Lombard Odier Investment Managers New Food Systems Strategy

Background 

PC: LOIM

Food systems are accelerating the transgression of several of the nine planetary boundaries that regulate the stability and resilience of the Earth system. These nine planetary boundaries are vital to ensuring that humanity and economic systems can continue to develop and thrive for generations to come. Crossing them could generate irreversible environmental changes.  

The agriculture, forestry and other land uses (AFOLU) sector accounts for 24% of greenhouse gas (GHG) emissions, 90% of forest degradation, 70% of freshwater supplies and 25% of biodiversity loss.

There is general agreement that to address the negative effects of food systems, it is vital to restore 1 billion hectares of degraded land by 2030, which implies reducing agricultural land by 20%. Some 115 countries have already shown support for this commitment through climate and biodiversity pledges. In addition, current food systems generate an estimated USD $12 trillion annually in hidden environmental, health and poverty costs.  

In order to sustainably and safely feed 10 billion people by 2050, food systems will have to undergo a sustainable transformation, drastically changing the way food is produced, distributed and consumed.  

Innovative partnership 

Lombard Odier Investment Managers (LOIM) has partnered with system change firm Systemiq to build holistiQ Investment Partners (“holistiQ”).^* holistiQ operates as an investment platform within LOIM, aiming to deploy capital for a net-zero and nature-positive economy. One of holistiQ’s pillars is nature-based solutions, which includes opportunities across the Global South.  

holistiQ brings an integrated approach to investment management, combining analysis 
of the commercial, environmental and societal factors that will shape the sustainability transition. As a research-driven platform, holistiQ has more than 100 professionals dedicated 
to translating its science-based quantitative research on the transformation of key economic systems – such as energy, land and oceans and materials – into investment strategies for clients. Its research-based investments, focused on unlocking the profit pools of the transition, aim to accelerate the emergence of sustainable, regenerative, nature-positive economic systems.

Solution 

PC: LOIM

LOIM launched the New Food Systems strategy on 7 July 2022. It is now part of the holistiQ platform alongside four other sustainability-driven strategies.  

The objective of the New Food Systems strategy is to invest in a food system that can meet the nutritional needs of a growing population, within the constraints of planetary boundaries. The strategy seeks to invest in public equities globally that develop and mobilize new forms of healthy and sustainable protein, new agricultural practices and new delivery models.  

The key investment impact themes for the investment strategy were defined based on sustainability-driven inflection points and shifting profit pools:  

1. Sustainable food production: Companies that produce biological and synthetic inputs and food products (like aquaculture, animal feed and health, fertilizers, agricultural products, food additives and ingredients).
2. Enabling solutions: Companies that provide specialized enabling products and services along the value chain (such as farming equipment, life sciences, enabling technologies, food packaging and logistics and delivery). 
3. Sustainable food consumption: Consumer-facing companies, manufacturing, retailing and serving food (for instance, food manufacturing, retailers and restaurants and canteens focused on distributing tomorrow’s diets).  

A diversified portfolio is constructed from companies with material exposure to these investment themes and by screening based on a clear set of financial, environmental and social criteria.  

Expected impact 

The New Food Systems strategy is part of holistiQ’s broader mission to drive large-scale capital investment to shape a net-zero and nature-positive economy. The strategy aims to invest in the transformation of the sustainable food value chain, favoring companies that enable solutions across the value chain in industries such as farming and food equipment, food packaging and logistics and consumer-facing companies that promote sustainable consumption.  

Sources 

• Food and Land Use Coalition (2019). Growing Better: Ten Critical Transitions to Transform Food and Land Use.  
• HolistiQ (n.d.). holistiQ website.  
• Lombard Odier Investment Managers (LOIM) (2022). Strategy summary: New Food Systems.  
• Lombard Odier Investment Managers (LOIM) (2023) & Systemiq (2023). Lombard Odier Investment Managers and Systemiq announce holistiQ Investment Partners. 6 June 2023.  
• Lombard Odier Investment Managers (LOIM) (n.d.). Food Systems.  
• Lombard Odier Investment Managers (LOIM) (n.d.). New Food Systems strategy launch announcement.  
• Lombard Odier Investment Managers (LOIM) analysis.  
• UNESCO World Water Assessment Programme (WWAP) (2019). The United Nations World Water Development Report 2019: Leaving No One Behind.