Food & Agri

30 november 2023

Net-Zero Emissions: Driving Change in Food & Agri

This article is part of a series of short LinkedIn blogs by the Food & Agri team of Anders Invest. Here, we outline our perspectives on key themes that are relevant to the Food & Agri sector and explain how we try to make an impact with our portfolio companies and investment strategies. 


Considering reducing your carb intake? While some individuals vouch for its effectiveness, others view it as a passing trend in nutrition. In contrast, reducing carbon emissions is a shared objective that unites the global food system. Unless we minimize CO2, methane, and other greenhouse gas (GHG) emissions, sea levels will rise, and the likelihood of catastrophic weather events will increase, impacting the food and agricultural industry.This article will examine the carbon market and will focus on Origin & Amsterdam, a portfolio company of ours, known for its sustainable sourcing and trading.


Food plays a crucial role in combating climate change, encompassing factors such as dietary choices, agricultural practices, and the supply chain that connects producers to consumers. Achieving the 1.5-degree target necessitates a reduction of global greenhouse gas emissions, with a goal of reaching a 50 per cent reduction from current levels by 2030 and attaining carbon neutrality by 2050. The framework to achieve these global targets in the food and agricultural industry is outlined in initiatives like the Green Deal. Consequently, the number of companies committed to reaching net-zero emissions has surged globally, with those taking action on such corporate targets quadrupling since 2020—from approximately 1,000 in 2020 to more than 4,000 in January 2023. In this transition towards a net-zero economy, the role of carbon offsetting will be crucial.


The carbon market can take two different but not mutually exclusive paths: a compliance carbon market and a voluntary carbon market. In the European Union, the compliance carbon market operates under the EU Emissions Trading System (ETS), a cap-and-trade system designed to limit greenhouse gas emissions across the continent. Under the EU ETS, the European Commission sets an overall emissions cap, which represents the maximum allowable emissions within the EU's jurisdiction, covering key sectors such as power generation, manufacturing, and aviation. This cap is progressively reduced over time to align with the EU's climate targets. Companies receive or purchase emission allowances within this cap, and if they emit less than their allowance, they have the right to sell their surplus permits to others. The price of permits has experienced significant growth. In 2018, a permit was valued at €7.50, while by March 2023, it peaked at over €100. Therefore, this can be a powerful tool and mechanism to incentivize companies to innovate and reduce their emissions.


On the other hand, a voluntary carbon market uses carbon credits: a document representing the equivalent of one metric ton of carbon dioxide and other greenhouse gases, either prevented from being emitted into the atmosphere (emissions avoidance/reduction) or extracted from the atmosphere through a carbon-reduction project. This market could lead to emission avoidance/reduction in the short term by investing in green energy, energy-saving technologies, and natural resources. Secondly, it can lead to emission removal (negative emissions). Achieving net-zero emissions by 2050 will require at least five gigatons of negative emissions annually. 


 The voluntary and compliance carbon markets face challenges related to measurement, standardized rules and regulation, leakage, and uncertainty. However, there are promising opportunities to make an impact within the food and agricultural industry. Future developments may enable the financial compensation of sustainable practices, reforestation efforts, and carbon sequestration processes. Companies that lead the way with innovative and environmentally friendly approaches are more likely to benefit from these opportunities. Consequently, investing in companies that actively remove and reduce emissions aligns with our investment philosophy and strategy, making both financial and moral sense.


Michel Beekwilder of Origin & Amsterdam, a company from our portfolio specializing in sustainable sourcing and B2B trading of organic products like wheat, spelt, sunflower seeds, soybeans, nuts and vegetable oils, explains what role the carbon market will play in his pursuit of a more sustainable enterprise: "Every organization, regardless of size, will soon need to adhere to forthcoming regulations on environmental impact. We've established benchmarks and performed an internal materiality analysis to remain proactive and not merely reactive. Given our rapid expansion and dependence on the emissions from our logistics partners, a mere commitment to reducing CO2 isn't adequate. Instead, we prioritize partnerships with entities that utilize renewable and hydrogen-based fuels. Our goal is a 30% reduction in average emissions from transport of our products over the next five years. Any gaps in achieving this will be addressed through carbon offset purchases."


"Aligning with our mission to create a positive impact, this approach also presents a strong business case. By 2024, major corporations will be mandated to detail their impact via CSRD, tracing back through their value chain to illustrate the nature of the products they acquire and sell. Consequently, these corporations will likely collaborate with sourcing firms with comprehensive impact reports and lead the way in sustainable policy. Moreover, by investing a premium, they can endorse their items with a carbon-neutral label, enhancing their product's value. We expect that customers who strive for transparency and sustainability will want to work with us. This shift is already happening, and making the right strategic decisions now will enable Origin & Amsterdam to be future-proof and acquire plenty of new business."

