Food systems are among the largest contributors of global CO2 emissions and, accordingly, offer one of the greatest sources of potential abatement, according to Stewart Investors, an active, long-only equity specialist and global leader in sustainable investing.
Stewart Investors, which holds numerous food systems-related companies across its worldwide, emerging markets and regional strategies, has identified five companies that it believes are innovators in food systems sustainability and have provided competitive long-term returns to investors.
“Food systems represent nearly a quarter of greenhouse gas emissions and reducing the pressure on ecosystems while meeting the growing global demand for food is critical,” said Clare Wood, portfolio specialist at Stewart Investors.
“We have identified several holdings across the globe that intersect with the food system in a variety of ways, grow sustainably, and generate attractive long-term returns to investors.”
All Stewart Investors holdings are profiled in the firm’s Portfolio Explorer tool, which details the investment team’s approach, identifies the companies held in the firm’s strategies, and explains how these stocks are contributing to sustainable development.
The following five companies (in alphabetical order) are contributing in important ways to food systems sustainability ranging from agriculture to retail:
Costco: This U.S.–based retail company has implemented several climate change solutions, including switching to climate friendly refrigerants and improving the efficiency of refrigeration and heating, ventilation, and air conditioning (HVAC) systems that contribute to reduction in food waste. Costco’s climate action plan commitment includes targets to reduce refrigerant emissions by 30% by 2030 (2020 baseline) and commitments to purchase 80% clean electricity by 2030 and 100% by 2035.
Mahindra & Mahindra: Based in India, Mahindra & Manindra is a conglomerate comprising 150 companies spanning 22 industries. In its core agricultural products business, it strives to improve energy efficiency and agricultural productivity. Its farm sectors strategy is designed to improve the state of farming by democratizing technology, especially for marginal and small landholding farmers.
Novenesis: Denmark-based Novenesis, a global biotechnology company, contributes to climate solutions across the food system through its products (including enzymes and yeasts) that help farmers increase yields and/or reduce or avoid pesticide and fertilizer use. Its products containing good bacteria allow farmers to eliminate their use of antibiotics, helping to improve animal welfare and gut health. The food and beverage division also produces enzymes that can reduce food waste by improving fruit firming, juice retention, yield and shelf life.
TOTVS: The largest technology company in Brazil, TOTVS provides software that helps to add value and improve practices in a number of industries, including agriculture, logistics and retail. The company’s logistics services enable better transport management and thus lower consumption of natural resources and greenhouse gases. Its retail solutions, ranging from inventory control to use of artificial intelligence, reduce costs and food waste.
Unicharm: Based in Japan, Unicharm makes a “Fresh Master” tray mat for the storage and delivery of food such as meat trays at supermarkets. The tray mats increase shelf life and reduce discoloration, odors and food waste. Unicharm continues to expand the market for its Fresh Master trays, including expansion into restaurants.
“These companies, and others across our portfolios, reflect and support our core belief and investment thesis that sustainable outcomes and long-term profitability are two sides of the same coin,” Wood said.
Portfolio Explorer
Stewart Investors’ Portfolio Explorer, launched in 2021, was developed to enable investors to explore strategies, companies, countries and sustainability issues of interest in four views: map, human development pillars, climate solutions and sustainable development goals. Each of the four views contains relevant sub-categories. The Portfolio Explorer can be viewed at https://www.stewartinvestors.com/all/how-we-invest/our-approach/portfolio-explorer.html
The companies highlighted above were gathered from the larger universe of approximately 200 companies held across Stewart Investors’ emerging markets, regional and worldwide equity strategies.
Last year, Stewart Investors received a Morningstar ESG Commitment Level of Leader, the highest designation in the assessment by Morningstar Inc., a leading provider of independent investment research. Stewart Investors is one of only eight asset managers out of 108 global firms evaluated to receive the Leader ranking by Morningstar. The designations range from Low to Basic, Advanced and Leader.
The Morningstar ESG Commitment Level is a qualitative assessment that aims to help investors identify the asset managers dedicated to delivering sustainability outcomes. To arrive at the Morningstar ESG Commitment Level for individual firms, the firm’s analysts evaluate the asset managers on three key pillars: philosophy and process; resources; and active ownership.
Source: The Morningstar ESG Commitment Level Research Paper dated Aug. 30, 2023 © 2023 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.
About Stewart Investors
Stewart Investors, with more than $19 billion in assets under management as of June 30, 2024, is an active, long-only equity manager and global leader in sustainable investing. It manages a range of worldwide, emerging markets and regional strategies on behalf of institutional and individual clients globally.
Based in Edinburgh, the firm also has offices in London, Singapore, New York and Sydney. For more information, visit: www.stewartinvestors.com.
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