By Sean Ahn and Maximilian Giers
U.S. based Monsanto is one of the world’s largest producers of genetically engineered seeds and herbicides for the agricultural sector.[1]
Monsanto frequently hits headlines and is a poster child of corporate evil to society – the allegations are fed by a general public skepticism towards genetically modified organisms (GMOs) and range from criticism about cancer causing chemicals over deliberately creating farmers’ dependencies on its product range.[2][3] However – whether we like it or not – companies like Monsanto will have to be a big part of the conversation in figuring out how to feed an increasingly hungry planet in a sustainable way.
Monsanto depends completely on agriculture as an end market, an industry that is responsible for about a quarter of human inflicted worldwide greenhouse gas emissions[4] – it thus heavily influences climate change and is affected by it itself at the same time[5] as shifting climate conditions will have large impacts on rainfall and temperature patterns, leading to a projected decline in crop yields globally.[6]
For Monsanto, this creates a set of opportunities to help mitigate the impact of agriculture on climate change and make a profit at the same time.
Monsanto’s recent shift to an environmentally-conscious approach
Over the past two years, Monsanto has made numerous announcements regarding its environmental impact and tries to position itself as a climate change leader. Its strategy is based on three cornerstones:[7]
- Collaborating with others to advance climate change adaptation and mitigation in agriculture: In a recent ICF study, commissioned by Monsanto, the company makes several recommendations to farmers on how to reduce its greenhouse gas emissions[8]
- Improve operations to reduce its own environmental footprint: In its 2015 sustainability report, Monsanto announced its goal to reach a carbon neutral operational footprint by 2021
- Help lead agriculture in the fight against climate change[9]
What is in it for the company?
Climate change could potentially also mean big business for the biotech-giant, which recently spent almost $1 billion on the climate change-oriented startup Climate Corporation.[10] Some examples of products that the company already sells or plans to sell include:[11]
- Data to help farmers grow crops in a changing climate
- Crop insurance for adverse climate impacts
- Carbon neutral crop production
- Crops that can deal with extreme weather conditions such as drought-resistant corn
- Highly productive crops that produce more food per acre of land
- Modified cotton seeds which consume less water than traditional cotton
- High-yield, highly fermentable corn seed specifically designed to be made into ethanol
The company itself states that laws aiming to reduce greenhouse gas emissions and U.S. reliance on foreign oil helped increase sales and post a significant financial opportunity for the business going forward.
Altruism or egoism?
Cynically known as the company that brings food to your children and agent orange to others[12], many fear that the company acts out of pure profit maximisation rationale. Monsanto finally has a chance to play a significant role in alleviating our impact on environment. In the end, only time will tell if this interferes with its impact on climate change.
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[1] Monsanto, Monsanto 2015 Annual Report, November 20, 2015
http://www.monsanto.com/investors/documents/annual%20report/2015/2015
[2] Leah Douglas, Monsanto-Bayer mega-deal a nightmare for America?, CNN, May 23, 2016
http://edition.cnn.com/2016/05/23/opinions/monsanto-bayer-douglas/
[3] Jutta Hoffritz, Was hat sich Bayer da nur ins Haus geholt?, Die Zeit, September 14, 2016
http://www.zeit.de/wirtschaft/unternehmen/2016-09/monsanto-bayer-uebernahme-kauf-saatgut-pflanzenschutz-umweltschutz
[4] United States Environmental Protection Agency, Global Greenhouse Gas Emissions Data,2015
https://www.epa.gov/ghgemissions/global-greenhouse-gas-emissions-data
[5] European Environment Agency, Agriculture and climate change, June 30, 2015
https://www.eea.europa.eu/signals/signals-2015/articles/agriculture-and-climate-change
[6] Elizabeth Marshall, Climate Change, Water Scarcity, and Adaptation in the U.S. Fieldcrop Sector, US Department of Agriculture, November 2015
http://www.ers.usda.gov/webdocs/publications/err201/55558_err201_summary.pdf
[7] Monsanto, Monsanto 2015 Sustainability Report, 2015
http://www.monsanto.com/sustainability/documents/monsanto-2015-sustainability-report.pdf#page=52, accessed November 2016
[8] ICF, Improving Agriculture, 2015
http://www.monsanto.com/improvingagriculture/documents/climate%20change/icfreportchartingapath-%20june102016.pdf
[9] Monsanto, Website, 2017
http://www.monsanto.com/improvingagriculture/pages/climate-change.aspx
[10] Bruce Upbin, Monsanto buys climate corp for 930 million, Forbes, October 2, 2013
https://www.forbes.com/sites/bruceupbin/2013/10/02/monsanto-buys-climate-corp-for-930-million/#3406a6a0177a
[11] John Raymaker, Empowering Climate-Change Strategies with Bernard Lonergan’s Method, 2015
https://books.google.com.sg/books?id=CoTzBQAAQBAJ&pg=PA122&lpg=PA122&dq#v=onepage&q&f=false
[12] Fleurmach, Website, February 28, 2014
Thanks for this article! Two things are going through my head now:
1.) As far as I know, Bayer’s acquisition of Monsanto is not yet finalized, but both companies are still working on making it happen. How would this deal affect Monsanto’s corporate strategy? Bayer is a company for which CSR and a constructive relationship with the public are of crucial importance. Will they try to influence Monsanto’s business practice, and if yes, how will this be perceived by society, especially the political left?
