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by Lombard Odier

Bacteria: a weapon in the fight for sustainable food

How Denmark's Chr. Hansen is using natural products in the transition towards a sustainable economy

For decades, the summers along the coast that stretch south from Copenhagen were plagued by tons of seaweed that would wash up on the beaches and start to rot. 

The stench was a big problem for the locals. But it was an even bigger problem for the tourism industry as holidaymakers from the Danish capital and beyond went elsewhere for their annual breaks.  

Today, all of that has changed thanks to a biogas plant that collects the seaweed and mixes it with biological residue from Chr. Hansen, the Danish bioscience company. The smell has gone, the beaches are cleaner and carbon-neutral energy has replaced fossil fuels for thousands of local residents. 

“We are not only part of delivering cleaner sources of energy and supporting local farmers; we also have a more cost-efficient alternative for handling our biological waste-streams,” explains Michael Juhler, Chr. Hansen's Senior Director, who is responsible for the company's biggest production site in Copenhagen. 

The contribution of Chr. Hansen, which produces food cultures, probiotics and enzymes for the global nutrition, agricultural and pharmaceutical industries, is an example of the steps that some companies are taking to reduce waste and cut emissions. 

This transition towards a Circular, Lean, Inclusive, Clean (CLIC™) economy is happening, and it will inevitably produce winners and losers as companies, industries and entire sectors move at different speeds. But the companies that understand the urgency of change and that are taking transformational steps today are more likely to emerge as leaders of tomorrow's CLIC™ economy. 

This transition towards a Circular, Lean, Inclusive, Clean (CLIC™) economy is happening, and it will inevitably produce winners and losers as companies, industries and entire sectors move at different speeds.

Chr. Hansen, which was founded more than 140 years ago,  produces in excess of 30,000 strains of “good bacteria” for food, crops and human health. Its natural cultures and enzymes supply the global dairy industry, and its products are consumed by 1bn people every day. But the company has set its sights on three wider challenges, each one on the United Nations' 17 global sustainability goals, that the world faces as it teeters on an environmental knife edge. 

The first is food waste. According to the UN, food loss and waste is responsible for about 7 per cent of global greenhouse gas (GHG) emissions. At the same time, close to 30 per cent of all land given over to agriculture produces food that is never consumed. 

Dairy products have a short shelf life, and Chr. Hansen estimates that 17 per cent of all yoghurt in the European Union is wasted every year. Extending the shelf life of yoghurt by seven days is estimated to reduce waste by 30 per cent. In Europe alone, such a reduction would translate into savings of 440,000 tonnes of yoghurt, or €250m in value and 520,000 tonnes of carbon dioxide. 

Chr. Hansen’s food cultures can delay spoilage in fermented dairy products such as yogurt, and the company has committed to eliminating 1.2m tons of yogurt waste by 2022. It has also developed coagulants for the cheese industry - a significant contributor to greenhouse gases via the methane that cows emit - that reduce the amount of milk required for cheese production. 

The second challenge is eliminating hunger through better farming. The World Resources Institute, a not-for-profit research organisation, estimates that crop yields will have to grow by more than a third over the next 44 years compared with the previous 44 years. But yields are already at historic highs. Add to that climate change and a growing population, it is clear that agriculture requires innovative and sustainable solutions. 

In response, Chr. Hansen is leveraging its microbiological platform and knowledge for improving crop yields. An alliance with FMC Corporation, the US chemical company, has already resulted in the development of a natural product capable of boosting sugar-cane harvests by 10 per cent through enhanced root development and protection. 

The third global challenge is promoting health. Malnutrition continues to plague the developing world. By contrast, populations in industrialised nations suffer obesity and chronic immune diseases. The widespread use of antibiotics, which has given rise to antibiotic-resistant bacteria, only complicates the outlook. 

Chr. Hansen’s food cultures can delay spoilage in fermented dairy products such as yogurt, and the company has committed to eliminating 1.2m tons of yogurt waste by 2022.

Among other things, the company has developed a range of probiotics for humans and animals as part of its research into the human microbiome, the ecosystem of more than 38tn bacterial cells that live in and on a typical human body. One probiotic strain can help reduce intestinal problems and may also support immune health, for example. 

According to PwC, the accountancy firm, more than 80 per cent of Chr. Hansen's annual revenue now contributes to these three UN goals, helping to reduce food waste, boost agricultural yields using natural products and improving human health sustainably. 

Today, we are living WILD. The food we let spoil is Wasteful; overlooking potentially valuable assets, such as seaweed, is Idle; the prevalence of inequality is Lopsided; and the excessive use of chemicals, transportation and energy requirements makes us Dirty. But the shift towards the CLIC economy is already underway. By helping to reduce waste, leveraging nature-based solutions, using its probiotics to tackle inequality and pioneering ways to reduce chemical use in agriculture, Chr. Hansen is at the forefront of that transition.  

