A Food System In Crisis – Why Investors Must Rethink Risk Management

In a world increasingly defined by geopolitical volatility, climate disruption, and social instability, one of the most underappreciated vulnerabilities sits quietly on our plates: the global food system. Despite mounting data and visible supply chain stress, many businesses still treat environmental disclosures as regulatory box-ticking. It’s time to call out this out and demand effective risk management.

In an extraordinary move cutting through corporate PR and greenwashing alike, an anonymous group of senior professionals from the UK’s largest food companies—Inside Track x Food—recently released a rare, candid memo warning that the sector is heading toward unprecedented instability, and investors are dangerously unaware.

This isn’t climate activism. It’s a board-level SOS.

The Bottom Line: Our Food System Is Not Resilient

According to the memo, yield, quality, and predictability from global sourcing regions can no longer be taken for granted. Soil degradation, water scarcity, and climate volatility have become immediate operational threats. Yet mitigation strategies presented to investors are often insufficient or misleading. “What was a long-term threat is now a short-term threat,” the memo states. “The balance of action needs to change.”

Frameworks like TCFD, TNFD, and CSRD are being treated as compliance tasks instead of strategic imperatives. Meanwhile, businesses remain focused on short-term efficiency, ignoring systemic risks piling up in their supply chains.

Richard Zaltzman, chief executive of EIT Food says: “Finance is complacent. Complacent with regards to its understanding of the risks inherent in the food sector, and also the needs of the sector to maintain socio-economic stability. The Arab Spring was triggered, in part, by wheat price spikes. Eventually, that displacement of risk will come back and bite you.” His warning echoes the memo’s core message: what was once seen as a long-term climate risk is now an imminent threat to profitability, supply stability, and geopolitical order.

A Perfect Storm: Climate Chaos Meets Corporate Complacency

The memo highlights how extreme weather in Spain has already affected the UK’s access to tomatoes, salad, and broccoli, while global shocks have disrupted supplies of cocoa, coffee, and sunflower oil. Many companies are relying on vague strategies to shift sourcing to new regions, but the memo calls this dangerously naïve and says: “We cannot all source everything from somewhere else at a time when other companies and other countries are seeking to do the same.”

It also highlights a cultural failure: short-term thinking dominates boardrooms, while legal, audit, and risk teams remain siloed and under-equipped to manage the challenges they face. At the same time, companies prioritize good news over honesty—leaving shareholders with a false sense of security.

System Risk Masked by Markets

Despite years of warnings, the investment community hasn’t truly grappled with the scale of food system risk. Capital continues flowing into high-growth sectors like AI, leaving the agrifood system—so vital to global stability—underfunded and misunderstood. “We’ve masked the effects of risk in global food supply chains,” says Zaltzman. “When global food prices rise, it’s not Wall Street that feels it—it’s often Africa or South America.”

The World Bank has estimated that trillions are required in investment to make the global food system more robust, yet Earth Track analysis shows the world still provides environmentally harmful subsidies to the tune of $2.4 trillion a year. And capital markets, designed to optimize for returns—not prevention—are not built to respond.

A Failure of Leadership—and Imagination

The food sector’s structural challenge is both economic and political. For investors seeking long-term, stable returns, the middle of the food chain—agriculture, processing, and logistics—is both high-risk and low-margin. “If you’re private equity or VC, you can’t extract the return. If you’re a pension fund, it’s too volatile,” Zaltzman notes. “No one’s investing, and that’s a systemic failure.“

Pushback against ESG and climate regulation is worsening the problem. As climate action becomes politicized, companies feel less empowered to speak openly or pursue joint strategies—further entrenching risk.

Still, Zaltzman sees hope in examples like the Andhra Pradesh Community Managed Natural Farming initiative in India. “You can turn desert back into productive in two or three years, he says. “Millions of farmers are already doing this. It’s one of the best-kept secrets in the world.”

The early months of COVID showed how quickly the environment can respond when the system is forced to pause. But assuming we’ll always have time to act later is, as Zaltzman warns, “a dangerous mindset.” “It’s like discovering a pill that lets you cram for your A-levels in a week,” Zaltzman says. “Once you know it works, you assume you can always do it tomorrow.”

The authors of the memo urge investors and boards to move from passive disclosure to proactive risk management. They ask: is your board treating this like the high-likelihood crisis it is? The memo states: “This crisis will be even more significant with the difference that this time we can see it coming.”

From Risk Registers to Real Action

For Zaltzman, what’s desperately needed is a shift from corporate risk disclosure to value-chain risk management. But competition laws often stand in the way.

“Imagine a joined-up risk assessment for the grain crop value chain—one that involves the big players and key investors. Right now, that’s hard to do legally under antitrust rules. But maybe it’s time to prioritize food security over market competition.”

He applauds organizations like Unilever for making real commitments to regenerative agriculture but warns that few initiatives have yet been stress-tested under real-world pressure adding, “That’s the true metric.”

The Bigger Picture: The Food System Is a Bubble

The most striking metaphor in the memo compares the global food system to a “bubble”—one built on overconfidence in the stability of soil, water, and weather. Like the housing market before 2008, it’s inflating on flawed assumptions. When it bursts, the consequences will be financial, social, and political.

But there’s still time—if investors act.

What we’re seeing is a rare and candid moment of introspection from those inside the machine. This isn’t about ESG window dressing or vague climate pledges—it’s a direct appeal to the financial stakeholders who have the power to force systemic change.

“This isn’t about upside,” Zaltzman says. “This is about preventing a system from collapse. And the money is still asleep at the wheel.” In a world where food security is poised to become the next frontier of geopolitical and financial risk, failing to ask the right questions looks like nothing more than a recipe for disaster.