Sustainable Food and Agriculture

How to feed the world sustainably?

Sustainable food and agriculture

Our current food and agriculture systems exceed planetary boundaries. They deplete soils, contribute to climate change through high greenhouse gas emissions, and to the deterioration of worldwide biodiversity. In addition, they fail to secure prosperity for all by contributing to malnutrition and by causing inequality due to power concentration.

Agriculture must work with nature rather than against it. At the same time, a balanced and resilient food system promotes healthy diets and pays farmers a fair income. A sustainable system meets the need for healthy food and agricultural products of present day societies without compromising the ability of future generations to meet the same needs. This requires a thorough redesign of our food system, a renewed connection between consumers and the food they eat and a revaluation of our food and ecosystems.

Our investment focus

Transition of the entire food value chain

As elaborated in our vision paper 'Towards ecologically and socially resilient food and agriculture systems', we believe that in a sustainable agricultural system food, fibre and animal products are produced using farming techniques that protect animal welfare, the environment and human communities, and waste is minimised. The whole value chain, from producers and processors to distributors and retailers contributes to such a system.

When analysing companies, in each step of the value chain we are guided by the following principles:

Responsible land use
Improving soil quality and regenerating land use
Avoiding GM seeds
Fostering biodiversity
Reducing water footprint

Focusing on production of healthy and nutritious food
Deploying environmentally friendly agricultural and aquaculture practices
Improving animal welfare
Encouraging use of biological pesticides and fertilizers and alternatives to livestock antibiotics

Limit and improve food processing
Improve products – substitute salt, sugar and fat flavourings
Use healthy and genuine ingredients

Seek more sustainable packaging and storage solutions
Foster greener transport methods
Produce closer to consumers
Provide preserved food options to reduce food waste

Choose short supply chains where possible
Adopt responsible purchasing practices

Provide healthy and nutritious food options
Foster consumption of plant-based proteins
Foster waste reduction and improve waste management

Crucially, a sustainable food and agriculture system cannot undermine nor ignore human and labour rights. This applies to each step of the value chain described above, and is a fundamental aspect of the deep transformation our current system needs.

We invest in companies that contribute to this transition at various stages of the food value chain. We uphold the principles outlined in the previous section, and apply them in our selection process. For food and agriculture, we mainly invest in food and beverage producers and retailers, companies involved in the production of biological fertilizers and producers of medical and infant nutrition. For all these companies, we ensure that good practices are in place that contribute to our vision towards balanced ecosystems, a healthy society and inclusive prosperity (as illustrated in our vision paper).

Our impact objectives

Sustainable agriculture, healthy food, and fair value chains

To identify and select companies that contribute to this theme, we have established a set of core impact objectives. We individually look at each company and use both qualitative information and quantitative data to screen companies and monitor alignment with our theme specific impact objectives and SDGs.

We use impact indicators based on sources of revenue data to track companies’ contribution towards these objectives. We further substantiate our analysis by looking at companies’ product offering and relevant sustainability indicators as well as other qualitative evidence of sustainable practices as stated by companies’ policies and active programmes.

In some instances, contribution to impact objectives cannot be captured fully through revenue analysis, or data might simply not be completely available. This is the case of process-related impact, for example:

Waste reduction
Efforts to reduce greenhouse gas emissions
Fostering biodiversity
Upholding fair and transparent value chains
Efforts to move towards more sustainable agricultural practices

In such cases our analysts look at qualitative evidence of contribution to these objectives, for example in the form of policies and programmes, or active participation to relevant platforms. This allows to also tackle challenges that can be traced back to other relevant SDGs, in a more qualitative fashion.

Minimum standards

Do no harm

After screening companies for positive impact, the selection is further reinforced by the application of our minimum standards, which are internally developed and regularly updated.

The main objective and rationale of minimum standards is ensuring that we do not invest in companies offering products or adopting behaviours that clash with our vision and beliefs.

For this theme we apply minimum standards that cover a wide range of aspects along the value chain. The standards standards below are most often applied:

Factory farming, often referred to as industrial and/or intensive farming, can be defined as methods of farming in which the breeding, raising, treating, processing, transporting and slaughtering of animals for their products are conducted in an intensive manner.

Companies have to demonstrate strong policies and standards in animal welfare, but also actively try to improve animal welfare at suppliers, and promote products with higher standards.

Our environmental damage standards cover multiple topics, such as biodiversity, raw materials sourcing (e.g. soy, palm oil), climate change, water use, scare commodities and deforestation. We require companies in the food value chain to implement precautionary principles to prevent environmental damage, and where possible also to improve biodiversity and climate.

