Sustainable Food and Agriculture
Translating themes into investable opportunities
December 2024
Report by Hayley Mole and Thomas Slattery for Esmée Fairbairn Foundation
Forward from Esmée Fairbairn Foundation
A deep dive series on Thematic Impact Investing
Esmée Fairbairn Foundation aims to improve our natural world, secure a fairer future and strengthen the bonds in communities in the UK. One of the largest independent funders in the UK, we provide £40m to £50m in grants each year towards a wide range of work in support of our aims. We also have a £60m allocation towards social investment (also referred to as impactfirst investing) for organisations with the aim of creating social and environmental impact.
In 2021, we established a £10m allocation for impact investing to test the potential for achieving financial returns through impact funds that align to our goals and which generate a measurable impact. We are now building out our thematicled investment strategy to explore how we might integrate Esmée’s strategy across our spectrum of capital.
To help us do this, we are commissioning a series of ‘deep dive’ reports to explore investment opportunities for impact investing, which is impact-driven to support our mission and our main investment portfolio.
We hope that by sharing the deep dives and focusing on their practical application, there is an opportunity to strengthen and grow thematic impact investing, and in turn, effect broader change for both people and planet.
We commissioned Hayley Mole and Thomas Slattery for our first deep dive, focusing on the theme of sustainable food and agriculture, which contributes to our impact goals in our aim for Our Natural World.
The review has looked at the market and investment opportunities as they currently exist, which in isolation do not necessarily transition us to the market we wish to see. It has been extremely useful in identifying and/or positioning companies and funds, that can accelerate the development of new and better models of food and farming that meet our impact goals.
But we are also cautious that there are investments that, at best, could perpetuate a broken food and farming system and/or divert resources into incremental solutions that do not engage with the systemic nature of problems we face and the transformative change we need to see.
Forward from Esmée Fairbairn Foundation
Whilst the deep dive goes some way to plotting a way through this for investment opportunities, we know a full spectrum of capital is needed. This is why we are challenging ourselves to understand how opportunities identified in this deep dive can work in concert with our grants and social investment. For example, how can the grant funded work we support on influencing policy and regulation create the conditions for better food and farming models where we and others can deploy more of our capital?
Our grant and social investment programmes also enable us to take a higher risk, longer-term approach to piloting future models, such as more localised supply chains, that will not offer market rate returns for the foreseeable future but will pave the way for radical and transformative models. A key next step is for us to consider how we can best join up these areas of our work.
Future deep dives will focus on decarbonisation, circularity, freshwater, nature finance, employment and training, renewables, sustainable aquaculture, community-led regeneration and more. www.esmeefairbairn.org.uk
About this report
Commissioned by Esmée Fairbairn Foundation, this report aims to highlight and deconstruct the investment opportunity across the sustainable food and agriculture value chain (also referred to as the agrifood system). This work is for investors and asset owners considering their approach to this theme and who are early in the process, as well as anyone interested in the role private capital can play in transforming food systems.
Through the lens of impact investing, it explores the economic and investment potential of key themes in food and agriculture, alongside impact outcomes. With the assumption in mind that both are possible, this report will seek to landscape and categorise what is currently investable from an asset owner’s perspective, and areas of interest within the theme.
Extensive research has sought to clarify what sustainability or a sustainable food systems transformation means in food and agriculture, and what principles, goals and guidelines can be followed to achieve best-case outcomes. This research thus leverages much bigger pieces of research to form its conclusions, and compares these findings to bottom-up research on individual fund opportunities. This report then investigates where themes can be accessed across asset classes, and where capital gaps exist for more catalytic involvement.
What is Thematic Investing?
Thematic investing is a forward looking, top-down approach based on capturing emerging trends. These structural shifts and macroeconomic, geopolitical and technological megatrends are also reflective of global crises, therefore a tool to leverage the most appropriate forms of capital towards solutions.
Disclaimer
This report is published for educational and illustrative purposes only. It should therefore not be construed as promoting any specific investment products or opportunities and does not constitute investment advice or any other kind of advice.
The contents of this report have been informed by the insights of a number of people across the food, farming and finance/investment sectors (as listed in the Acknowledgements). However, the opinions expressed in the report are those of the authors.
Whilst the report was compiled with reasonable care, Esmée Fairbairn Foundation and the authors make no representation or warranty and assume no responsibility or liability for the accuracy or completeness of the information set out in it or for any use by any reader of the information set out in this report.
Each reader of this report should take full responsibility for evaluating and acting on the basis of any information contained in it and should seek its own investment, financial, legal, tax or any other professional advice as may be necessary in relation to its specific circumstances.
About the authors
Hayley Mole and Thomas Slattery, independent consultants in the field of impact investing and sustainable food systems.
Hayley is an investment professional with experience in the food and agriculture sector spanning both professional experience in New York/ London for an impact-dedicated investment advisory firm, as well as hands-on exposure to operating farms in South Africa and the UK, which formed an integral part of her upbringing. As VP, Private Market Investments at Flat World Partners until 2023, Hayley led investment research, process buildout, due diligence and client engagement for foundations, pension funds and HNW families on private market investments across numerous impact themes, and included building and maintaining the funds pipeline in food and agriculture within a broader database of 300+ managers. These investments ranged from early stage agrifoodtech to large scale farmland, later encompassing the emerging sub-themes of carbon and natural capital. She holds a MS Sustainability Mgmt from Columbia University.
