ARLINGTON, VA. — The issue of climate stress and its possible relationship to the increased volatility of input prices seen in recent years was a topic of discussion at the Sustainability Summit, a joint conference sponsored by the Food Marketing Institute and Grocery Manufacturers Association and taking place this week.
Speaking on a panel at the meeting, Jeff Seabright, vice-president of environment and water for The Coca-Cola Co., Atlanta, said, “If you can imagine the food, energy, water, climate relationship, the stress by climate change and economic demands around the world, that relationship was in relative stability for two or three generations relative to commodity pricing. I think what we are looking at going forward is much greater volatility, much greater unpredictability in that relationship. And it is the climate adaptation challenge that really is emerging as a big issue that we in the business community have to deal with not just by reducing our emissions, but learning to navigate within a climate change world.”
Mr. Seabright noted his company is a large buyer of juices, sugar and many other agricultural commodities that are included in The Coca-Cola Co.’s portfolio of products, and that the company is focusing on sustainable agricultural practices.
“One of the things that we have witnessed in input prices during the last several years is evidence of increasing volatility in agricultural markets due to climate stress,” he said. “If you look at what happened to wheat prices three years ago, because of the drought in Australia, it may be related to climate science. We can’t say this event was caused by climate change because there are so many variables involved, but what we are seeing is a pattern emerging that climate science suggests is a result of climate change.”
Speaking on the same panel, Bruce Kahn, a director with Deutsche Asset Management, New York, said input price volatility was the No. 1 concern of chief financial officers surveyed by his company.
“The challenge we face is how do we manage these medium- and long-term problems in a short-term market?” he said. “This is the kind of thing that emerges over a period of time and then becomes acute. If we are not set up to manage that as companies and investors, it will really be challenging.”