that the challenges are huge, but I mean, maybe just to contextualise a little bit for listeners, perhaps who are unfamiliar.

I mean, maybe I'll just give a few data points to just demonstrate the magnitude here. I mean, agriculture actually accounts for 4% of over GDP and actually up to 25% in some developed markets. So, with that backdrop, if you think that 40% of the world's population is in agriculture, and that number can be up to even 65% of poor working adults, making a living in agriculture in some countries, right. Yet 10% of the world is currently hungry, and that's about 700 million people.

So, I mean, policymakers, again, have a lot on their shoulders here and a lot they need to address. I mean, that backdrop, and the momentum around climate, right, you said rightly so that the food system, you know, makes up a significant portion of global emissions. So, if we're talking upwards of 30%, we currently do not have enabling policy environment to support agricultural innovation and emissions reduction. So, I think some of the greatest barriers, and ones that we hope will really be addressed are around agricultural subsidies, right, which currently are just not aligned with climate and nature goals. And that's a tough discussion to have, right? We needed to incentivize and support farmers with the right subsidies. And currently, we don't think those are fit for purpose, right?

And, and you also mentioned rightly, methane reduction. And we think we need to have an increased focus from COP26, and you know, and NDCs, around methane reduction targets at the national level, particularly given the increasing evidence on the need to reduce methane in all sectors. And at the same time, again, a real challenge. But I think, you know, policymakers are keeping this front and centre is the need to have a just transition right to bring the livelihoods and communities of this, you know, 40% of the world's population 65% in some countries and population, along with us, to incentivize and to support them in this kind of transition.

And then I think, finally, again, you also mentioned, one of the biggest challenges is that investors, companies and policymakers are really lacking a clear roadmap in transition to 1.5, like we have for the fossil fuel sector. So really more clarity on global targets around agriculture and land use, that's going to align with 1.5 degrees, as well as the targets on biodiversity losses. Absolutely critical.

Eva Cairns: Yeah, yeah, I fully agree, I think that would be definitely a key priority for policymakers to look at. And so, we've talked a lot about food, and you clearly have a passion when it comes to food and how you reflect this in your career, but just finding out a bit more about yourself, how is this reflected in your personal life?

Maria Lettini: Well, I mean, I come from - this sounds a bit cliche, I suppose - but I come from a quite a foody family. I mean, we've always I mean, growing up, cooked fresh food at home. And, you know, again, that's maybe was quite novel, even, you know, 30 - 40 years ago, and even my, you know, my friends in school used to love coming over to dinner at my house, because we'd always have, you know, a good balanced diet.

And that stayed with me, quite frankly, I mean, and it formed part of our, you know, sort of culture and our family relationship centred around food and bringing together that communal element. And also, you know, at a very young age, then I was, I was quite aware of how my food was produced and where my food came from. I was always puzzled, for example, that, you know, when I was in primary school, why we’d, we all had these giant poster boards, for the 4 food groups, or, you know why we were always drinking cow's milk, much to the dismay of my grandparents who lived in Wisconsin, the Midwest, you know, very much dairy state. So, all of that was quite confusing to me. So, I followed the food, I followed, you know, where my food came from always really closely. And, and I've always been a really big proponent of using food as medicine, and the fact that what we're consuming, or even what I was consuming, could in fact, be doing more harm to my body than good. So, I think that kind of links back to your, maybe your previous question.

And then interestingly, I mean, I, I've always worked in restaurants supporting myself through school and through university. And, you know, I ended up opening up my own restaurant in, in Madrid, back in 2000, obviously, a number of years back, but it was, you know, the first New York City bistro in Madrid at that time, and really began incorporating this idea of using sort of fresh, locally sourced produce, um, to make sort of an innovative new style of top of dishes to, to the Madrilenos. And so, food has always followed along with me over the decades. And so kind of makes sense that it's, you know, still close to my heart today.

Eva Cairns: Yeah, that sounds very good. So, is that restaurant still going in Madrid?

Maria Lettini: It's not still going. But it did go on for quite some time, even after I moved to London.

Eva Cairns: In terms of what's inspired you on your journey? Are there any people that have inspired you and keep you motivated and hopeful or any, any, any books or podcasts maybe that you listen to that you would recommend? What is the thing that that is really inspirational for you? Well,

Maria Lettini: I think maybe we're sharing this a little bit. I just listened to one of your podcasts, Eva, and I think you mentioned the same thing, but I mean, you know, this climate ambitions, you know, have have been a challenge over the past decade and I've always have been really inspired by Christiana Figueres. She has done almost everything she can to raise the issue of climate and make the investor community step up. And you know, back to some of the original sort of commitments around climate change back in Montreal years ago now. And you know, I just find her energy is absolutely amazing and I don't think we could have gotten where we are today without her pushing the investment community to make serious pledges.