Thomas is an expert at the nexus of regenerative agrifood systems, technology, innovation, and thought leadership content. He is wholeheartedly dedicated to advancing sustainability and regeneration within the agrifood sector and Thomas holds a master’s degree in Agricultural Technology and Innovation. He leads initiatives that create and share thought leadership in this field, nurturing significant connections between innovators, investors, producers, and industry. Thomas has 15 years of experience as a marketing consultant and advisor, demonstrating a versatile skill set in marketing and communications across various sectors. His extensive portfolio includes working with renowned companies such as Airbus, ASDA, Bayer, Cafedirect, Canon, Capco, Carlsberg, Castrol, Capcom, GSK, HTC, Nokia, and Unilever.
Executive Summary
Capital is flowing into food and agriculture sustainability, but not at the scale, and with the prioritisation necessary, to meet both the challenges and opportunities facing the sector.
Financial actors can leverage the socioeconomic opportunities of the food systems transition to seek investment returns, and simultaneously, understanding these system challenges can serve to mitigate the increasing financial risks presented by the current food system.
At the same time, these efforts can underpin strong economic recovery, climate action, nature protection and public health. The market opportunity for private capital in agrifood is consequently one of alpha generation and risk mitigation, as well as, importantly, influence.
This work focuses on Thematic Impact Investing, whereby targeted thematic alignment can mutually seek financial returns and impact.
It zooms in on where private capital can play a role in a sustainable food systems transformation:
•Shifting capital allocations to impact
• Driving engagement
• Setting standards, transparency and disclosure
• Driving generational change
• Collaboration across the supply chain
Food system challenges and drivers
Global megatrends of population growth, shifting diets, and technological advancements are intertwined through agrifood value chains with the global challenges of environmental degradation and climate change, socioeconomic inequality and poor public health, among others.
These system challenges are also causal drivers for a wide range of policy, technology and producer/ consumer responses to transform the food system.
The next page gives a summary of the challenges and drivers, leading to the three themes explored in this report.
Executive Summary
From drivers to themes for systems change
Demand-side and Supply-side
Market Drivers
Environmental Challenges
Strong fundamental driving forces underpin agrifood industry growth such as population growth, shifting diets, resource and land scarcity, and technological innovation.
The climate crisis and corresponding nature crisis are integrally linked to food production.
Food Security Challenge
Supply chains are under pressure and at risk of “unknown unknowns”, including global conflicts and weather events, susceptible to single points of failure.
People are central to these value chains, from workers to consumers, with deep ongoing inequities and access disparities.
Socio-economic Challenges
Poor diets drive poor health, and a huge economic burden – particularly in the UK.
Food needs to be produced continually through more sustainable methods, using fewer or different resources, and accounting for externalities. This implies continued efficiency gains and a reduction in food loss and waste through the value chain.
Nature has been fundamentally ignored – all transitions, practices and technologies should aim to protect and restore nature by preserving intact ecosystems, rehabilitating degraded landscapes, and enhancing biodiversity.
Resiliency, transparency and traceability, whilst seeking efficiency and mitigating food loss and waste through the chain. Food security and diversification of food sources is also critical.
Themes to address the challenges and capture the driving opportunity
Agricultural labour should be fairly compensated, rural livelihoods prioritised, gender disparities addressed and efficiency should not come at the expense of people or they environment they live or work in.
Health and nutrient density are key, alongside consumers making healthy choices, through development of less processed, nutrient dense food, while improving consumer knowledge and behaviour towards optimal nutrition and health.
and Health-Focused
Innovation 2. Supply Chain Resilience and Traceability
Aligning themes to the agrifood value chain
The complexity of the food system also speaks to the complexity of finding solutions – whereby solutions to one serve as solutions to another. Whilst the themes overlap in many ways, it's helpful to link them to the agrifood value chain to better understand where interventions are possible.
Through these themes, the investment opportunity can be captured on the front edge of an evolving system, whilst simultaneously seeking to deliver true impact and sustainable systems change through resolving system tensions.
Primary production forms the foundation of all agrifood value chains, yet it bears a disproportionate responsibility for greenhouse gas emissions and environmental harm. While interest in sustainable methods, particularly regenerative agriculture, is growing, scaling their impact requires significant capital investment.
This can be achieved through real assets like farmland and infrastructure, transition finance via private debt, or venture capital to drive innovation and enabling technologies. These investments can advance sustainable production systems and enhance the measurement, monitoring, and reporting of outcomes, supporting the broader transformation of agricultural practices.
Food processing and distribution connect sustainable production to healthier consumption, and are responsive to both demand and supply side drivers. The midstream is critical to reducing food waste, and ensuring local food security is not depending entirely on offshore processing.
However, midstream receives less attention from private impact investment than other parts of the value chain.
(Re)developing infrastructure via real assets or private equity stage investments, with ingrained innovation catalysed by venture, needs aligned capital to build and adapt to the system which is changing around it.
Food consumption drives the value chain to adapt in response to consumer demand or to regulation. In the face of diet-related poor health, macro-drivers are beginning to converge on “nutrition” in food, in addition to sustainability. This has helped health and nutrition to become a priority in end products and a key focus in the value chain.
