Public Equity Investing in Sustainable Food and Agriculture

By Paul Hilton, Trillium Asset Management

Trillium’s Sustainable Opportunities thematic suite of public equity strategies aims to address global sustainability challenges in three core areas:  climate solutions, economic inclusion, and healthy living. Since 2008, Sustainable Opportunities has looked to identify companies benefiting from the shift to a more sustainable economy. As an intersecting theme, sustainable food and agriculture cuts across these issues, and yet it is a difficult theme to play in public equities.

The three general categories of sustainable food and agriculture investments in public markets include:

•  Agricultural and irrigation equipment

•  Food production and distribution

•  Food retailers, food service, and restaurants

The planet needs more food, and more equitable food distribution, to meet the needs of a growing global population. According to the World Health Organization, roughly 45% of deaths among children under 5 years of age are linked to undernutrition. A 2021 FAO study found that 690 million people globally are hungry, 8.9% of the world population. And yet we are faced with a scarcity of resources made more insecure based on the growing threats related to climate change, including extreme weather events, invasive pest spread, and plant migration. Agriculture and food production are a big part of the climate change problem, representing 19-29% of total greenhouse gas emissions.

Unfortunately, many large companies focused on agriculture in the public markets have been involved in factory farming, deforestation, prevalent use of pesticides, and excessive water consumption. Some have also been implicated in land grabs that have helped to push smaller farmers out of business. On the other hand, smaller, new-to-market companies have their own issues. Many are in an earlier phase of their business cycle and are often unprofitable, some have small market caps and are more volatile, and many have a very short financial history. In the post-covid period, some new entrants have seen their shares decimated as growth expectations came down in a rising interest rate environment. We’ve seen stocks like Beyond Meat fall to just a fraction of the IPO value as competition grew and the projected sales curve never materialized. As we look to identify solutions-focused companies, there must be a high bar to determine companies that are not just “green-washing” as well as identifying companies with well-developed business strategies, proven management, strong balance sheets, and enough scale to compete.

This article does not attempt to touch on the work on sustainable farming in other asset classes beyond public equities, such as that being done by smaller, private companies, through green bonds, CDFI loan funds, or farmland REITS.  For more information about these investments, see this paper from Croatan Institute.

Some public equity strategies will also engage companies through shareholder advocacy to push them on a variety of issues related to sustainable food. Trillium began engaging companies on food more than 20 years ago, when it became the first investment firm to file a shareholder proposal on the issue of animal welfare. In 2002, Trillium also became the first sustainable investment firm to file a shareholder proposal on the issue of GMO labeling at Whole Foods Markets. More recently, we have engaged on issues including food waste, packaging, and climate targets. 

Advocacy in Action – WhiteWave Foods: Palm Oil Impacts (2016)

Palm oil is a commodity that has attracted high profile scrutiny for its role in deforestation and human rights abuses. Given consumer and regulatory demand, many companies have committed to tracking and reducing pesticide use, leaving laggards at a competitive disadvantage.

WhiteWave Foods [acquired by Danone in 2017] sourced 100% of its palm oil through the Roundtable on Sustainable Palm Oil (RSPO) mass balance certification system. WWAV also specifies in its Supplier Code of Conduct that its suppliers must protect areas of High Conservation Value (HCV). However, due to shortcomings in the RSPO Principles and Criteria, these actions alone do not ensure that the palm oil in WWAV products has not contributed to deforestation or human rights abuses. For example, the RSPO does not mandate protection of High Carbon Stock (HCS) forests or peatlands, two carbon-rich forest ecosystems that are commonly cleared for palm oil cultivation.

In 2016, several high-profile food manufacturing companies committed to specific protections for all forest types, including HCS forests and peatlands, in addition to stronger human rights protections. Through a shareholder proposal, Trillium sought a similar specific commitments from WhiteWave to demonstrate their stated intention to “affect positive change by expecting ourselves and our suppliers to constantly seek – and create – opportunities to source more responsibly.”

