Tag: Impact Investing

Climate change is one of the biggest threats facing our planet today. With greenhouse gas emissions continuing to rise, it is imperative that we find innovative solutions to reduce emissions and mitigate the impacts of climate change. One promising solution is the development of alternative proteins, which could offer a significant and untapped opportunity for climate financing.

Alternative proteins, which include plant-based proteins, cultured meat, and fermentation-based have the potential to reduce greenhouse gas emissions from animal agriculture drastically. Animal agriculture is responsible for a significant portion of global greenhouse gas emissions, with estimates ranging from 14.5% to 51% of all emissions. By developing alternative proteins, we could significantly reduce these emissions and help to mitigate the impacts of climate change.

The numbers speak for themselves. According to a report from RethinkX ^[1], a think tank focused on technology-driven disruption, alternative proteins could capture up to 10% of the global meat market by 2035. This shift would result in a reduction of up to 2.4 gigatons of greenhouse gas emissions annually, equivalent to taking 527 million cars off the road. Furthermore, the report suggests that this shift could save up to $1.4 trillion in environmental costs by 2050.

Biodiversity and Animal Agriculture

The animal agriculture industry significantly impacts biodiversity, which refers to the variety of living organisms and ecosystems on Earth. A recent paper published in Nature^[2] mentions if we continue the same level of meat production and consumption, then 17,000 species are under threat of extinction.

Here are some key ways animal agriculture affects biodiversity:

1) Habitat loss and fragmentation: The expansion of animal agriculture often leads to converting natural ecosystems, such as forests and grasslands, into agricultural land. This results in the destruction of habitats for many plant and animal species, which can lead to their decline or extinction. Fragmentation of habitats can also occur when natural ecosystems are broken into smaller patches, reducing genetic diversity and increasing vulnerability to environmental stressors.

2) Soil degradation: Animal agriculture significantly contributes to soil degradation, negatively impacting plant and animal species that depend on healthy soils for survival. Soil degradation can lead to reduced soil fertility, erosion, and desertification, which can result in the loss of habitat for many species.

3) Water pollution: Animal agriculture is a significant source of water pollution, mainly through the runoff of excess nutrients and antibiotics from animal waste. This can lead to the degradation of aquatic ecosystems and the loss of aquatic species.

4) Introduction of invasive species: The transportation of livestock and their feed across borders can lead to the introduction of invasive species that can compete with native species for resources and disrupt ecosystems.

5) Climate change: Animal agriculture significantly contributes to greenhouse gas emissions, which contribute to climate change. Climate change can significantly impact biodiversity, including changes in temperature and precipitation patterns that can negatively impact the survival of many species.

Cattle ranching is the most significant cause of deforestation in the Amazon, accounting for around 80% of the destruction.^[3] This activity is primarily driven by the global demand for meat, leading to the clearing of vast areas of land to make space for cattle ranching. In Brazil, cattle ranching has been the leading cause of deforestation since at least the 1970s, with government figures attributing 38% of deforestation from 1966-1975 to large-scale cattle ranching. Today, the figure is closer to 70%.^[4] 

Alternative Proteins as a Climate Financing Opportunity

These numbers highlight the significant potential of alternative proteins as a climate financing opportunity. By investing in developing and scaling alternative proteins, we could reduce greenhouse gas emissions, create economic opportunities, and contribute to sustainable development.

In addition to the environmental benefits, alternative proteins offer other potential advantages. Plant-based proteins, for example, can be produced with significantly less land, water, and other resources than traditional animal agriculture. This can help to reduce pressure on natural resources and promote more sustainable food production. Cultured meat, meanwhile, could offer a more humane and sustainable alternative to traditional meat production, potentially reducing animal suffering and improving animal welfare.

Additionally, over 60% of all emerging infectious diseases worldwide have zoonotic origin.^[5] Livestock production is one of the most significant contributors to the spread of zoonotic diseases.

In the BCG report, Food for Thought: The Protein Transformation,^[6] the environmental impact of alternative meat and dairy is compared with animal-derived meat.