Starting with alternative products that are striving for better health and sustainability, alongside technologies supporting traceability (venture capital), this theme can be carried backwards through value chains with local context for supply availability, production practices, and innovation in ingredients.
Executive Summary
Where investors can look
Investable Areas | A framework for agrifood investments as 20 system interventions
Sub-themeswithin agri-foodguide the goalsof where capital can effect change.However, thefood system has endless componentparts,from farms and other forms ofprimary production,toinnovationsin supplychain efficienciesandtechnologieswhich are reshaping theway wethinkaboutproducing and consuming food.Based ondiscussionand research, this report has landed on 20 investable areas of priority, for consideration.
Based on discussion and research, this report has landed on 20 investable, sustainable focus areas for consideration.
Bybreakingout the systemintothese parts,andfocusingon investable,sustainable focus areas,potential investmentscan be alignedtoaframework tovisualise where theyfit in the system.Distinguishingbetween the WHERE and WHAT can help provide clarity.
The themes,investable areasandvalue chain purposefullydonot fullyalign,to acknowledge the complexity and non-linearity of the system.
What does this do and how can its operations be labelled in the food system?
A glossary of investable areas is on pages 15 and 16. Themes
How is this addressing the imperatives for change?
Executive Summary
What to consider in practice
The context of each investment, its role in the value chain, the team driving it forward, and the appropriateness of the capital to the business model of the company are paramount to decision making on allocations to each theme.
In impact investing, food and agriculture is most commonly approached through real assets and venture capital, where longtermism and practice shifts can meet innovation across the value chain.
Here, we consider the systems change role of each asset class and opportunities within each theme.
Producing food with nature and health central to farming and land management practices.
Scaling Sustainable Agriculture and Food Production
Creating Supply Chain Resilience and Traceability
Embedding Nutrition and Health-Focused Food Innovation
Same as above, plus connecting the up- and downstream value chain and catalysing new markets.
Opportunities with experienced managers, with a clear thesis how their operations are more sustainable than the status quo (contextualised for region, product type, opportunity cost relative to natural capital).
Managers that are investing in hardware and solutions to tough, capex heavy infrastructure challenges.
Managers looking to expand learnings from production downstream through vertical integration, or where synergistic assets can prove out the ability for midstream development with technology integration.
Opportunities which can link the downstream, consumer and regulatory pull, to the upstream production operations where nutrient density can be linked to inputs and farming practices.
Enabling the transition with technology across the value chain
Early stage opportunities either directly or via fund managers, with the depth of experience to cover more technical areas in deeptech and agbiotech.
Digitisation solutions for supply chain connectivity, transparency and efficiency – notably those applicable across different supply chains and product types.
Opportunities in consumer products where nutrition meets sustainable consumerism goals, understanding if expanding the product base is responding to validated demand.
Financing change and bridging near term expenditures.
Finance (for further research)
Leading in other forms of capital by buffering traditional returns expectations.
Tailored transition finance with flexibility around growing seasons but stringency around practices.
Real Assets
Private Equity
Venture Capital
Private Debt
Blended
Transition Finance
Technology and innovation
Land and Infrastructure
Agrifood Value Chain Operating Businesses
The Market Map (Europe)
Investable Landscape |The Market Map (Europe)
Investable Landscape |The Market Map (Europe)
Investable Landscape |The Market Map (Europe)
/Fundraising Closed (or unknown)
Back to market 2025
Examples of fund managers investing in food systems (by estimated AUM of most recent fund)
Thisreport reviewed 60+ global venture capitalfund managers with eitherexplicit focus or part-focus onthetopic offood and agriculture,to assess areas ofthematic focus, portfolioconcentration andoverlap,and differencesin strategy.
Thisreport reviewed 60+ global venture capitalfund managers with eitherexplicit focus or part-focus onthetopic offood and agriculture,to assess areas ofthematic focus, portfolioconcentration andoverlap,and differencesin strategy.
Thisreport reviewed 60+ global venture capitalfund managers with eitherexplicit focus or part-focus onthetopic offood and agriculture,to assess areas ofthematic focus, portfolioconcentration andoverlap,and differencesin strategy.
Equity Fund Managers
CibusEnterprise)
SeasonsVentures
Tikehau Regenerative Agriculture Fund
GullspångRe:food
FarmlandFund
Generation
these, 27 are Eurocentric venture and growth equitymanagerswith potential or existingUKexposure,alongside anumberof dedicated realassetmanagers (somefollowing PE-like strategies).Acknowledgingthat the agrifood techspaceparticularly has seena tough few years,there isaresurgence in fundactivity andinterest indicatedbythe breadof these strategies.This list is not exhaustive but provides good coverageoftheimpact-focused manager subset.
these, 27 are Eurocentric venture and growth equitymanagerswith potential or existingUKexposure,alongside anumberof dedicated realassetmanagers (somefollowing PE-like strategies).Acknowledgingthat the agrifood techspaceparticularly has seena tough few years,there isaresurgence in fundactivity andinterest indicatedbythe breadof these strategies.This list is not exhaustive but provides good coverageoftheimpact-focused manager subset.
these, 27 are Eurocentric venture and growth equitymanagerswith potential or existingUKexposure,alongside anumberof dedicated realassetmanagers (somefollowing PE-like strategies).Acknowledgingthat the agrifood techspaceparticularly has seena tough years,there isaresurgence in fundactivity andinterest indicatedbythe breadof these strategies.This list is not exhaustive but provides
manager
Europe
European Food and Ag Focus (or key vertical) –VC & Growth
CibusEnterprise)
Astanor
(Edmond de Rothschild) Mudcake
Peakbridge (Edmond de Rothschild)
Mudcake
YieldLab
FoodLabs
Five
From drivers to investable solutions
20 system interventions
Investing in agrifood systems transformation presents a compelling opportunity to address escalating global challenges, while unlocking significant economic potential.