And I also, you know, very inspired by Dame Sally Davies, I mean, she is - for those who don't know, the former UK Chief Medical Officer - and she has never let this issue of antimicrobial resistance die. I mean, I mean, and people should be worried if the UK chief medical officer is still banging on about this, quite frankly, I mean, it is still front and centre in her agendas. And she has been a huge advocate, especially now after COVID. And now that we're seeing just a convergence of all of the sort of food and health issues, I mean, she's relentless, and hugely energising and I think that's part of the reason why we've seen antimicrobial resistance be part of the G7 talks this year. So, I mean, both of those ladies have really made a big difference in how I think about our work and actually understanding how investors can really make a difference in the discussion.

Eva Cairns: Yeah, fantastic and I fully agree. I follow Christiana Figueres as well and she is just such a powerful and stubbornly optimistic person. And I listen to her podcasts her podcast,Outrage and Optimism is really good so I would highly recommend that. So just to wrap up, what's next for FAIRR? And, you know, what are the key priorities for you, would you, do you think, in terms of looking to next year in the food industry? Where would you like it to be in 12 months time?

Maria Lettini: Well, you know, this year for us has really been about policy, I think, well, maybe I should say, for everyone, right, we just started a policy pillar FAIRR. And, you know, it couldn't have been, you know, too soon, right? We're working, we see ourselves as there to fill the gaps, where we find them again, and policy has been a key area of focus, we did think that there was sort of a clear lack of investor engagement on agricultural policy issues, and we think we can be helpful in that regard. So, working on, you know, on some of the summit's like COP, COP15 on biodiversity will be important. We're engaging on regulatory issues, like the taxonomy and subsidy reform, as I mentioned, and obviously opportunities to really consider sustainable protein as a game changing solution. So, I mean, like you and I both mentioned this idea that there is a different protein supply chain, and we should be diversifying.

And, you know, across our research, and engagement outside of policy, we are doing more work on biodiversity, I think, you know, the entire investor and sort of corporate community is seeing that as a real key risk. Obviously, that's not an easy task. We've been looking at it for quite some time. But we want to be mindful of where we think FAIRR can really add the most value outside of deforestation, so we will be working with investors on that front.

And, of course, our continued work on climate risk, we're going to be launching the 3.0 version of our climate risk tool, which you of course, helped us sort of conceptualise the previous versions Eva, so thank you for that. And we want to be able to incorporate broader issues around land use change, etc.

And then finally, I guess, to highlight something quite exciting. I mean, we've been working, obviously, very closely on this issue of protein diversification, but this year, we're going to be building out our experience even more in the food tech space. And that's a response to demand from our institutional investor network. So, we'll be covering the issue, of course, through our thematic work through our index, which is, you know, our key opportunity factor, the sustainable protein engagement and policy and now we'll obviously be building out a pillar of external experts as well. So, you know, I think this is really this next 12 -18 months is really the time for the food system to be in focus.

And again, I'm hoping that it is the perfect storm across policy investors and corporates to really come together and it takes some leadership to transform the food system into one that's providing nutritious food, livelihoods and, you know, in meeting climate goals all at the same time, so it's a lot to do. It's a, you know, but I think we have to, yeah.

Eva Cairns: A lot to go on with. Yeah, yeah, absolutely, so much to be done. It's fantastic to hear from you. It's been such a pleasure to have you with us today. So thanks a lot for your time and your inspirational contribution well

Maria Lettini: Well, thanks Eva and I mean I'd obviously like to thank abrdn and your leadership on not only climate issues, but on food system risk. So, you know, FAIRR can't do the work that we do without support of our institutional investors and positive and negative feedback, in order to shape our you know, our annual work plans and our focus areas. So, I would be remiss if I didn't call out the good work that you all do.

Eva Cairns: Thanks Maria, very much appreciated. I look forward to working with you in the future and all the challenges we talked about today.

You've been listening to the abrdn Sustainable Investing podcast, a podcast relating to all things responsible and sustainable investing, and today, a focus on FAIRR and the Food Revolution that's needed. Thank you all for tuning in. You can find all our episodes on various podcast channels such as Spotify and Apple, as well as on the abrdn website.

Until our next podcast, goodbye for now.


Eva Cairns is joined by Maria Lettini, Executive Director of FAIRR Initiative - Farm Animal Investment Risk and Returns, to discuss the challenges the food industry faces when trying to tackle climate change.