The Future Of ESG Investing? A Look At Some Plant-Based Investors Backing Sustainable Food

Plant-based businesses are getting hotter. And the money is following suit.

While ethics are usually shown the door when investments are concerned, there are a group of individuals who are putting their money where their heart is and reaping returns.

Ethical investments are not a new genre. Many climate-conscious investors have been pushing for greener technologies. That is one of the reasons why capex-intensive energy sectors like solar power and wind power have been able to see the light of day.

But there’s a new sector that has been quietly rising among the ranks which is whetting the appetite of the investors- plant-based businesses.

THE EXPLOSIVE RISE OF PLANTS

Veganism started off as a movement to end animal exploitation but it also brought awareness to two of its side effects- it’s better for the environment and health.

Ever since the human population has been made aware of the looming climate crisis, people have been consciously trying to reduce their carbon footprint.

Not only that the importance of health has also been more apparent now than ever before.

This has taken plant-based food and lifestyle products beyond the ‘woke’ stage.

According to a report by Bloomberg Intelligence (BI) titled ‘Plant-Based Foods Poised For Explosive Growth”, plant-based foods could make up 7.7% of the global protein market as early as 2030. The market value alone pegged at $24.9 billion is expected to be at $162 billion by 2030.

“Food-related consumer habits often come and go as fads, but plant-based alternatives are here to stay – and grow. The expanding set of product options in the plant-based industry is contributing to plant alternatives becoming a long-term option for consumers around the world.

If sales and penetration for meat and dairy alternatives continue to grow, our scenario analysis suggests that the plant-based food industry has the potential to become ingrained as a viable option in supermarkets and restaurants alike.

Meat and dairy alternatives could even obtain 5% and 10% of their respective global market shares in the next decade,” according to Jennifer Bartashus, senior consumer staples analyst at BI.

The India story is not far behind. Imagine Meats, Blue Tribe, One Good, Vezlay, Mister Veg are just some of the quickly growing plant-based meat and dairy alternative businesses that have been able to fascinate investors.

And that is just the plant-based food industry.

Clean vegan beauty and lifestyle product sectors are also seeing more curiosity from investors as the trends shift.

In India, vegan brands and aggregators like Plum Beauty, Mama Earth, Kind Life and Sublime Life were able to convince investors that there is a demand for clean and cruelty-free products.

SOCIALLY RESPONSIBLE INVESTMENTS

There are currently only a handful of dedicated funds that invest in plant-based and vegan sectors, but this area is bound to see more interest.

US based VegTech™ Invest, is a Plant-based Innovation & Climate Exchange Traded Fund (ETF) (Ticker: EATV) on public markets.

Elysabeth Alfano, CEO VegTech™ Invest believes, “with the acceptance of plant-based foods and the growing understanding of the negative impact of animal agriculture on the planet, more and more people are buying EATV on the public market.”

VegTech™ Invest has seen a 100% growth since its launch four months ago.

While recessionary fears are hanging over the markets, many reports are quick to jump on the falling share prices of plant-based companies like Oatly and Beyond Meat.

Elysabeth remarks, “The whole market is experiencing a downturn, and Oatly and Beyond Meat are no exception.  That said, the companies have good growth and continue to have strong consumer demand”.

Elysabeth Alfano, CEO  VegTech™ Invest

Another ETF, the US Vegan Climate ETF (Ticker: VEGN) aims to "address the concerns of vegans, animal lovers and environmentalists by avoiding investments in companies whose activities directly contribute to animal suffering, destruction of the natural environment and climate change,” according to its prospectus.

The index constitutes a careful selection of companies from over 500 large-cap companies belonging to the Solactive US Large Cap Index and excludes those that conduct any “Prohibited Activities”. The list of these prohibited activities includes animal testing, using animal-derived products, using genetically modified animals, extraction, refining or burning of fossil fuels, activities that contribute to environment and habitat destruction and even human abuse including tobacco and weapons manufacturing.

As of March 2022, the fund holds close to $70 million in assets.

Another German investment boutique, Sagefund curates portfolios for sustainable investing. Their motto- “our job is to carefully craft investment portfolios that meet your needs, while ensuring high sustainability standards - because making money doesn’t need to hurt others!”

Sagefund is made of a mixture of sustainable ETF bonds, stocks, real estate, and commodities (clean energy, timber, and gold). 41% of their investments go towards projects aimed at curbing climate change.

Other notable investors include Big Idea Ventures’ New Protein Fund a $50 million plant-based accelerator fund and Capital V whose mission is to create a global ecosystem of vegan companies that can grow, develop and support one another, by putting money into ventures that promise environmental, animal and public health benefits in addition to financial returns. Capital V has companies like Eat Just Inc., The Vegetarian Butcher, Impossible Foods and Meatless Farms as part of their investment portfolio.

INVESTING IN THE PLANT-BASED INDIA STORY

In India, the idea of sustainable investing especially in the plant-based sector is nascent.

While the government pushes for sustainable development with its many initiatives, the vegan sector is seeing a growing interest only in the last five years.

Ahimsa VC is India’s first plant-based fund that has already set the ball rolling with investments in two plant-based start-ups. The fund invests in early-stage start-ups with pre-seed and seed investments in companies that are creating new technologies to build better plant alternatives to animal food and material products.

Siddharth Kothari, Chief Investment Strategist of the publicly traded Om Kothari Group who is part of the Investment team at Ahimsa VC said, “we are constantly on the lookout for founders from India and the world who are leveraging a change towards sustainability. Currently we have invested in Demolish Foods who are making plant-based meats and ULTRAW – who are making plant-based leather alternatives.”

Siddharth Kothari, Om Kothari Group

WHAT THE FUTURE HOLDS

The Global Sustainable Investment Alliance estimates that the total assets under management under the Sustainable Investing category to be worth $35.3 trillion. More than 80% of the investments are held by USA and Europe.

The frontiers of these funds are expanding to include plant-based food and product companies as part of the portfolio since they meet the sustainability criteria.

Not only are plant-focussed funds on the rise, even large investment funds and asset managers are advocating capital allocation towards companies that are committed to address the urgent issues.

CEO of Black Rock, Larry Fink, says a “tectonic shift of capital is just beginning” and believes in the next five years environment, social and corporate governance (ESG) is going to be meshed in every asset class. Plant-based businesses fit in perfectly within the realms of ESG.

As the plant-based industry aligns itself with sustainability goals, investor confidence will allow for the bigger names to get on board towards an eco-friendly future for investments.

Like this? Read: Feeling Bullish: Will we ever trade vegan stocks on the Indian bourses?

Read More: $10M To Go Into First Ever Protein Research Center In The US, Funded By USDA