Subthemes within agrifood guide the goals of where capital can effect change. However, the food system has endless component parts, from farms and other forms of primary production, to innovations in supply chain efficiencies and technologies which are reshaping the way we think about producing and consuming food. Based on discussion and research, this report has landed on 20 investable areas of priority, for consideration. By breaking out the system into these parts, and focusing on investable, sustainable focus areas, potential investments can be aligned to a framework (see page 41) to visualise where they fit in the system.
Investable Areas: A Glossary
Agbiotech and Inputs
Advanced biological and chemical solutions for crop protection, seed technology, genetics, soil and animal health to boost agricultural productivity sustainably.
Agricultural Livelihoods and Workforce
Initiatives that support fair labor practices, skill development, and improved livelihoods for agricultural workers and rural communities.
Alternative/Novel Food Product Offering
Innovative approaches in food distribution, restaurant operations, and retail experiences that prioritise sustainability, health and consumer convenience.
Circularity and (Food) Waste Management
Solutions that minimize food waste and promote circular economy principles in the food industry.
Climate Risk and Weather
Technologies and services that help farmers food producers mitigate and adapt to climate-related risks and weather uncertainties.
Consumer Behaviour & Food Culture
Initiatives that influence and shape consumer preferences towards more sustainable and healthier food choices.
Data, measurement and monitoring
Digital tools and platforms for collecting, analyzing, and utilising data to optimise agricultural production, processes and food supply chains.
Education and Knowledge Exchange
Innovative approaches in food distribution, restaurant operations, and retail experiences that prioritise sustainability, health and consumer convenience.
Ethical Livestock and Animal Welfare
Technologies and practices that improve the quality of life for farm animals while maintaining production efficiency.
Investable Areas
FarmTech
Technologies/solutions that enhance farm productivity, efficiency, and sustainability through automation, IoT, robotics, remote sensing, and other smart farming tools.
Food Service and Retail
Innovative approaches in food distribution, restaurant operations, and retail experiences that prioritise sustainability, health and consumer convenience.
Natural Capital and Ecosystem Services
Approaches that recognise and monetise the value of nature to agriculture and food production. Aiming to incentivise land stewards to protect and enhance ecosystem services, rebuilding damaged ecosystems and making food production more resilient.
Novel Production Systems
Innovative food production methods such as vertical farming, aquaponics, and controlled environment agriculture that maximize resource efficiency.
Nutrition and Health
Products and services focused on improving human health through better nutrition, functional foods, and personalised dietary solutions.
Supply Chain Infrastructure
Advanced physical and digital systems that form the backbone of food distribution networks. This includes smart warehousing, cold chain logistics, intermodal transportation hubs, and data-driven management platforms that enhance the speed, reliability, and sustainability of moving food products from producers to consumers.
Supply Chain Innovation
Solutions that optimise the journey of food from farm to table, enhancing efficiency, transparency, and sustainability.
Sustainable Agriculture
Farming practices that focus on soil health, biodiversity, and ecosystem restoration while producing food and sequestering carbon.
Sustainable Aquaculture and Fisheries
Technologies and practices that promote sustainable fish farming and responsible wild-catch fishing to preserve marine ecosystems.
Sustainable CPG
Consumer packaged goods that prioritize sustainability in ingredients, packaging, and production processes.
Transition Finance
Financial products and services designed to support the transition of food systems towards more sustainable models.
Theme 1 Sustainable Agriculture and Food Production
Comparing two pathways for Sustainable Agriculture
The need to transition away from conventional agricultural systems is widely recognised, given its significant environmental and social impacts. However, the path forward is complex, with numerous interpretations and definitions of alternative farming systems – regenerative agriculture being a topical example. To navigate this landscape without becoming entangled in definitional debates, this report focuses on the two approaches.
Source: Chatham House
Environment & Society Program: Sustainable Agriculture and Food systems; Comparing contrasting and contested versions (2022)
Version 1.
“Sustainable” intensi ication and land sparing
•Assumes demand for food will inevitably increase due to population growth and rising incomes
•Focuses on increasing agricultural productivity and efficiency to meet growing demand
•Aims to intensify production on existing farmland to spare other land for nature conservation
•Relies heavily on technological innovation to boost yields while minimizing environmental impacts
•Gives primacy to market forces and consumer choice
Version 2. Agroecology and land sharing
• Assumes demand can be shaped through policy and structural changes
• Focuses on changing diets and reducing waste to decrease overall food demand
• Promotes agroecological farming methods that work with nature
• Aims to create heterogeneous farming landscapes that share land with biodiversity
• Calls for restructuring markets and policies to prioritize health and sustainability outcomes
Esmée Fairbairn Foundation’s report on Nature-Friendly Farming advocates for practices that restore biodiversity, improve soil health, and reduce the use of chemicals, aligning most closely with the Agroecology and land sharing pathway for Sustainable Agriculture outlined.
