In the wake of the COVID-19 pandemic, many investors may be wondering what sustainable business prospects to explore in the “new normal”. This comes on the back of research indicating the world could see $10 trillion erased from the global economy by 2035 due to increasing weather emergencies, lengthy droughts and floods, and other weather pattern changes material to the success of the global agricultural industry.
As the virus spread, so did food insecurity due to supply chain disruptions, global inflation and other market disturbances. According to the 2020 UN report on the State of Food Security and Nutrition in the World, between 720 and 811 million people in the world went hungry in 2020. Further, they found 2.37 billion people (30% of global population) lacked access to adequate food in 2020, up 320 million from the year before. In light of these sobering statistics, businesses have shown renewed energy for implementing sustainable farming methods, and investors have an array of companies to choose from when building a profitable portfolio.
Although the market volatility of 2020 and 2021 have some investors skittish about investing in sustainability in 2022, there are exciting and promising business and technology emerging in sustainable agriculture which illustrate a bright future for those businesses and impact investors who share the vision of building a more sustainable world.
Businesses Taking New Strategies
Walmart, the global retail giant, has taken big steps in investing in vertical agriculture in early 2022. The company recently took a stake in Plenty Unlimited, an indoor vertical farming company using advanced aquaponics to grow large volumes of produce in smaller spaces.
Walmart’s California stores will be supplied with products from Plenty Unlimited’s Compton farm, where the company hopes to use “square footage rather than acreage” to grow their products. The investment is part of a $400 million round of Series E funding, supporting Plenty Unlimited’s efforts to reduce transportation needs and food waste by utilizing 100% recyclable packaging, reducing travel times between isolated farms and busy cities, and by decreasing water use.
Beyond vertical farming, Walmart has also worked with 15 large suppliers (30% of their food and beverage sales in the US) to provide farmers with data which helps farmers use less fertilizer, thus reducing CO2 outputs, and potentially reducing greenhouse gasses by 2.3 million metric tons. They acknowledge they are still in the process of building strong foundations in instituting these programs, but nevertheless their partnership with Plenty Unlimited indicates their commitment to building a sustainable future for the world’s largest grocer.
Archer Daniels Midland (ADM)
ADM works with farmers to develop new technologies, enhance sustainable practices and connect their products to the global market. They target the processes which improve and secure the quality of products both before and after they enter the stream of commerce, including storage, transportation, and exports. Their specialities not only include human nutrition ingredients, but ingredients supporting animals and wellness nutrition programs.
In late 2021, during the company’s Global Investor Day, ADM exhibited their strategic plan for sustainable earnings growth by 2025 and beyond. The company introduced the sustainable agriculture industry’s first carbon neutral milling footprint, and using its carbon capture and storage capabilities has permanently stored more than 3.5 million metric tons of CO2 a mile and a half under the surface of the earth.
In 2022, ADM’s enthusiasm for expanding sustainable earnings growth continues to show itself. In late February, ADM announced the successful pricing of its first sustainable bond, agreeing to issue $750 million in the aggregate principal amount of 2.900% notes due 2032. The company intends to use the proceeds from the offering to finance and/or refinance projects related to sustainable aquaculture and animal husbandry, agriculture, green buildings, energy efficiency, food security/sustainable food systems and more.
Bunge is an integrated, global agribusiness and food company operating in the farm-to-consumer supply chain. They specialize in buying grains, oilseeds and softseeds from farmers, then store, transport and sell them on the global market. They operate with a strong ethos towards sustainability, emphasizing climate action to reduce their environmental footprint, building and protecting responsible supply chains, and promoting accountability.
Their 2021 Global Sustainability Report indicates that their efforts are paying off, showing that since 2016, their water use has decreased 22%, and emissions, waste disposal and energy all down more than 5%. Where their usage has decreased, the company’s profit in 2022 (up 17.1% in the adjusted quarterly profit) continues to top expectations as crush margins boost the agribusiness unit.
In the last quarter of 2021, the company posted an adjusted net income of $533 million, compared with $455 million in 2020. Bunge has also partnered with global giant Chevron to create renewable feedstock and diesel through Bunge’s soybean processing plants in Louisiana and Illinois.
Agricultural sustainability is not only necessary to support a global population set to reach 9 billion by 2050, but to support the industry itself. Farmers are disproportionately affected by climate change, and businesses connected to global food distribution are taking steps to support these communities in a profitable way. With the advance of time and technology, business leaders and investors in sustainability have a wide array of options to contribute to the cause while maintaining a successful portfolio.