• The shift to alternative beef, pork, chicken, and egg alternatives will save more than 1 gigaton (Gt) of CO2e by 2035—or about 0.85 Gt CO2e in 2030. This is equal to decarbonizing most aviation or shipping industries, or about 22% of the building industry. The following graph clearly shows how much investment in plant-based meat reduces emissions compared to other sectors.^[7]

• Producing animal alternatives emits 30% to 90% fewer GHGs than conventional meat, fish, dairy, and egg production. 

• Cultured meat requires up to 78% less water than beef, and plant-based meat requires 99 percent less water than conventional meat.

We need to shift the narrative around food and sustainability. This means emphasizing the positive benefits of alternative proteins, including their potential to reduce greenhouse gas emissions and reduce/eliminate animal suffering, while also acknowledging the challenges and limitations of these technologies.

Investment Gap

According to the BCG report, Food for Thought: The Protein Transformation:

• Almost 30 million tons of bioreactor capacity for microorganisms and animal cells will also be needed in the base case, requiring up to $30 billion in investment capital.

• The extrusion capacity needed for plant-based proteins will require up to $28 billion in investment.

Just alone in APAC (Asia-Pacific), according to a report published by the PwC, Rabobank, and Temasek^[8] – $750 billion in additional funding is needed by 2030 to meet the rising protein demands.

In conclusion, alternative proteins offer a significant and untapped climate financing opportunity. By investing in developing and scaling these technologies, we can reduce greenhouse gas emissions and mitigate the impacts of climate change but also create economic opportunities and contribute to sustainable development. To fully realize the potential of alternative proteins, we need to address the challenges and limitations of these technologies and shift the narrative around food and sustainability toward a more positive and inclusive vision of the future.

Important reference links:

Dawn of the Climavores
https://www.kearney.com/consumer-retail/article/-/insights/dawn-of-the-climavores

Food systems account for more than one-third of global greenhouse gas emissions
https://www.fao.org/news/story/en/item/1379373/icode/

Climate-friendly foods: are alternative proteins the way forward?
https://www.weforum.org/agenda/2022/07/protein-diet-vegan-climate-food-system-decarbonization

Food system impacts on biodiversity loss
https://www.chathamhouse.org/2021/02/food-system-impacts-biodiversity-loss

The way we eat could lead to habitat loss for 17,000 species by 2050
https://www.vox.com/future-perfect/22287498/meat-wildlife-biodiversity-species-plantbased

Factory farms are an ideal breeding ground for the next pandemic
https://www.vox.com/2020/10/21/21363990/factory-farms-next-swine-influenza-pandemic

 
Article by Sagar Tandon, Partner at Beyond Impact.

Sagar was involved in setting up 2 funds – Gray Matters Capital, edLABS & Australian Govt. DFAT backed impact fund. Led investments in 18 early-stage ventures. Mentor at Good Food Institute India & APAC, Founders Institute Food APAC and Fashion for Good, Netherlands.

At first glance, investment in the meat and dairy industry looks attractive. Global meat consumption is expected to grow over the next decade to a projected increase of 14% by 2030, according to the FAO. The changing global climate, however, poses significant risks and opportunities not just to this growth trajectory, but to the fundamentals of the industry.

From the rising price of feed to desertification of grazing lands and increasing regulation to reduce greenhouse gas (GHG) emissions from livestock production, climate-related risks require an extra layer of analysis for asset allocation in the sector and present opportunities for transformative change in the decades ahead.

The Paradox of the Animal Protein Sector: Both a driver of climate change, and at risk from it

Readers of GreenMoney Journal are probably well-aware of the climate and environmental impacts of the animal agriculture sector. For instance, it releases more GHG emissions than every car on the planet combined, and the UN Food and Agriculture Organization has estimated that 14.5% of all global anthropogenic GHG emissions come from livestock production. The animal agriculture sector uses 30% of the planet’s freshwater resources and continues to be the largest driver of deforestation. It also has a large part to play in the ‘silent pandemic’ of antimicrobial resistance (AMR).

What is less well reported however, and of increasing concern to financial institutions, is that the meat and dairy industry not just contributes to climate change, but is uniquely vulnerable to its effects.