Theme 1
Sustainable Agriculture and Food Production
The balance between these approaches will likely be determined more by political and ideological factors than purely scientific evidence. Achieving true sustainability in agriculture will require changes in governance, market structures, and consumption patterns regardless of which version is emphasised.
1.
Agroecology and land sharing have significant environmental benefits, but will take time to scale up and will require adaptations to existing supply chains and retail systems.
Both approaches have merits and drawbacks, and that the future will likely involve some combination of the two rather than a pure version of either. Some key points on how both are needed:
2.
Achieving the necessary scale of change in the near-term will likely require improvements to the existing intensive agricultural system acknowledging the need to sustain productivity.
3. Technological innovations from the intensification approach can potentially be applied to make agroecological methods more productive.
4.
A hybrid approach could involve intensifying production sustainably in some areas while expanding agroecological methods in others based on local contexts.
5.
Shifts in diet and reducing food waste would reduce pressure on land, potentially allowing for more agroecological approaches.
Theme 2
Supply Chain Resilience and Traceability
Addressing the supply chain
through the “missing midstream” in the value chain
The midstream includes processing, storage, aggregation and distribution, marketing, and could also bridge into retail and end-distribution (D2C, B2B, and wholesale). This segment plays a vital role in the value chain, but has received relatively little investment attention compared to upstream production and downstream food service or retail-stage innovation.
Why the midstream?
• Food safety is paramount, as traceability, quality controls, regulation and compliance require processors and food handling to generate and report operating, real-time data.
• Minimising post-harvest losses, particularly in developed markets. Food waste occurs mainly midstream and downstream, with 16% of total food waste attributed to supply chain inefficiencies. For instance, cold storage is crucial in minimising food loss during transit.
• Sustainable farming practices require robust middle infrastructure to process and transport agricultural products efficiently, and to create viable channels for regeneratively or sustainably produced goods, or shorter, regional supply chains.
Supply Chain Resilience and Traceability
The “missing midstream”
There is a misnomer between overall investment in the midstream, and investment in the midstream that is fit for, or directed, towards supply chains which are targeting all the outcomes of a sustainable food system transition. Planet Tracker’s Financial Markets Roadmap indicates that 60% of external funding is directed toward manufacturers and distributors. However, this is from a dataset of banks with large public equity holdings and large debt providers, rather than private capital, and also does not account for the alignment of this capital towards any broader outcomes. The report also notes the critical requirement for midstream/downstream companies and their funders to take responsibility for their indirect impacts which link back to production.
Two pieces, notably from a US perspective, cover this topic with more nuance for regeneration and sustainability. Croatan Institute’s Investing in Regenerative Agriculture Infrastructure Across Value Chains (2022) highlights five considerations for midstream investments:
• Capital alignment is lacking: These are often nontraditional businesses are working in complex regional and local food systems with small- to mid-sized producers, which often find their business models do not align to conventional capital which cannot accommodate uneven growth trajectories and longer timelines, or high capex outlays.
• Strong value chain partnerships are critical: Due to the proximity to producers, commitments in the form of contractual partnerships but also in terms of sustainability are the only way for these entities to reach viability.
• Technical assistance with finance: Cost management, risk mitigation and digitisation support are critical, and investors should be in a position to connect investees with these resources.
• Skilled labour is a challenge: Workforce development was noted as a key bottleneck, which links the midstream to a huge skilled job creation or just transition opportunity.
Theme 2
Supply Chain Resilience and Traceability
CREO’s Unlocking Regenerative Agriculture report highlighted whitespace opportunities in the value chain for midstream solutions. This is primarily driven by the acknowledgment of the gap for venture funding in the midstream to enable innovation and catalyse alternate systems. These businesses have to consider how to push against industry consolidation and commodification by, for example, addressing mismatched demand and supply with technologyenabled marketplaces.
Whitespace opportunities in the value chain for midstream solutions (CREO, 2021)
Theme 3
Nutrition and Health-Focused Food Innovation
The Protein Dilemma
The excessive consumption of animal protein in wealthy countries significantly contributes to climate change, harms natural ecosystems, and is associated with a rise in non-communicable diseases (NCDs). As global demand for animal protein increases alongside population growth, it becomes crucial to shift away from overconsumption in order to sustain the planet’s resources. While integrating practices such as regenerative agriculture, increasing nutrient efficiency, and improving on-farm energy use have significant climate mitigation potential these efforts alone are insufficient. Embracing alternative protein sources, such as plant-based whole foods and innovative protein options, is essential for reducing public health, climate, and environmental risks while ensuring long-term food security.
Plant-based meat and grass-fed beef (which includes regenerative beef) each make up less than 1 percent of the total meat market. Meanwhile, global meat demand shows no signs of slowing down. Per-person meat consumption in 2019 exceeded every year before, and the United Nations predicts that global meat production will increase by more than 50 percent by 2050 to meet growing demand. (GFI)
Sustainable Agriculture
Novel Production Systems
Alternative Protein Sources (FAIRR , 2024)
What is alternative protein?
