Incentivizing food systems transformation

World Economic Forum, in collaboration with McKinsey & Company
Resource type:
Reports and discussion papers

This report outlines four pathways for creating the right incentives to transform food systems. It presents barriers and potential solutions along each of these pathways, highlights the role different stakeholders can play and provides case studies. The roadmap also sets out five action areas for the global community.


Section 1: Unlocking incentives for comprehensive food systems transformation

A brief summary and key messages for each of the four pathways are below, and Figure 5 in the report (page 16) provides a very helpful summary of stakeholder actions across each of the four pathways.  

Repurposing public investment and policies to provide positive incentives for those in the food system to produce food that is healthy for people and the planet. "By realigning incentives in the policy and regulatory environment and by using public sector investments, governments can change the economics that drive companies, investors and smallholder farmers." Some areas for actions that government could reevaluate to better align with the goals of improved human and planetary health include: labelling, tariffs, subsidies, taxes, public procurement policies, investment, and research and development. Within this action area, there are several challenges that policymakers need to overcome to effect change: Siloed decision-making; Lack of evidence for underlying interventions; Institutional capacity; Transition costs; Stakeholder resistance to change. Figure 1 outlines actions for different stakeholder groups to overcome these barriers and repurpose public investment and policies. 

Business model innovation pathway to prioritise environmental, social and financial outcomes. "To truly unlock their power to incentivize transitions, companies must take a broader approach and re-evaluate their strategy, products and services. They must restructure their organizations and business models to focus on maximizing the triple bottom line – the company’s return on people, planet and profit." Barriers to making these changes include: innovation risk, economic returns, supply chain and infrastructure challenges and changing corporate culture. Figure 2 outlines actions for government, development partners, private sector, civil society and research/ thought leaders to help overcome these barriers. 

Institutional investment can set higher standards with respect to how companies target environmental and social outcomes alongside financial returns. "Institutional investors are increasingly seeking opportunities to address climate and societal risks that affect returns on assets." And as more data on how climate change and poor nutrition impacts near term asset values becomes available, these will become more important to the decision making process of institutional investors. To make this happen, the following challenges need to be considered: risk-return trade-offs, intermediation, lack of market data and enabling environment challenges. This text of section provides some potential solutions to these challenges, and Figure 3 outlines actions specific stakeholders can take.

Consumer behavioural change can shift demand to environmentally and socially responsible nutritious products. Despite growing trends towards healthier and more sustainable food and food products in developed countries, "Poor diet still ranks among the highest global health risks, and food systems are responsible for one-third of global GHG emissions." In order to encourage greater shifts across the food system, the report highlights two major barriers that will need to be overcome: deeply rooted consumer preferences and affordability of food. Figure 4 shows actions for governments, donors or development agencies, private sector participants and civil society organizations to help with consumer behaviour.


Section 2: Roadmap for stakeholders to take action

The five action areas of the roadmap are below, along with a selection of key points:

Align on the vision for food systems transformation and build shared consensus on incentive pathways: An alignment among stakeholders on this vision and what it means for action is the first step towards developing an agenda at the global, regional and country level.

Identify scalable models across incentive pathways and build new tools and approaches: Such lessons will help identify replicable and scalable models across the four incentive pathways that food system participants could rally around for learning and prototyping in the pursuit of improvement and replication.

Exercise systems leadership:At both the country and the global level, leaders need to exercise systems leadership using a combination of traditional skills and capabilities – big-picture thinking, management and execution, technical analysis – and non-traditional skills and systems thinking such as cultivating a shared vision for change, empowering widespread innovation and action and enabling mutual accountability to accomplish systems change

Take collective country-level action: Identify priority transitions and incentive pathways; Set up a mechanism that can ensure coordination and implementation; Prepare for implementation; Incorporate agile approaches; Review, refine and scale.

Take collective action at the global and regional level: Develop a coalition of participants who will identify and implement incentive pathways; Identify and scale emerging global partnerships and financing mechanisms focused on such incentive pathways; Innovate, align, build capacity and establish learning platforms to replicate and scale; Leverage key international milestones to drive progress


Section 3: Case study – Reducing GHG emissions from food systems with incentives 

This case studies goes through practices farmers can adopt to reduce emissions and ways to incentivise the adoption of GHG-efficient farming practices, linking back to the pathways set out in Section 1.


"A food systems transformation requires several transitions, including to a healthier diet, sustainable supply chains, more inclusive livelihoods and greater production efficiency... We need consumers to adopt healthier diets, reduce waste and place value on more sustainable, healthier food products; we need farmers to adopt more sustainable farming practices, protect and restore natural resources and meet the nutrition needs of a new generation of consumers."


Read the full report

This resource presents evidence or data but has not been peer reviewed