A warming world, for example, means increasing heat stress on cattle. Animals that experience heat stress may have lower productivity given reduced fertility, liveweight gain and milk yield as well as immune system problems that make them more susceptible to certain diseases. Climate change increases the probability of extremes, and these fat tails have real world impacts, as we witnessed last summer when the death of thousands of cows was reported after a weekend with extreme climate conditions.

FAIRR research on material climate-related costs shows potential increases between 4-35% by 2030 and 3-53% by 2050, relative to 2020, for livestock companies based in North America, with the largest cost driver being higher animal feed prices. Thus, damaging the profitability of many meat and dairy companies, as well as those suppliers and clients that rely on them if costs are passed on.

With many of its assets operating in already water stressed areas, the livestock industry is vulnerable to decreasing freshwater quality. The sector must manage this risk alongside those it faces from increasing AMR, carbon prices and action to reduce global methane emissions.

Investors are increasingly aware of, and acting on, these risks. It is why the FAIRR Initiative, which is focused on helping investors understand risks and opportunities related to intensive livestock production, has become one of the world’s fastest growing investor networks with supporters managing over $70 trillion of assets under management (AUM) joining the network since 2016.

Pricing in Climate Risk

Data and research conducted by FAIRR supports investors in assessing systemic risks that might negatively affect the returns of their portfolios in the long run. According to FAIRR’s Climate Risk Tool, a group of 40 of the largest livestock producers face an estimated $23.7bn total decrease in earnings in 2030 compared to 2020 due to climate factors in a ‘business as usual’ scenario – based on assumptions including that the world is on track to reach 2C of warming by 2100, and that consumption of meat and dairy continues in line with current trends as the population grows to 9.2 billion in 2050. Potential hits to profits are driven largely by an increase in climate-related costs that include higher feed prices and more expected carbon taxes on emissions from livestock production.

Regulatory Risk

One of the biggest concerns for investors is that far too few meat and dairy companies are monitoring and reporting on these risks adequately. For example, by aligning the reporting to the Task Force on Climate-Related Financial Disclosures (TCFD) framework which is now mandatory in locations such as the UK and New Zealand.

FAIRR’s research of 60 of the largest meat, fish and dairy firms shows 70% of the world’s largest meat, fish and dairy companies assessed since 2019 still do not disclose any animal-farming or feed-farming GHG emissions. This lack of carbon footprint disclosure can significantly impact the financial performance of companies given upcoming climate regulation by exposing them to litigation and reputational risk, as well as the prospect of increased carbon taxes. For example, by 2025 New Zealand plans to introduce an agricultural emissions pricing mechanism, which as FAIRR’s research found can impact the country’s livestock farmers through cost increases, higher debt, and potential curbs on production.

Preserving Long-term Value

Climate risk is becoming an increasingly material issue and it is crucial that investors and companies act now or risk losing out in the future. Livestock companies are both exposed to climate risk and are exacerbating climate challenges, impacting investors’ returns. However, only six out of 40 of the largest meat and dairy companies assessed have conducted climate risk scenario analysis. A relevant exercise that the TCFD recommends is to develop strategic corporate plans that are more flexible or robust to a range of plausible future states and help them take advantage of the opportunities and adequately manage risks.

Investors expect returns to reflect the risk held. This means companies that fail to manage risks or miss opportunities related to climate change will likely have financial impacts, such as an increased cost of capital.

What are Investors Doing About it? 

These figures highlight the urgent need for meat and dairy companies and their investors to mitigate the clear risk to the bottom line. This includes exploring decarbonization strategies, such as diversifying sources of proteins towards those that have lower environmental impacts and reducing the carbon footprint of livestock. Investors are also asking companies to share their action plans around the implementation of clean food technologies, improved farming practices and adoption of innovative solutions.

For example, a group of investors has engaged with 23 leading food manufacturers and retailers, including firms like Walmart, Conagra and Kroger, to encourage them to reduce their reliance on animal-derived products and increase exposure to more sustainable proteins (e.g., plant-based proteins). Companies are still navigating the challenges of reaching scale and reducing costs, yet alternative proteins have a key role to play, especially in the mid and long term, as the alternative protein market is forecast to grow 13%-35% by 2030 and 9%-14% by 2050 in relation to its size in 2020 in developed countries.

