13 September 2021

Spotlight on Sustainability

Ahead of the COP-26 conference on climate change in November, and in the wake of extreme climate events in various parts of the world, a resurgence of activity by Extinction Rebellion and a more general drift towards ESG investment, it is hardly surprising that there is increasing activity in different areas of focus for carbon reduction.

One focus is changing farming practices. The recent Dimbleby Report on a National Food Strategy for the UK has been met with a positive reception and clearly government money will be committed, in the UK and elsewhere. There are comparatively few pure investment opportunities in this area in the UK, or indeed elsewhere. These include the hardware – vertical farming, and lighting, as well as the “software” – the food. Finding more efficient ways of generating protein than growing it by cutting down the Amazon rainforest, or by factory fishing, and then feeding it to animals or to farmed fish makes sense. Doing it so it tastes good is less easy.

Most of the investments have been done by venture capital funds, and are therefore hard to access, and/or have a high entry price. Earlier this year LGB introduced Agronomics, an AIM-quoted fund, to platform investors, and they have been busy putting money to work (announcing this week a follow-on investment in Formo, which makes “animal-free” cheese). Cibus Enterprise Fund ll, a VC fund, is currently raising money: this is a conventional VC fund with a high minimum commitment and a phased drawdown. We have been impressed by their approach and have introduced them to a number of clients. We will see more companies coming to the market, and indeed are currently assessing an opportunity with a company which designs and installs sophisticated lighting and sensors for vertical farms and glasshouses and is looking to IPO on AIM in early October.

There are other related areas to invest in change in the food chain, for example in low impact fungicides (Eden Research), and compostable cutlery (Biome Technologies) – in some cases these are facilitated by changing regulation, in some cases (as in the European Plastics Directive, which doesn’t facilitate composting) not. We will continue to seek out opportunities.

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