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Is Covid-19 accelerating ESG investment in food and agribusiness?

Evidence of this is widespread. Take for example, global food delivery, which is expected to grow to $98 billion by 2027, from $24 billion just two years ago.

Ride-sharing platform, Facedrive has acquired Fodora Canada, part of multibillion multinational food delivery service, which operates in 40 countries and services more than 500,000 restaurants.  The amalgam has launched as Facedrive Foods.

The virus has prompted investment backing in food delivery, but sustainability is a key priority and the company blurb around the acquisition is instructive: “Facedrive Foods adheres to these principles by offering eco-friendly deliveries, with each delivery contributing a portion of the fee towards local tree-planting initiatives to help reduce carbon emissions in the atmosphere.

Facedrive Foods has also committed to comprising the menu options available for delivery through its app of select healthy, nutritious and sustainably sourced choices offered by like-minded restaurant businesses, with consumers’ wellness in mind.”

Sustainable ventures such as this are attracting increasing investment, as consumer preference for ethically- sourced and delivered produce is expressed in all sorts of ways.

A recent study by Ernst & Young shows the strength of this appetite, as they discovered that 84% of millennials have named ESG investing as a main goal, with the vast majority willing to pay more for a sustainable alternative.

Long established food and beverage companies have also heard the clarion call for ESG investment. Chris Daly, Pepsi’s VP, Supply Chain, Strategy, Transformation and Sustainability points to impending population growth patterns, and associated demands on agriculture and water to highlight his company’s approach.

“The contrast between people’s needs and the conditions for growing is stark and will bring huge pressure to the global food system – from how food is grown right through to how products are made. Approximately 70 percent of the world’s freshwater is used for agriculture, however around 60 percent of this is wasted due to inefficiency and leaky irrigation systems.”

To meet their sustainability responsibility the company uses crop monitoring technology via a mobile and web based platform to allow growers to unearth how their crops are performing through live in-field crop monitoring across 200 data points, enabling growers to know how much water crops need and when. It amounts to growing more, using less resource.

The success of the approach is evident in Spain, where prior to applying the technology, 48 percent of the fields were applying the right amount of water. Since using it, this has shifted to 92 percent.

Meanwhile Danone has announced that it is weaning the company off intensive farming is in favour of regeneration, part of its new sustainability mission. The company is working with farmers worldwide to adopt a regenerative approach to farming that encourages healthier soil and ecosystems, better water stewardship and a broader diversity of cultivated seeds and crops.

The company’s leadership acknowledges the move will be expensive but believe the modern consumer will pay more for ethically- sound produce.

Talk of expense shows there is much work to do to build a more resilient and sustainable supply chain system, including concerns about how quickly it can be transformed worldwide, rather than in set regions.

The EU recently launched its bloc-wide sustainable food strategy but has come in for some criticism for how to make it work in terms of trade goals and how it does business with trading partners outside the union.

The Farm to Fork strategy (F2F) is being seen in some quarters as a threat to the competitiveness of the European food supply chain, due to competition with the lower standards of imported products.

Food Safety Commissioner Stella Kyriakides is assuring that diplomacy will be undertaken to establish alliances in the international field to drive the convergence to a global sustainable food system so that EU farmers are not disadvantaged compared to third-country producers, but it remains if this forging of green alliances on sustainable food systems will succeed.

Many point to the need to meet the Zero Hunger UN Sustainable Development Goal of providing nutritious food to all the people that need it, as a rallying ground for investment, and indeed there is a noticeable uptick in investment in food and agriculture, some of which may be revolving around that goal before the virus struck. AgFunder reported that in 2019 $20bn was raised by food and agritech companies, six times the amount raised in 2012.

The indications are that Covid-19 could be an accelerating catalyst for more investment in the area of sustainable supply chains, but clarity on that will take time, as the world continues to reel.

How can you incorporate ESG investment?

Sustainability and esg is becoming increasingly pertinent in the agrifood investment sector, with both public and private investors seeking ethical ventures that balance profitability with regenerative agriculture principles, nature & biodiversity protection, climate change mitigation, and food waste and water management.

At Farrelly Mitchell, we support ambitious and responsible investors who prioritise ESG principles. We offer valuable insights into green finance initiatives, rural development & community empowerment, gender equality programs, clean energy solutions, and much more.

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sean@initiate.ie

Managing Director
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