Plant-based proteins:
Sources: Legumes (soy, peas, lentils), nuts, seeds, grains (quinoa, amaranth)
Insect proteins: Sources: Cricket flour, mealworms
Algae-based proteins: Sources: Spirulina, chlorella
Mycoprotein (fungal protein): Sources: Derived from Fusarium venenatum fungus (e.g., Quorn products)
Cultured or lab-grown meat: Sources: Animal cells grown in a laboratory setting
Fermented proteins: Sources: Tempeh, natto
Does a complementary protein system lead to healthier diets?
Role for Regenerative Animal Protein
Regenerative animal protein production, when done properly, can have positive impacts on both the environment and human health. These systems often mimic natural grazing patterns, which can improve soil health by increasing organic matter content and enhancing carbon sequestration, and this process helps combat climate change by removing carbon dioxide from the atmosphere. Additionally, wellmanaged grazing can promote biodiversity, restore degraded grasslands, and improve water retention in soil.
How the two systems can benefit each other:
Regenerative agriculture and alternative proteins can work hand-in-hand to create a just, secure, and sustainable food system.
Integrated land use:
• Alternative proteins can reduce land demand for livestock, allowing more space for regenerative practices.
• Regenerative agriculture can provide sustainable inputs for plant-based proteins.
Diversified protein sources:
• Regenerative farming can produce diverse, high-quality animal proteins.
• Alternative proteins can fill gaps and reduce overall demand on animal agriculture.
Circular economy:
• Byproducts from alternative protein production can be used as inputs for regenerative farming.
• Regenerative practices can provide sustainable biomass for certain alternative proteins (e.g., insects fed on crop residues).
Impact Risks A complex system of paradoxes, and many possible outcomes
There are risks that the outcomes sought by an intervention are either not met or are something other than what was intended. The paradoxical nature of some of these challenges, highlighted here, provides some examples of where assumptions about agrifood system actors and behaviours could be different to the reality of the system.
1.Sustainable Agriculture and Food Production
Farmers would change, but often can’t
Farmers want their land to thrive, and the long-term economics of regenerative agriculture are positive, but…
• …changing behaviour is hard.
• Adopting new practices requires capital, while farmers are operating tight budgets and industry is running at tight margins.
2.Supply Chain Resilience and Traceability
The market and value chain should support innovation, but often doesn’t The commodity-centred food system is efficient and expansive, but…
• …fragmented and untraceable.
• Reinvention from what is produced to how it is produced requires collaboration, coordination, data, and new approaches.
3.Nutrition and Health-Focused Food Innovation
Consumers say they want to buy better, but often don’t
Consumers value sustainable and healthy food offerings, but…
• …not at the expense of good taste, high quality and reasonable price.
• And they struggle to find clear, consistent information to support these decisions.
3 Adapted from Food System Transformation:
The Time Is Now, Bain & Company (2022)
• Market Volatility: Transitioning to systems could disrupt food supply and price volatility.
• Economic Viability: Sustainable practices have transition costs, unproven returns and a seeming reliance on ecosystem service credits.
• Social Resistance: New tech and practices may face resistance from farming communities due to unfamiliarity, skepticism.
• Carbon tunnel vision: Natcap options tend to focus carbon revenue streams which don’t necessarily account for biodiversity, water or other factors.
• Leakage: Moderating yields or preserving land in favour of nature may result in intensive practices replacing them somewhere else.
• Complexity and Transparency Overload: Excessive data leading to difficulty for consumers and stakeholders to understand key sustainability metrics.
• Data misuse: Maximal transparency created may provide ways for irresponsible actors to exploit pricing, resources or regulatory loopholes.
• Cost of Implementation: Solutions may be cost-prohibitive for smaller, local producers or suppliers being unable to compete with larger corporations.
• Energy intensity: High-tech and deep-tech solutions require intensive data usage which (especially in the case of AI) could multiply the value chains’ energy burden.
• Lack of supporting research: Longtime beliefs around “health” have been disproven, and current beliefs could prove to be wrong (i.e. “non-fat” leading to realisation of “good” vs. “bad” fats).
• Access and Affordability: Sustainable, personalised nutrition solutions and functional foods may be expensive and inaccessible
• Healthy but not Sustainable: Changes in downstream requirements for food may catalyse over-production of high-footprint products (i.e. avocados, and water usage/ transit footprint).
• Fads not solutions: food-as-medicine, nutraceuticals and alt. products rapidly become trends, with the risk that new value chains develop that turn out to be fleeting and redundant (wasted infrastructure and capital).
Real Assets
Soil, natural capital and biodiversity as tangible assets
Many real asset managers are looking to use carbon or biodiversity credits, alongside farmland management for additional revenue streams, and for the preservation/rehabilitation of fallow land. These natural capital markets are still nascent in most geographies, so realistic expectations should be set in terms of returns potential, but natural capital exposure for existing agrifood managers can also be a potential hedge against a rising carbon price environment where agrifood supply chains will be required to inset/offset.
