Sustainable nutrition: “We have an eye on the entire value chain”

Sustainable nutrition has long been in the media spotlight. However, the topic did not seem to have reached the financial sector for a long time. What made you decide to take up this topic now and establish your ETF, Mr. Berberich?

It’s simple: the investment opportunity is too big to ignore. We were amazed when we saw that the area of ​​sustainable nutrition was not really investable. After all, we all eat three times a day and we are driving this growth as consumers, and our awareness of sustainable eating is only increasing. When it comes to sustainable nutrition, we’re not just talking about food, like plant-based alternatives, but about the entire value chain of our food system. This investment approach did not exist before, and the growth potential is enormous.

What does the “full value chain” include?

This can be well illustrated by looking at the greenhouse gases released during the production and transportation of food. It starts with land use – it’s about how soil and water are used, changed and cared for, and ranges from animal feed to processing and transportation to packaging materials. This means that we invest, for example, in companies that produce sustainable fertilizers, produce climate-efficient packaging, or bring sustainable food additives to market. In addition, there are also some well-known “classics” in our ETF, which, for example, develop vegan food alternatives.

What are the benefits of this alignment?

Our approach allows us to diversify and cover a wide range of topics. When it comes to sustainable nutrition, many immediately think of companies like Oatly and Beyond Meat. However, our ranking of topics goes a step further and also includes companies that stand out with innovations such as vertical farming, i.e. growing food in greenhouses erected vertically to significantly reduce land use. Our research partners’ topic classification also includes companies from the ingredients and flavorings sector, for example. A company of particular interest here is the Danish company Novozymes, which is developing enzymes that are added to bread to make it last longer, thereby reducing food waste. Sustainable food is more than the vegan burger.

So as an investor, if I want to invest in sustainable food, could I invest in a trucking company that offers more sustainable transportation options?

If we can make supply chains more efficient, we will save resources and fight food waste. Recent bottlenecks in the supply chain show how important this sector can be, especially for the food industry, which is hit particularly hard due to shelf life. Our diet is an incredibly complex ecosystem. Companies that optimize supply chains can definitely be included.

What exclusion criteria do you have?

We follow a radical approach with strict exclusion criteria. According to a 2021 UN report, 33% of our greenhouse gases come from the food system. Half, that is, almost 14.5 percent worldwide, comes from meat production. In concrete terms, this means that sustainable nutrition cannot be reconciled with meat production, because meat consumption is the biggest problem.

“It is a mistake to think that there can be a sustainable consumption of meat.”

Can that be quantified?

The production of one kilogram of beef generates almost 60 kilograms of CO2. There is also 16,000 liters of water. Only one kilo of CO2 emissions from beef is due to transportation. So it doesn’t matter if you source your meat regionally or ship it by plane from Brazil. It is a mistake to think that there can be a sustainable consumption of meat. Based on the theme, companies involved in animal products of all kinds, commercial fishing, companies that produce GMO seeds, and also packaging companies that do not exclusively produce reusable packaging are excluded.

Invest for growth potential or impact investing desire?

It’s a combination: For investors, performance often comes first. But we also see that more and more investors are specifically looking for investment opportunities where they can make a difference and, for example, do something for the planet. But these motivations can go hand in hand. It is not necessary to be a clairvoyant to understand that all trends are moving in the direction of sustainability and that this development will accompany us for a long time. We make investable companies that already have the solutions today to create a sustainable food system. The more this topic slips into the social focus, the more successful these companies become. We invest in the transition to a sustainable system.

Why should you invest in sustainable food and not, for example, in clean energy?

If you are in the impact area, you want to have as much positive effect as possible. The question is then simple: where do most greenhouse gases come from? Our food system ranks very high on the list. Nutrition cannot be ignored as part of the green transformation of our society. Clean energy companies and funds have already raised billions in investments, and the vast majority of people understand what needs to change. This awareness is still partially missing in food. We talk about the energy transition all the time. However, the change in diet should be mentioned at the same time. Furthermore, the corona crisis in particular has led many people to want to eat more mindfully. The fact that many changes in this sector are being driven by consumers is promising.

They are based in London. Does the international vision make you optimistic?

Don’t make the mistake of going to a supermarket and counting how many meat substitutes or vegan alternatives are on sale. This gives you an idea of ​​how entrenched the issue is in society, but not how much is actually being done to address nutritional transformation. The UK may seem more advanced on this issue to many. By far the most interest in our ETF comes from the DACH region.

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