As a result of our engagement, eight out of 23 global food companies now have targets to increase the volume and sales of meat and dairy alternatives and/or reduce brand-level emissions. 100% of the companies in the engagement are now investing in the development of plant-based products.

Investors are also engaging to reduce the industry’s emissions. FAIRR’s Global Investor Engagement on Meat Sourcing is supported by an $11 trillion investor coalition and focused on six leading fast-food companies with a combined cap of more than $281 billion, including the likes of Chipotle Mexican Grill, Domino’s Pizza and McDonalds. The investors urged companies to de-risk their meat and dairy supply chains by setting ambitious targets to reduce GHG emissions as well as reduce water consumption.

As of June last year, all six of the fast-food companies have now publicly set, or have committed to set, science-based targets approved by the Science Based Targets initiative (SBTi). Chipotle has gone one step further by committing to reducing Scope 1, 2 and 3 emissions by 50% by 2030.

Sectorial scenario analysis and company-specific data is essential for investors to make more informed investment decisions. Such data allows deeper conversations between investors and companies which can use that dialogue to develop more sustainable practices that not only mitigate climate risks, but also enhance long-term profitability and create value for all stakeholders involved.

Ultimately, collaborative engagements, supported by data, provide a powerful platform for investors to achieve their goals. And, despite the complexities of the challenge, a well-managed transition within intensive livestock production is necessary to address climate risks that are already impacting the bottom line.

Article by Sofía De La Parra, Investor Outreach Manager at the FAIRR Initiative. She is responsible for strengthening and expanding FAIRR’s investor network. Sofía leads FAIRR’s outreach work in the United States and collaborates on outreach in other global markets. She works closely with investor members to integrate material ESG issues and develop sustainable food systems as a key priority. 

Prior to this, Sofia led the Sustainable Proteins collaborative engagement, which targeted 23 food companies and had 84 investor signatories with $23bn AUM. Before joining FAIRR in March 2021, she led the project finance venture at Naked Energy Ltd, a clean-tech start-up. Sofía also worked as a Rating Analyst at S&P Global, following Latin American companies across different industries, including retail, consumer products and building materials. 

Sofía holds an MSc (Distinction) in Climate Change, Management and Finance from Imperial College London and a first-class BA in International Business Management from Universidad Iberoamericana Ciudad de Mexico. She also holds a CFA certificate in ESG Investing.

Blueberries at Burns Farms, Planting Phase 2

It was a breakout year for organic agriculture in 2022. Consumer demand for organic food continued its steady rise, with strong prices for producers, rising land values and excellent returns for investors.

Beyond these results, three significant trends were sharply apparent last year that will continue to affect not only organic farming but the entire agriculture sector – rising consumer demand for healthy food, the fragility of the conventional farming system and investor interest in sustainable farmland practices.

Organic’s Strong Market Fundamentals

The organic market is enjoying strong momentum. Demand is growing because consumers increasingly recognize the benefits of pesticide-free healthy organic food. They also see that conventional chemical-based farming and food production are increasingly industrialized and commoditized, harming the environment and producing unhealthy, pesticide-laden food.

Today, organic food is a $56 billion market and represents 6% of all U.S. food sales. Demand is growing at 13% annually and is constrained by a lack of supply, since organic cropland is only 1.2% of all farmable acreage in the U.S. and is growing by just 7% yearly. The result is a 50-200 percent price premium for organic produce.

Those strong fundamentals were reflected in our business, too. Farmland LP marked its 14^th year in operation in 2022, and we have demonstrated over that time that organic farming is profitable at scale. Today, we manage more than 16,000 acres, valued at $250 million, and 40 crops are grown on our farms. By converting conventional farmland to organic, we have increased rents from $300/acre to $750/acre. We have also increased revenue per-acre up to ten times by converting from commodity crops to higher value and permanent crops.

Conventional Farming is Vulnerable

Last year, the organic sector was able to avoid many of the pitfalls that disrupted traditional agriculture. The war in Ukraine was a colossal blow to conventional chemical-based farming because it sparked a price jump in natural gas, a key input for the fertilizer on which it depends. Fertilizer costs for conventional farmers reached record levels in 2022 and accounted for 36 percent of a farmer’s operating costs for corn and 35 percent for wheat, according to the USDA^[1].