Real assets, consisting of physical land assets, has the most potential for direct and rapid protection and restoration of soils and biodiversity, where emerging technology can enable more sustainable practices and the ability to measure and monitor progress.
Soil Wealth (2019) by the Croatan Institute identified $47.5 billion in investable strategies with regenerative agricultural features, including $5.3 billion in public debt and $8.4 billion in public equity. The bulk of this funding lies with $22.8 billion in farmland and real assets. The report highlights that regenerative agriculture, which focuses on improving soil health, can increase the long-term value of farmland. Healthier soils lead to better crop yields, resilience against climate change, and reduced input costs, making the underlying real asset more valuable over time.
Considerations and Manager Insights
• Physical risk: More so than other asset classes, physical assets are materially at risk from extreme climate events. while infrastructure (such as roads) is critical to farm operations, bringing peripheral physical risk.
• Land use restrictions: Existing conservation structures such as easements (USA) can restrict land use conversion, for better or worse, and should be carefully understood.
• Different models, different levels of transformation ability: Owneroperators will have more direct control over what happens at each property, while buy-and-lease models open up more opportunity to work with aligned, experienced and sustainably-minded operators.
Aquaculture and Fisheries Natural Capital and Ecosystem Services
Private Equity
The developers and operators
Private equity invests in value chain companies either supplying regenerative farms or sourcing from them, but can also include direct farmland investments through owner-operator and buyout-type strategies. Private equity leans towards financing upstream companies focused on production or inputs, and downstream processors, handlers, aggregators and food brands. The lack of processing and manufacturing infrastructure dedicated to “regeneratively” produced commodities is often cited as a barrier to growing the market for regenerative end products.
Common attributes of PE agrifood managers
• Technology interventions (through farmtech such as robotics, or a transition to biological inputs) towards both sustainability and higher productivity commonly form part of the fund’s value-add in agrifood.
•Managers may also pursue more typical PE value creation strategies such as upgrading management teams, geographic, area or export market expansion, and vertical integration.
•Long-term but with focused exit pathways, as opposed to venture which may pursue less established exit expectations. In PE, this may comes from strategic sales, IPO and recapitalisations, and in all cases require a strong team and correspondingly strong network.
Trends
• A shift in focus, downstream to upstream: from 2021 to 2022, downstream PE investment activity at a global level dropped by 65%, compared to the 4% decline in upstream businesses (according to Campbell Lutyens 2023 report). This is due to high valuations, crowding in the downstream market, and high capex requirements to reach production scale on new products.
• Higher value permanent crops (such as almonds) have garnered PE favour in recent years, over lower value annual row crops (such as wheat).
• Vertical integration is one way to circumvent the midstream barrier, aligning midstream and downstream incentives, capacity, and scale to promote regenerative production upstream.
Private Equity
Fund managers in focus
Considerations and Manager Insights
• With specialisation comes concentration. As the sector grows, managers are becoming more specialised, targeting fastgrowing niches which are largely linked to global shifts towards healthier food, resource efficiency and meeting growing food demand. This is increasing competition in the space and extra scrutiny is required on valuations as well as the intention and execution of impact within the strategy, and also risk awareness for concentration around product type or supply chain.
• Greenfield expansion often forms part of a fund strategy, which warrants consideration on what the prior use of the greenfield site was, and whether sufficient productivity gains are being achieved to justify any further footprint (i.e. is sustainable intensification effective, as opposed to just scaling land area).
• Europe is catching up.
Agrifood-focused PE is not common in the European ecosystem, although there are later stage managers with some focus on the theme – which makes sense from a sector diversification perspective. However, with growth equity opportunities emerging in Europe, the market is developing for private equity with specialist expertise to focus on resulting M&A opportunities.
• Benchmark returns for agrifood will largely be based on longstanding US private equity data which may not accurately reflect the European opportunity, especially with an altered view on extractive, intensive processes of the past few decades.
• Real Assets + Private Equity can result in a lower, but potentially favourable, riskadjusted return. Private equity managers (such as Regenerate Asset Management) pursue a real-asset based strategy, which incorporates an income component to the potential return profile, albeit with a lower overall target than traditional or technology-backed PE.
Venture Capital
The innovation driver
Venture capital exists to provide equity capital to early-stage companies which are channeling innovation into food systems. Venture investments can be done directly into early enterprises, or via a plethora of venture-stage managers focused on the agrifood value chain, across almost all investable areas.
Characteristics of Venture investments
• High Growth Potential: Venture investments in agrifood target earlyto growth stage companies with innovative technologies and business models that can disrupt traditional agriculture and food at any point in the value chain. These areas include precision farming, alternative proteins, and novel foods, with the potential for very high returns (with equivalent risk of failure).
• Active Engagement: VC firms often take an active role in the management of portfolio companies, providing strategic guidance, resources, and industry connections to scale. In agrifood industries, these networks and regulatory know-how can be particularly valuable, where the usual path to exit is acquisition by a large agrifood corporate.
• Technical, scientific or engineering expertise: Many firms invest in deeptech, where the underlying biotechnological or hardware-based technologies involve complex IP, technical analysis and route to market, needing expert context and background knowledge.
