In 2018, researchers determined that for the first time, more than half of the world’s population now lives in middle class or wealthy households. This increased prosperity has coincided with dramatic improvements in standard of living, doubling global life expectancy to 60 to 80 years over the last two centuries.

Despite the obvious benefits of these developments, the resulting population boom—coupled with several decades of a “take-make-dispose” system of consumption and production in developed economies—has strained the planet’s finite supply of resources. From 1970 to 2017, global material consumption ballooned by 254%, with faster rates each year since 2000. Roughly 12 tons of resources were extracted per person in 2015, compared to just over eight in 1990.

Reversing this trend is at the heart of United Nations Sustainable Development Goal 12 (SDG 12): responsible consumption and production.

What Is Responsible Consumption and Production?

Achieving SDG 12 means finding equitable ways to meet the individual needs of a growing population within the ecological limits of the planet.

The goal calls for urgent and concerted political action to stop the overextraction and degradation of natural resources, and for sustainable consumption patterns, particularly for lifestyles in industrialized societies. Among other aims, it involves:

  • Using natural resources efficiently
  • Cutting per capita global food waste in half
  • Reducing waste through prevention, reduction, recycling, and reuse

By improving land use and conserving natural resources, reducing pollution from agriculture and other industries, and helping to mitigate climate change in various ways, SDG 12 is intertwined with a number of the other SDGs, including zero hunger (2), good health and well-being (3), clean water and sanitation (6), climate action (13), and life on land (15).

Impact investors play a key role in responsible production and consumption by deploying capital across sectors such as sustainable forestry, water management technology and infrastructure, sustainable food and agriculture, and waste reduction and recycling.

Investing in Responsible Consumption and Production

Impact investors have played a role in responsible production and consumption by deploying capital across sectors such as sustainable forestry, water management technology and infrastructure, sustainable food and agriculture, and waste reduction and recycling.

The sustainable food and agriculture structure has been especially active due to consumer demand for organic foods. In the Global Impact Investing Network‘s 2019 survey of impact investors, 58% of respondents reported allocating assets to the sector, more than any other area.

Combating food waste has also captured the attention of impact investors. Almost one-third of the world’s food is never consumed. At the same time, 815 million people are food-deprived, the global economy loses $1 trillion annually to food loss and waste, and decomposing food is significantly detrimental to the environment. In the first 10 months of 2018, investors put $125 million into US companies whose missions involve preventing food from going to waste, according to ReFED.

Another type of consumer-related waste that has garnered significant attention in the last few years is single-use plastic packaging, a major source of greenhouse gas emissions. As part of the MacArthur Foundation’s New Plastics Economy initiative, six boutique investment companies have collectively committed $275 million toward reducing plastic waste. They’re providing early-stage capital for startups offering reusable container solutions, bioplastics, and advanced recycling technologies, as well as investing in recycling infrastructure.

Investors have also begun filing shareholder proposals to pressure large corporations, such as Starbucks, Mondelēz International, Kroger, and Kraft Heinz, on plastic pollution and their use of plastic packaging.

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