Climate Fallout Could Cost Food Investors $38 Trillion by 2050, Experts Caution

The global food and drink industry is staring down the barrel of an escalating climate crisis — and investors are being called to act before it’s too late. According to a new briefing by the First Sentier MUFG Sustainable Investment Institute, investors exposed to food systems must urgently strengthen their climate risk frameworks. Why? Because under a 2.5°C warming scenario, the world could face up to $38 trillion in damages by 2050 — and that’s not a hypothetical. The UN warned last year that, even if all Paris Agreement commitments are fully met, we’re still on track for a 2.6°C–2.8°C temperature rise by 2100. That projection came before the U.S., under Donald Trump, exited the Agreement again.

Global food demand is projected to increase at a compound annual growth rate of 1.26% between 2023 and 2033, outpacing population growth across most regions. However, that demand may clash with mounting climate pressures. The Institute's report outlines how climate volatility — from unrelenting droughts and blistering heatwaves to flash floods and devastating storms — will threaten global food security, disrupt production, and destabilise supply chains.

Even though most investors back processors, distributors, and retailers rather than raw producers, the briefing emphasises that no segment is immune. Climate-related shocks will ripple through entire supply networks, upstream and downstream.

The Institute recommends a clear course of action: investors must embed climate risk scenarios and environmental sustainability criteria into their due diligence and portfolio management practices. They’re also encouraged to innovate, develop financial instruments that support climate-resilient food systems, and collaborate with peers on high-impact solutions.

Specifically, the briefing urges investors to demand robust disclosures from food businesses. These include:

• Value chain maps pinpointing core suppliers/offtake regions contributing >20%

• Climate risk scenario models spanning at least a decade

• Input price forecasts over five years or more

• Nutrient density trends across top commodities

• Natural resource impact metrics: land use, water consumption

• Material ESG factors tied to business operations

• Current and future ESG-linked taxation exposure, including carbon pricing

• Shifting demand dynamics driven by environmental awareness

• Transition strategies to greener models — across operations, products, and capital plans

Businesses are guided to use frameworks like TCFD, TNFD, the Transition Plan Taskforce Gold Standard, and the European Sustainability Reporting Standards (ESRS) to help navigate these demands.

Yet behind closed doors, the narrative isn’t quite so polished. In an anonymous letter, a cohort of senior food industry professionals, brought together by Inside Track, expressed deep concern. They claimed companies were masking the extent of climate threats from shareholders and stakeholders alike. Their words were pointed: the focus, they said, is often on placating boards rather than telling the unfiltered truth. Worse still, many treat climate risk assessments as mere “tick-box” exercises with little actual response to findings.

A stark example of these risks already playing out is cocoa. A new study by Christian Aid found that cocoa prices have surged 400% in recent years, driven by rising heat and erratic rainfall in top-producing nations.

In 2024 alone, 71% of cacao-growing regions across Côte d’Ivoire, Ghana, Cameroon, and Nigeria experienced six extra weeks of 32°C+ days, pushing cocoa trees — and the livelihoods of those who tend them — to the brink.

As chocolate becomes a luxury commodity, Christian Aid warns that climate stressors are fast reshaping global markets, which should be an unmistakable alarm bell for investors.