Group warns investors of false confidence about food sector’s impending crisis
April 16, 2025
An anonymous group of food industry professionals has warned investors that a number of factors are giving them false confidence about the state of the food sector, despite it heading into a crisis.
Inside Track x Food has warned investors, owners and creditors that the food system faces an unprecedented threat, driven by a web of crises including soil degradation, water scarcity, global heating and extreme weather.
This means the food system can no longer count on stable yields, consistent quality, or reliable supply chains in the years ahead, according to the group.
However, the group noted that the severity of these challenges is not being adequately communicated to investors, partly due to food companies failing to approach corporate reporting with sufficient rigour.
It warned that while efforts to map major — and in some cases existential — risks should be central to corporate strategy, the valuable insights from TCFD and CSRD processes are too often reduced to box-ticking exercises.
In addition, audited environmental risk reports are also giving investors false confidence, as many aren’t questioning whether auditors have the ability, interest or motivation to properly assess and stand behind what’s being reported.
The group said the current auditing process is unfit for purpose, with little support or investment to help auditors understand food system resilience or what constitutes meaningful risk mitigation. It added that poor communication to investors about the scale of risk is partly driven by a bias towards “pleasing rather than being honest.”
Another reason, according to Inside Track x Food, is that food companies are presenting investors with three strategies: exploring alternative sourcing regions, investing in the resilience of existing sourcing regions and diversifying food sources.
However, while these strategies are presented as “suitable solutions,” the group described them as “wishful thinking” as they fall short of addressing the true scale of the risks involved.
In response to these challenges, Inside Track x Food outlined a series of questions that investors should ask to better assess the resilience of the companies they own and their preparedness for potential disasters.
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Last Updated: 16 April 2025