2.) I am not quite sure if the discussion on altruism or egoism is really helpful in the climate change context. Arguably, most companies do not engage in any activity, if it does not create shareholder value, at least in the long run. Although some companies might do so, this is not the market-wide norm and will not be in the foreseeable future.
Although I do not expect companies to act out of altruism, I believe that it is societies’ responsibility to set a legal framework in which actions based on altruism and those based on egoism, overlap. If that can be achieved, I argue that the underlying motive becomes irrelevant.
Nobody would raise the question, whether Vestas’ motivation behind producing wind turbines was altruistic because it contributed to climate action or egoistic because the technology was heavily subsidized in the beginning and the company earned a financial profit. Accordingly, I think we should accept that companies do whatever they can to earn money and make sure to guide them into a sustainable direction.
Looking forward to discuss these questions further.
The GMO debate is a very interesting one. If you eat cereals for breakfast, drink soy milk, eat meat, or wear cotton t-shirts, you basically have been in touch with GMO products for most of your life, even if you are not aware of it (If you grew up in the EU, you have too).
All vegetable and fruit products we consumer today are genetically modified versions of their original variety found in nature, which in most cases would be indigestive or poisonous to us. What priests or farmers did for over decades manually, today can be done using modern certified seed processes or using GMO technology, i.e. in short spans of time using a computer.
One might have issues with associated agrochemicals used on GMO crops, contractual agreements binding farmers, or other issues. But I think opposition to GMO technology in itself is emotional and not based on rational thoughts. There is no data suggesting GMO products are any different than the rest of genetically modified products that we eat on a daily basis. And anyone under 40 has eaten GMO foods for most of his/her life.
While there is a boom across upper-middle and upper classes about heirloom organic produce, the reality is that these sources of food production are not sustainable, and are only economically viable among niche customers.
Natural seed cycles make heirloom varieties to suffer from yield decline and genetic deterioration, and plants vulnerable to ever-evolving pests. That is why most global food production comes from certified seed sources. Non certified seed lack defining traits such as uniformity and stability, which allow large scale commercialization.
If on top of that we add global warming and the more than likely increase in world temperature in 4ºC by 2050, the need of improved certified seeds is pressing. With global population increasing in 50% and global yields reduced in half, modern seed improvement technologies (together with other farming processes ameliorations) are unavoidable.
I agree with you Arnau, that GMO technology is not a bad thing and allows us to optimize production. It is a bit worrisome though, that because the mass production now all use the same seeds (whether GMO or not), the genetic diversity is extremely low, making us very susceptible to environmental shocks. Look at bananas, the most eaten fruit in the world and the fourth largest crop globally (after wheat, rice & corn). There are about 700 types of bananas, but we currently only cultivate ~15 max. because these are suitable for mass production. If a specific fungus or bacteria were to rise and ruin all our crops, the 400 million people for whom bananas are on of their main food sources are doomed.
Monsanto plays a key role in decreasing the variability of these crops and making us more susceptible to epidemics.
Thanks for the interesting article.
Indeed, it seems that GMOs are too recent for us to truly understand their impacts on our health.
I find it hard to believe that such companies would ever act on the basis of altruism when they could profit so much by everyone else’s disgrace.
Monsanto is accused of having a huge negative impact on cotton production because they pretty much induced farmers to grow modified crops that require much more products to maintain (sold by Monsanto), and even charging royalties on top of that. It seems that they generate problems only to sell you the remedy.
This is a major challenge for regulators and, ultimately, to consumers.