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Can food innovation save the climate?

Alice Ross, the FT’s Deputy News Editor outlines the impact agriculture is having on the environment, and what can be done to alleviate the damage. 

“Agriculture alone makes up 11 per cent of global greenhouse gas emissions. But if you add in other activities like storage, packaging, food waste, things like that, it goes up to as much as 37 per cent. It's a huge problem.” 

But as Ross explains, there are developments afoot, ranging from changes in consumer behaviour to new technologies, to financing, that could significantly reduce food’s impact on the environment.  

“There was a letter written recently in BioScience magazine and it was signed by 11,000 scientists. And they basically said that if we did things like eating more plant based foods, eating less meat, that this could have a huge impact on greenhouse gas emissions as a result of food.”

“I think people are changing the way they eat. I think you can just see from all the people that you see around you. People are massively changing their eating habits because they know that what they eat has an impact on the environment. For sure. We've got a lot more veganism on the rise, vegetarianism, people eating less meat. So, I think the message is coming through to some extent, but there are a lot of other things that people are doing as well, apart from changing their diet.”

“One area that has attracted huge interest in the last couple of years is plant-based protein. Lab-grown meat is another area where there's a lot of innovation. A lot of people are trying to get it right. They'll take some cells from an animal, almost like cloning, and then they'll grow the meat in a lab. So actually, no animals are being harmed in that process. And then you're actually eating meat, but in a more environmentally friendly way and there's less animal cruelty as well. But those kinds of companies are very early start-up. None of them have come to market with the product yet.”

“We're also seeing things like vertical farming. So just as people are starting to grow meat inside labs, people are starting to grow plants inside warehouses. Vertical farming could be good because it makes the supply chain shorter. It reduces transport costs, things like that. But it uses a lot of electricity inside the indoor farm, and a lot of this isn't fully worked out in terms of the technology.”

She outlines other technological developments.

“Farmers can use technology like drones or satellites to use exactly the right amount of water and fertiliser for their crops. There are apps that you can use now where it will tell you what sort of food the consumers are throwing away, and then it will help the restaurant to produce less of that food and more of another kind of food.”

“In order for some of this new technology to work, we do need investors to back it. And fortunately, that is happening. Investment in food start-ups doubled in 2019 to hit more than a billion dollars. The new technology is definitely here to stay. I think you can see that as the technology improves, more people are going to adjust their eating habits. So, it's driven a lot by consumers changing their eating habits. It's driven a lot by investors backing this new technology and in terms of governments, what they can do is introduce stricter regulations on food waste, for example, on recycling, on energy efficiency. That's one of the big areas generally in climate change where governments can really get involved.”

“Tech has been a big disruptor in many other industries, as we know. So far, it hasn't made that many inroads into farming. That's good because it means that there's a lot of room for development. The downside, I guess, is that if only it had been done before, we would maybe have fewer emissions now.” 

Ross says that financing in the ESG arena is also undergoing changes. 

“Another area that's changing quite rapidly is the interest in sustainability-linked loans, where banks are making loans to companies and the interest rate that they pay on that loan will fluctuate according to whether they're hitting certain ethical or environmental targets.”

“Green bonds are a really quickly, rapidly growing area of finance, but historically there have been way more green bonds in renewable energy than agriculture, which has very much been a sort of a laggard. When something isn't very developed, you can always say there's a lot of potential in it.” 

“It can be an issue for ESG investors who aren't necessarily rushing to pile into the food industry, because it's quite hard to measure the food industry’s sustainability, because you have a lot going on. You've got things like packaging, transport, long supply chains.” 

She can also see the structure of the market changing. 

“So, it’s not just about start-ups. At the moment, there's a lot of interest in the new guys, the smaller players, the new technology, but we're also seeing that the larger, more established food companies, household names are also backing this kind of thing. If these big food companies that have a lot of research and development budgets are also looking at developing their own alternative meat products or their own plant-based products, that means that they might quickly overtake some of these smaller start-up companies that are going to struggle for various other financial reasons. I don't know for sure, but I assume that you don't have to invest that much in it upfront. So, if you get a decent alternative meat product that sort of anyone could do, it's not like it takes ages to set it up. So that means that lots of other companies could jump in.”

The food industry may have been slower than some to embrace sustainable practises, but Ross believes it may have an advantage when it comes to flexibility. 

“You can compare it to other industries like the oil and gas industries. Traditional food companies can pivot their business models more quickly than an oil and gas company, so can become more sustainable, more easily than a big oil major.”

In terms of disruption to the food industry we’re sort of in the foothills of that happening at the moment, which means there's a long way to go, but that it's also quite exciting.”

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