Meanwhile, the cost for compost, the main fertilizer for organic acreage, was up only marginally.

It’s not just the impact of the Ukraine war that showed how fragile conventional farming is today. Climate change is also affecting costs and output. Climate change is expected to produce rainstorms of higher frequency and severity, with potentially devastating effects on farming. Heavy rains late in the growing season in the Midwest impact the drying period needed for corn production and are a stark illustration of these risks.

Very few farms – and certainly almost no industrial-scale producers – are adapting their management methods to the realities of climate change.

By contrast, we invest with climate change in mind. We use computer modeling and satellite mapping to identify farms that are well placed to withstand climate shocks. Once we add them to our portfolio, we convert the acres from environmentally damaging, chemical-dependent commodity crops to an organic and regenerative system that can be productive, profitable and resilient as climate change advances.

Overcoming the Barriers to Organic Production

There are significant barriers to converting farmland to organic. It starts with the way farmland is owned. Approximately 40% of US cropland is owned by absentee landlords. Many received it generations ago during the Homestead Acts, but now their descendants live in cities and no longer farm directly. Most of this land is farmed by tenant commodity farmers who farm one or two crops, usually corn and soybeans. Expertise is another barrier, as owners and tenants often lack the knowledge on how to transition to and farm organic crops.

But perhaps the most significant barrier is economic. It takes three years to convert land to Certified Organic and at least five years for value-added permanent crops to reach full production. Absentee owners would have lower rental income during this transition period, as would tenant farmers. And the tenant farmers also would not benefit from the increase in land values once the organic conversion is completed.

(There are also deeply entrenched federal policies that subsidize industrial farming and impede the growth of organic, but that is topic for another time.)

We have overcome these barriers through our operating expertise, market knowledge and, most importantly, our capital structure, which enables us to make the multi-year investment in organic conversion.

Let’s look at an example. We acquired Burns Farm, a 4,000-acre farm in northern California, in 2013. It had been farming the same three crops for 50 years, rotating them about every five years. It had no organic acres or permanent crops.

Today, after completing the conversion process, 80% of the farmable acreage is Certified Organic and grows a dozen permanent and row crops, from organic blueberries, green beans and squash to olives and almonds. Revenue per organic acre is up more than 2x to $800/acre today, and the appraised value of the farm has increased 3.0X since we acquired it.

Investors Want Sustainable Farmland Investments

Finally, the past year has seen a dramatic rise among investors for sustainable farming opportunities as they seek to align their capital allocation with their values.

Sustainability is at the heart of our strategy, and we do not compromise on returns. Indeed, many of our 1,000+ investors participate in our funds because of our sustainable farming practices and favorable financial performance. They understand that best-in-class soil health and farmland management practices drive both financial returns and ESG benefits.

And, unlike most other farmland managers, we can document our environmental improvements. In a USDA study^[2], our first farmland investment fund demonstrated $21.4 million in net ecosystem benefits using regenerative farm management practices at scale. There is economic value in clean water, diverse pollinator habitats and healthy soils.

We advise investors – both individuals and institutions – to watch for managers that make marketing claims about sustainability. Empty rhetoric and greenwashing have spread into farmland investing like an outbreak of ragweed. Any farming standard that supports chemical-based monocropping cannot be considered “sustainable,” no matter how appealing its branding might be.

Our practices have made Farmland LP the highest-rated company globally for corporate sustainability, according to HIP Investor, a leading independent sustainability ratings service. Our 82.0 rating (of a possible 100) places Farmland LP as #1 in HIP Investor’s worldwide corporate universe of 10,000 corporations, as well as at the top of the agricultural real estate investment trust (REIT) category, the closest comparable peer group.

In the year ahead, we expect capital to continue to flow into the sector as more investors recognize the benefits of farmland investing. Managers that can demonstrate their positive impact on the environment and a track record of favorable returns will be best positioned to attract investor capital – and help drive the growth of a more sustainable food system.

Article by Craig Wichner is CEO of Farmland LP, the largest manager focused on organic and regenerative farmland in the US, with 16,000 acres in Washington, Oregon and Northern California valued at $250 million.

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.