Trillium was pleased to withdraw the shareholder proposal after management agreed to disclose at reasonable cost and omitting proprietary information, that demonstrates how WWAV works to curtail the company’s actual impact on deforestation and human rights violations, beyond simply purchasing RSPO mass balanced palm oil. For more information: Trillium’s WhiteWave Foods Engagement

Trillium Sustainable Food & Agriculture Holdings*

Trillium’s Sustainable Opportunities strategy holds companies that we believe are strategic ESG leaders with above-average operating fundamentals and growth opportunities over the long-term in three core areas: climate solutions, economic inclusion, and healthy living — including sustainable food and agriculture solutions leaders.

Below are a few companies held within our portfolio with business models clearly exposed to sustainable food and agriculture, and that highlight our exposure across the sustainable food and agriculture solutions supply chain.

Kerry Group – With origins as a small dairy company in Ireland, Kerry Group is now a large global multinational food ingredients and flavorings business. The company has a goal to reach over two billion people with sustainable nutrition solutions by 2030 with programs including partnering to help indigenous farmers in Madagascar produce sustainable 100% certified organic vanilla, improving farm productivity in Kenya, and working to fight malnutrition in Niger. Kerry’s taste and texture solutions also help food companies produce meat alternatives that taste better and have improved nutritional profiles as well as smaller environmental footprints. 

McCormick – As a producer of spices and flavorings, McCormick has increased its focus on healthy product development and transparent labeling, with a growing mix of products using designations such as organic, non-GMO, and BPA-free. Through its Sustainable Sourcing Framework, McCormick seeks to source all herbs and spices sustainably, with standards for farmer resilience, women’s empowerment, and ethical behavior. The company seeks to improve and measure smallholder farmer skill/capacity, income, access to financial services, education, and nutrition/health.

Xylem – A leading global water company, Xylem produces a number of products for the agricultural market, including pumps, mixers, and water handling systems, as well as products to treat and analyze wastewater. Per the company, the agriculture industry is responsible for 70% of the world’s water use. Xylem’s energy efficient products help small farmers reduce energy consumption for irrigation, which is a major cost of business.

* This list is not inclusive of all Trillium Sustainable Opportunities portfolio holdings or all sustainable food and agriculture holdings. These companies were selected based on breadth of business models in the sustainable food and agriculture arena.


Article by Paul Hilton, CFA, Portfolio Manager and Research Analyst at Trillium Asset Management, covering the Consumer Discretionary sector and is the lead Manager for the Sustainable Opportunities strategy. He is also a member of the portfolio management team for the Green Century Balanced Fund, for which Trillium serves as a sub-advisor. Prior to joining Trillium in 2011, he was Vice President of Sustainable Investment Business Strategy at Calvert Investments and also previously held senior positions within Calvert’s Equities and Marketing Departments.

Paul also served as Portfolio Manager for Socially Responsible Investing at The Dreyfus Corporation, then a division of Mellon Bank, and as a Research Analyst in the Social Awareness Investment (SAI) program at Smith Barney Asset Management, then a division of Citigroup. Paul started his career as an Analyst with the Council on Economic Priorities, a non-profit known for an influential consumer guidebook called “Shopping for a Better World.” 

Paul is former Board Chair of US SIF, former Treasurer of the United Nations Environment Programme Finance Initiative (UNEP-FI), and founder of the Social Investment Research Analysts Network (SIRAN), the first U.S. network of sustainability analysts. He is a member of CFA Society Boston and a Chartered Financial Analyst, and holds Master’s degrees in Anthropology from New York University and Education from Roberts Wesleyan College. Paul is a frequent speaker on topics related to approaches to SRI/ESG investing and the growing market for products in this space.

Important Disclosure Information.

This is not a recommendation to buy or sell any of the securities mentioned. It should not be assumed that investments in such securities have been or will be profitable. The specific securities were selected on an objective basis and do not represent all of the securities purchased, sold or recommended for advisory clients. Information and opinions expressed are those of the author and may not reflect the opinions of other investment teams within Trillium Asset Management. Information is current as of the date appearing in this material only and subject to change without notice.

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