Climate Adaptation Unlocking Value Chains with the Power of Technology 2025

Climate change is expected to increase cereal prices by a median of 7.6% by 2050, increasing food prices and the risk of food insecurity and hunger.30 The most vulnerable, particularly in low-income countries, will be disproportionately affected. Agriculture, food and beverage companies have started paying the costs of inaction, reporting a median 6% yearly profit impact by 2050 due to physical climate risks – a figure likely underestimated, with sectoral estimates ranging from 8%-12%.31 When food companies adapt to minimize the impact of climate change, they achieve significant results – generating economic returns, reducing costs and benefitting stakeholders along the value chain. Food and beverage companies report a perceived benefit-to-cost ratio of 19:1 from adaptation investments, with some reaching as high as 43:1.32 This underlines the opportunity for food companies to quickly adopt advanced technologies, such as AI, drones, IoT or Earth observation, strengthening resilience while creating efficient, productive operations that reduce the climate footprint of agriculture and promote sustainable practices. Embedding adaptation technologies into food networks One of the key characteristics of a food system is that it operates as a social network. Each network node (e.g. port, warehouse, retail store) faces specific climate risks, so its adaptation capacity depends on the role it plays and its ability to access resources, data and technologies. Specifically, –Upstream, input-providers, such as seed and fertilizer companies, have to learn to adapt to climate crisis-induced changes in crop yields and pestilence. –Farmers, at the frontlines of climate change, must take on extreme weather events such as droughts and floods, which threaten agricultural productivity and livelihoods. –At the processing and distribution stages, climate risks disrupt the movement and supply of raw materials, amplifying the vulnerability of the global food trade. –Downstream retailers and consumers must manage major fluctuations in food supplies, which will lead to price volatility and food insecurity. Building on the network-like nature of food systems, integrating data and advanced technologies can significantly improve resilience, efficiency and sustainability across all stages. Six key tech-driven adaptation use cases show how food systems can adapt to climate-related disruptions (see Figure 8). Some – such as precision farming, digital agricultural platforms and food supply chain tech – help the value chain to better understand climate risks and opportunities. Others – such as regenerative agriculture, agri-biotech and novel farming systems – focus on building resilience against climate impacts. One thread that runs through all of them is the need for collaboration, facilitating the sharing of resources, data and technologies that single entities cannot access alone. Adopting a system-wide approach magnifies the benefits of adaptation, driving transformation at larger scale.Food and beverage companies report a perceived benefit-to- cost ratio of 19:1 from adaptation investments, with some reaching as high as 43:1 We learned through our collaboration with institutions that it’s essential to clearly define the use cases for collective adaptation, to ensure that collaboration between the public and private sectors is focused, goal-oriented and yields measurable results. Commitment from leadership is also required to prioritize and invest in climate-related projects. Hatice Yildirim, Koç Holding Climate Adaptation: Unlocking Value Chains with the Power of Technology 14