Growing for Profit

Agriculture currently covers 50 million square kilometres of the Earth’s surface, more than the combined land areas of Russia, Canada, China and the U.S.A. In 2018, agriculture contributed $3.34 trillion to the global economy – 3.9% of global GDP – a 304% increase from the $1.1 trillion generated in 2000. Of the agricultural land in use, two-thirds is currently pastureland used to produce animal-based foods which are forecast to grow 70% by 2050.

Planet Tracker’s benchmark analysis of 37 listed equity funds in the food and agriculture sectors demonstrates that asset managers need to understand that for their food and agriculture equity funds to manage portfolio risks effectively, they must measure, manage and monitor the natural capital risks in their investments by aligning these with sustainable food and agriculture systems to improve investment performance.

For each of the 37 AgriFunds, Planet Tracker performed a high-level screen of their 2018/19 annual reports and related securities’ filings for these key words and terms. This initial screen determined whether these AgriFunds are disclosing the natural capital risks embedded within their investments.

Some Key findings are:

• Natural Capital Risks: Only three funds, the DWS Global Agribusiness, DWS Invest Global Agribusiness and Janus Organics Thematic ETF – USD (liquidated to shareholders of record on 17 March 2020), identify and describe a mitigation action for one or more of the selected natural capital risks.
• Food and Agriculture Systems Sustainability Alignment: Only two funds, the DWS Invest Global Agribusiness and Janus Organics Thematic ETF – USD refer to aligning with the SDGs, the EU Action Plan on Deforestation and Imported Deforestation or the EU Sustainable Finance Taxonomy.
• Responsible Investment Alignment: None of the funds refer to any of the three investor guides for responsible investment in the food and agriculture sector.