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04 june 2024

Food & Agri

Unfolding CSRD This article is part of a series of short blogs by the Food & Agri team at Anders Invest. This article is specifically written for individuals and companies that are interested in or affected by CSRD. In total, 50,000 companies will need to comply with this legislation in the coming years. Additionally, companies who do not need to report will face additional pressure to supply information and data regarding their sustainability performance from B2B customers. Are you involved with a company that will need to comply with the CSRD or needs to generate impact data? Then this article is meant for you. Let’s unfold it’s basic concepts together.   The Corporate Sustainability Reporting Directive (CSRD) is a piece of legislation developed by the European Union which passed on January 2023. Starting January 1, 2024, CSRD intends to ensure that large and listed companies will  report and disclose sustainability information in an elaborate and consitent framework in their management reports. It builds upon previous legislation through: an extended scope including a gradual integration of large companies, standardized requirements, assurance requirements, a digital format, and integration into management reports. Given the extensive scale of the directive, it is very likely that most companies are affected by this directive (either directly or indirectly). Let’s put together some basic concepts in this article to unfold CSRD and understand it’s mechanisms. Why did CSRD came into effect? CSRD aims to address climate change, stakeholer salience and governance malpractises. The driving force behind the CSRD is the European Union's ambitious goal, as outlined in the European Green Deal, to become the first climate-neutral continent and achieve a pollution-free environment by 2050. The Green Deal is the overall sustainable growth strategy of the EU. To direct capital to investments that drive sustainable solutions, the EU made an Action Plan on Financing Sustainable Growth (APFSG) which consists of a set of policy initiatives. To prevent greenwashing and set aligned activities for sustainable investments, the EU taxonomy regulatory framework came into effect in 2020. Basically, CSRD is required to increase transparancy through disclosure of sustainability information, enabling EU taxonomy to work. Overall, CSRD’s goal is not to report for the sake of reporting, but for the sake of transitioning to a green economy with the relevant public information to do so. However, it is difficult to asses how much of the effort will be translated to actual impact. How will CSRD impact the business climate of Europe? Starting in 2025, the first companies need to report on their ESG impacts and opportunities over the year 2024. CSRD compliance is phased in, depending on the type of company. The first report year for the application of the new regulations will be structured as follows: In 2025, companies already subject to the previous non-financial reporting standards, particularly large public-interest entities with more than 500 employees. The subsequent year, 2026, marks the inclusion of other large companies, specifically those with over 250 employees. By 2027, the reporting requirements will extend to include listed Small and Medium-Sized Enterprises (SMEs). Finally, in 2029, non-EU companies generating more than €150 million in revenue within the EU will also be required to comply with these reporting standards. Gradually, more than 50.000 companies will need to report a maximum of 11.000 datapoints per year. The European Reporting Advisory Group (who prepared the standard) estimates that the one-off costs are around €287.000 and recurring cost are €319.000 for companies the first companies to start in 2025. For later companies the costs are €146.000 (one-off) and €162.000 (recurring). As you can see, the amount of work and costs involved with the mere compliance, let alone impact, are significant. Next up, what is in the actual report? What will be in the report? Before CSRD, the annual report consisted of a management report, followed by an audit report and financial statements. The sustainability statements are based on the European Sustainability Reporting Standards (ESRS) and consist of General Information (ESRS-1), General Disclosures (2), Environmental information (ESRS-E), Social Information (ESRS-S), Governance Information (ESRS-G). Thus, CSRD is the piece of legislation as directed by the EU, ESRS are the standards that specify what to report.                List of topical standards: ESRS E1 Climate change ESRS E2 Pollution ESRS E3 Water and Marine Resources ESRS E4 Biodiversity and Ecosystems ESRS E5 resource use and circular economy ESRS S1 Own Workforce ESRS S2 Workers in the value chain ESRS S3 Affected communities ESRS S4 Consumers and end-users ESRS G1 Business Conduct ESRS 1 and 2 serve as a guideline for the general sustainability reporting. The cross-cutting standards define the information to be disclosed about material impacts, risks and opportunities related to sustainability aspects. An understanding of the structure, concepts and general requirements for the preparation and presentation of sustainability information is to be reported. For the topical standards, one is required to conduct a double materiality assesment to map impact, risks and opportunities in relation to the different topics. All topics that are material in the value chain of the company have to be reported and substantiated with data. Accordingly, all topics whose impacts are either materially related to the environment or society (impact materiality, inside-out) or which have a short-, medium- or long-term financial impact on the company and can thus significantly influence the company's development and performance (financial materiality, outside-in) have to be reported. Once all material points are covered, the report will be auditted by an external assurance party. As you may see, it will prove difficult to operationalise this directive and the amount of abbreviations by itself is a real headache. In the next article, we will go in more detail on the impact on the business landscape for Food & Agri and what our strategy involving CSRD is.

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02 may 2024

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