CPG innovation is benefiting from a 10-fold investment increase in ESG funds

“The food industry has the potential to make the largest impact of all industries on climate,”​ and be rewarded financially for their efforts, Nicolas McCoy, managing director at Whipstitch Capital, said this week at virtual Expo West.

But to do so, he explained, the industry will need to tap into outside investment because even though food accounts for about 25% of the global emissions by supply chain – more than any other industry – it has the lowest net income per ton of emissions by industry, coming in about a third lower than all fast moving consumer goods, and roughly a quarter of electronics and fashion.

Luckily, he noted, investment in ESG funds across fund-types has increased 10-fold in the past two years with flows growing from about $5bn in 2018 to just over $20bn in 2019 before surging just past $50bn in 2020. Last year, flows surpassed assets under management for EST, which also have grown dramatically in the past two years – increasing from about $18bn in 2018 to just under $50bn in 2020.

This growth is primarily by the strong performance of ESG-tilted companies on the Standard & Poor’s index and the S&P 500, which outperformed the broader market by 113% and 121% over the last seven years from January 2014 to July 2020 respectively, McCoy noted, adding, “people are taking notice.”

In addition to improving their chances to secure capital, food and beverage companies with an ESG component focused on improving arable land could see significant returns based on economic growth alone, McCoy said.

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