Companies that are involved in severe environmental damage controversies, are excluded from investment. We also exclude producers of pesticide (applying a company revenue threshold of 5%).

Human and labour rights are a major issue in food value chains. From harmful practices in land acquisition, that threaten the livelihoods of local populations or violate the rights of indigenous people, to the incidence of child labour and forced labour, as well as the lack of living wages that ensure that work is adequately remunerated and allows for decent living standards, we strongly believe that companies need to step up their efforts in this area.

We make sure that companies we invest in have all the relevant policies in place to prevent the risk of violations of human and labour rights along their value chains, and take proper measures to mitigate potential violations of human rights.

We are a long-time supporter of agricultural practices that are based on the principles of organic agriculture. As genetically modified (GM) crops have found their way into the food production chain, we have developed some of the strictest GM standards in our sector. We apply a specific approach to genetic engineering for each level of organisms, based on occurrence, ethical aspects, and health and environmental risk. In the food industry, we require companies to avoid use of GM ingredients and to provide end-consumers with freedom of choice including GM-free products. We exclude companies that develop and commercialise transgenic crops and genetically modified animals for other than medical purposes.

We consider health and safety as integral aspects of quality of life. Products such as alcohol display addictive qualities that may cause abuse, which has negative effects on individuals (users), their families and society at large. We do not exclude the production or retail of alcohol as such, but companies producing or selling these products are expected to mitigate the negative impact of its products as much as possible. Tobacco is considered to contribute to serious health problems, and the use of tobacco products can negatively impact others, e.g. in the form of passive smoking. We exclude companies that produce tobacco products and related products or sell tobacco products under their own label (applying a company revenue threshold of 5%).

We track controversies related to our minimum standards for all companies we invest in and engage with companies on material controversies that violate our minimum standards or that could lead to a breach of our minimum standards, e.g. following a merger.

Engagement

Positive change

Although all companies in our funds are selected based on their good sustainability performance, we always strive for improvement and we constantly exert our investor pressure to push for substantial results. Engagement is part of continuous monitoring of companies in our portfolio, and we see it as the way we can move forward together. We carry on engagement in the Food and Agriculture theme under different fronts:

Collaborative engagement on sustainability in the food sector and farm animal welfare (through FAIRR and BBFAW initiatives)
Ongoing conversations with companies, particularly on the topics of animal welfare, sustainable animal feed and mitigation of negative environmental impact of intensive plantations (e.g. soy and palm oil)
Thematic engagement on reduction of CO₂ emissions, engaging with a number of companies in our portfolio to urge them setting science-based targets and aligning activities with the Paris agreement

Investment examples

Investing in sustainable food and agriculture

Within the Sustainable Food & Agriculture theme we invest in companies that are already well aligned with our vision (upper right), and in companies that display a clear commitment to becoming more sustainable (upper left). Our Pioneer Impact fund also invests in smaller, innovative actors that push the business ecosystem in the right direction with their solutions (lower left).

Here we have selected three examples of companies we invest in, and placed them on the transition curve. Scroll down for more examples and an up-to-date list of our investments in this theme.

Danone is a French multinational food company.
45% of its revenue is based on water and dairy products with limited processing and additives. Danone contributes to:
- Healthy and affordable food
- Transition towards plant-based diets
Danone officially adopted the benefit corporation model, and to date 45% of Danone’s sales are B Corp™ certified.
Danone runs a strong animal welfare programme and over the last five years turned from laggard to frontrunner in this area.
The company stands out for its non-GMO offering and its efforts to reduce GMOs in its supply chain, including cow feed in its dairy farming activities.

Hain Celestial manufactures, markets, distributes, and sells organic and natural products.
With 37% of its revenue originated from organic food sales, it contributes to promoting: organic agriculture, healthy diets, and responsible consumption.
Hain Celestial’s labelling practices help consumers to make informed purchasing decisions, for example by indicating the absence of GMO ingredients.
The company is committed to ensuring animal welfare. It works with sustainable fisheries and its meat and poultry products are sourced with animal friendly practices.

Kerry Group develops, manufactures and distributes ingredients and flavours for the food, beverage and pharmaceutical industries, combining natural ingredients and innovation.
Kerry is in the early stages of the transition trajectory, but meets our minimum standards.
With positive signs of commitment to more sustainable practices, it is well placed to tackle the transition.
30% of the company’s revenue is still linked to red-meat, desserts and highly processed food. We actively encourage the company to shift towards more plant-based solutions and more natural products.
The company’s foundational technologies are focused on proteins, fibres, enzymes, probiotics, fermented ingredients, texturants. Benefits include natural preservation, immunity support, digestive system improvement.

Sustainable Food and Agriculture Investments

Sustainable Food and Agriculture