65% of water resources are used for agricultural purposes, while it is estimated that half of this amount is wasted and not used properly. This number perhaps explains why the food industry at the international level still has a long way to go before it shows significant progress towards sustainable development. This is an unfortunate reality that the investment fund Schroders, which has been active in Greece since 2000, is trying to change. To do this, as Felix Odey, a portfolio manager at Schroders, explains to K, the investment management company launched Schroder in 2021. Global Fund for Sustainable Food and Water ISF. It is a fund under Article 9 of the European Sustainability Disclosure Regulation (SFDR) with the sole purpose of funding food and beverage businesses with a real and measurable environmental footprint.

“Continued population growth is driving demand for protein and meat, which is expected to grow exponentially over the next thirty years, with the world population reaching 10 billion by 2050. This means that agricultural production should increase by 70%, while at the same time, due to climate change, less land should be used and water consumption should be reduced. However, we were not interested in the question of whether the value cycle of the food system is based on a solid sustainable basis in terms of, for example, the use of water resources, the entry of plastic into the food chain, or the depletion of arable land. With this in mind, we have established the Schroder ISF Global Sustainable Food and Water Foundation, an Article 9 SFDR fund that aims to address the social and environmental challenges of food production. In other words, we invest in companies that adopt environmental, social and governance criteria (ESG), effectively contributing to the elimination of social and environmental impacts. It is common knowledge that sustainability has become a condition of the train, and in many cases it remains unanswered, occupying very few asset management companies. However, in matters of ESG, citizens are demanding more transparency. This is what our approach to sustainable development through our energy transition and sustainable food funds aims to: clarify the commitments made by companies, seeking to push them towards the adoption and implementation of specific goals.

– The goal is to strengthen the sustainability of the food and beverage sector, which accounts for a quarter of carbon dioxide emissions. Both with the direct and indirect production of more than two billion tons of garbage annually, and with the absorption of 65% of all water resources. We must not lose sight of the fact that biodiversity, agricultural production and land use are interconnected containers. That is why we pay special attention to the entire value chain in the food industry, i.e. from growing and sowing to production and placing products on the shelf. This is a large network of companies working from the processing and production of food, their sale to the consumer, to the post-marketing stage. Technology plays a catalytic role throughout the value chain, from seeding to product sales and packaging recycling.

Here’s what Felix Odey, a portfolio manager at asset management firm Schroders, says.

– We have formed a list corresponding to an ecosystem of approximately 200 listed companies, in our portfolio there could potentially be from 35 to 60 companies with diversified activities. However, we take into account certain parameters related to the fact that we make sure that the companies in which we invest apply sustainable development methods and set clear goals for themselves with which they correspond. If every link in the value chain made sustainability a top priority, we would cut global carbon emissions by 25%. In addition, a key parameter in the equation is, in addition to technology, consumer behavior, which in many cases is determined by purchasing power. Thirdly, our main goal is to minimize the consumption of resources and make it possible to produce food using less water. However, to do this, it is necessary to establish the necessary legislation, corresponding to that which exists in the energy sector, where prices are known and the green deal is concluded.

– The analysis of our investment ecosystem takes place in two stages. The first involves performing a series of measurements relating to the environment and society, with companies evaluated according to their performance. Those in the bottom quartile are excluded. The second step aims to determine the amount of investment in each company using a range of measurement tools. Businesses are also valued as part of this process, and underperforming businesses are excluded from our investment target. In addition, companies that have made a number of commitments both in terms of sustainability and in terms of their relationships with their partners are evaluated, with a common denominator of reducing their influence.

– One of the main criteria for investing in a company is that 50% of its income comes from a food and water supply system that is fully consistent with sustainable development goals. At the moment, no Greek company performs specific tasks for the production of environmentally friendly products. In any case, Greece is a particularly important country for Schröders and the region of Central and Eastern Europe and the Mediterranean. It is no coincidence that we have been actively working in the country since 2000, constantly giving the “real” even in times of crisis. With more than two decades of presence in the country, Schroders has strengthened its cooperation with Greek banks. Investments in really viable companies signal the monetization of capital expenditures and, as a result, the appearance of profits, which are directly reflected in the return on shares.