Venture Capital
Reviving agrifoodtech in the wake of valuation corrections
Considerations and insights from managers:
• Capital Availability/Exit Strategies: VC investments typically require a clear exit strategy, such as an initial public offering (IPO) or acquisition by a larger company, and the timing and success of these exits can significantly impact overall investment performance. Several managers noted onward funding constraints, especially from Series C and later.
• Hardware vs. Software: The longstanding hesitancy around hardware-based solutions still stands, with most managers noting a preference for hardwarelight companies, unless hardware was a specialist focus.
• Is the end customer the farmer? Many managers noted a preference for solutions that do not require selling to farmers, either due to 1) consideration of pricing distribution and not loading all costs on the primary producers, and 2) observations that adoption of new innovations by farmers continues to be problematic, so it is preferable to focus products and services that can be scaled through existing infrastructure and sales channels –such as biological input alternatives.
• New food segments: Beyond the traditional categories, niche categories such as pet food and coffee replacements emerged in conversations, highlighting the breadth of offerings and also the need for deep market knowledge in due diligence to understand market adoption.
• Technologies for SMEs: Most technologies are intended for large scale adoption, and are designed and priced as such. However, the importance of making technology and innovation accessible to smaller producers and SMEs was also raised, which does speak to the consideration of how food systems can remain small, local and also efficient.
Thematic Impact Investing
Impact Investing Spectrum
Themati c Impac t Investin g is the first segment of capital focused on maximum-impact. Through this focus, targeted thematic alignment can mutually seek financial returns and impact.
Seeks financial returns regardless of Environmental, Social or Governance (ESG) factors
Investments screened out based on ESG Risk (“negative screening”)
Negative Screens: (examples) Tobacco, alcohol, weapons, gambling, pornography, nuclear energy
Sustainability factors and financial returns drive investment selection Factors
Considered:
• Carbon footprint
• Resource use
• Waste reduction
• Compensation
• Product safety
• Gender equality
Targeted themes and financial returns drive investment selection
Solutions For:
• Climate Change
• Population growth
• Urbanisation
• Water scarcity
• Food systems
Social and environmental considerations take precedence over financial returns
Financial returns disregarded in favour of social and environmental solutions
Support For:
• Innovation and risk-taking
• Proof of concept/pilots
• Enabling environments
• Commercial capital leverage
Esmée Fairbairn Foundation
Investing in Our Natural World
Esmée Fairbairn Foundation has three strategic aims: to improve Our Natural World; secure A Fairer Future; and nurture Creative, Confident Communities. The focus of our work in Our Natural World is on restoring and protecting nature and ensuring people benefit from that recovery. We want to contribute to sustainable and ethical food, and Nature Friendly Farming is a key funding priority – due to its immense value, not just for nature and wildlife recovery, but also for our health.
This page shows our approach to investing in sustainable food and agriculture using our Spectrum of Capital.
Enhanced Sustainability
Impact Investing
Allocation
Impact First Investing (Social Investment)
Philanthropy
Market rate returns
whilst targetting leaders in ESG and sustainability
Returns and impact in lockstep through themes
Innovative and impactled, financial returns are secondary
High impact towards our aims and priorities
Acknowledgements
We would like to thank the following people who contributed time to providing insights and discussion for this report, and for their various contributions to the transformation of the food system towards sustainable and impact outcomes.
Jack Bobo
University of Nottingham
Chris Ramsa
Simon Evill
Pelican Ag
Henry Dimbleby
Anya Claxton
Anu Shetty
Bramble Partners
Antony Yousefian
Naeem Lakhani
The First Thirty
Madeleine Evans, Lucía Keijer-Palau
Generation Investment Management
Gaia De Battista
Sidd Shrikanth
Just Climate
Claire Murray
Blume Equity
Leslie Kapin Astanor
Adam Kybird Triodos
Addy Windsor-Clive
Nicholas Burlington
Regenerate Asset Management
Paul McMahon
SLM Partners
Erin Feger
David Leon Biome Capital Partners
Tristan Berne Aliment Capital
Nick Schroer
Trailhead Capital
Guilherme Teixeira
Sustainable Capital Group
Lara Nuchowicz
LNL Consulting
Tosca Griffin
Planet First Partners
Gaetan Kerloc’h
Five Seasons Ventures
Peter Dorfner
Janna Ensthaler
Green Generation Fund
Alistair Cooper
Kristen Weldon
Katie Hughes
Cibus Capital
Caitriona Dickenson
Tikehau Capital
Chris Windeatt
Tim van den Pol
Van Lanschot Kempen
Maxime Walter Capagro
Peter Herz 1st Course Capital
Acknowledgements
Brandon Welch
Mad Capital
Emma Steele
Ascension Partners
Helen Lin At One Ventures
Rosie Wardle
Synthesis Capital
Edward Arthy
Gullspang Re:food
Tijl Hoefnagels
Rubio Impact Ventures
Marie Ang
David Gowenlock Cambridge Associates
Sue Pritchard Food, Farming and Countryside Commission
Tessa Etkin-Silver
Mission Kitchen
Robert Fraser Real Farming Trust
Christelle Perera
Skagen Conscience Capital
Gautham Radhakrishnan
Professor David Hill CBE Trustees, Esmée Fairbairn Foundation
Special thanks goes to Veronica White (PhD, Exeter University) for her input on visualisations for food systems investing