The latest UN Emissions Gap Report has shown that rising greenhouse gas emissions mean global warming is unlikely to keep within the 1.5C threshold. This news, released by the UN environment programme, highlights the emissions gap and underscores the importance of investing in the transition of greenhouse gas heavy industries such as food production.
Ahead of attending COP28, Stephanie Glover, Head of Strategy and Sustainable Finance at Guernsey Finance spoke to Rosie Wardle of Synthesis Capital about the investment opportunities in a more sustainable global food industry.
Industrialised meat production is bad for the planet.
According to 2021 research from University of Illinois, the entire system of global food production, including farming machinery, fertiliser and transport creates 17.3bn metric tonnes of greenhouse gases a year.
The use of cows, pigs and other animals for food, as well as the necessary livestock feed, is responsible for 57% of all food production carbon emissions.
Given these statistics, it’s clear that the type of food we eat and how it is produced needs to change if the world is going to meet global emission reduction targets.
In the past, cultivated meat was dismissed by many as an impossible feat with no market, fast forward to 2023 and there is indeed a market and funding research into alternative food sources is ripe for investment and capitalisation.The future of food
One investment firm backing this ticket is Synthesis Capital; the firm invests in the future of food through innovative food tech. Its focus is on funding alternative protein companies and providing industry leading returns.
Rose Wardle, Co-Founder of Synthesis Capital is confident the fund’s chosen approach will deliver: “While some consumers might not yet be familiar with the market for alternative proteins or cultivated meat, investors certainly are.”
Environmental impact and sustainability are critical considerations for the fund which has engendered investor confidence by choosing the Guernsey Green Fund regime – the world’s first regulated green investment fund product.
Launched in 2018, the Guernsey Green Fund gives backers assurance that their investments have a positive environmental impact on the planet, monitored against internationally recognised criteria. Since its launch, the net asset value of Guernsey Green Funds has steadily risen, with a NAV of £5.6 billion recorded at the end of Q1 2023.What are alternative proteins and cultivated meat?
Rosie explains that there are three main types of alternative proteins. Synthesis Capital invests in all three sectors, acknowledging that it is important to spread the investor risk across these emerging technologies.
“The first type of meat substitutes is plant based and use products such as soy and pea protein to mimic an animal product. We are already very familiar with these products which line our supermarket shelves; from chicken to burgers and sausages, the quality of these products is continuing to improve thanks to research into food production technology.
“For example, Redefine Meat, part of the Synthesis Capital portfolio, uses a 3D-printing platform to create ‘whole-cut’ structured meat products that are unrivalled in their ability to emulate the taste, texture and juiciness of meat.
“The second category is fermentation. The specialist in this sector is Perfect Day – a leader in creating real dairy without the cow by harnessing fermentation and recombinant protein technology and turning microbes into dairy protein factories.
“And finally, we have cultivated meat,” explains Rosie. “Harvested animal cells are used to grow real meat – without growing, rearing or slaughtering animals. It is a whole new way of supplying the food system whilst still providing nutritionally complete protein.”
Upside Foods, in the Synthesis Capital portfolio, is the global leader in cultivated meat, which is now in the process of building the world’s first full commercial scale facility for cultivated meat and was recently approved by US regulators to sell cell-cultivated chicken in the country. “Scale is the next critical step for this sector,” says Rosie.
She acknowledges that there needs to be a significant shift in public opinion around alternative meat products, particularly those which are grounded in technology such as lab-grown and 3D printed meat. However. she is passionate about the need for change, if we are to feed the world’s growing population.
Whilst individual research statistics vary, it has been proven that industrial meat is the single biggest cause of deforestation globally. In countries where the industry is biggest, such as South America, it is also linked to numerous human rights abuses, land-grabbing and health scares.
Rosie agrees that there is very little positive to say about the world’s large scale meat industry, however, she explains that it is not just issues of climate change and ESG that are fuelling investments in alternative proteins and food tech. “The Covid-19 pandemic, the dangers of Avian flu and the tragic war in Ukraine have all contributed to significant disturbances in food supply chains and a growing realisation that our current food system is not immune to disruption. This has led investors and forward thinkers to look for sustainable solutions such as investing in food tech.”Are these solutions truly sustainable?
“At Synthesis Capital, we work hard to ensure that each and every investment we make is sustainable. This doesn’t just mean cutting edge tech or solid returns. It also means that ESG factors must be integral to the company. This is a further reason why the Guernsey Green Fund accreditation is so important. Guernsey as a jurisdiction is known globally and recognised for its innovation and stability. The certification, backed against global benchmarks and standards, gives weight and integrity to our work and values – it ensures standards and real-world impact.”Potential impact
The operating data of the organisations within the Synthesis Capital portfolio speak for themselves.
For example, Perfect Day’s products, compared directly to produced dairy equivalents, on a by-weight basis, produce up to 97% less greenhouse gas (GHG) emissions, have up to 60% less energy requirements and use up to 99% less water consumption.
Another member of their portfolio, Redefine Meat, has similarly impressive credentials. Its products, when compared to traditionally produced beef, also on a by-weight basis, showed it produced 89% less GHG emissions, used 96% less water and 98% less land.
In short, a move towards alternative proteins and away from traditional meat, egg and dairy products will have significant real-world impacts, with most experts considering it a vital element in the fight against climate change and reducing carbon emissions. What’s next for the industry?
According to Rosie, the future of food tech and alternative proteins is very exciting. ‘In many respects the future is already here. Singapore approved cultivated meat production in 2020, and the US Food and Drug Administration (FDA) and USDA recently approved two companies to commercially produce it as well, one of which is Upside Foods.
“Dairy ingredients from Perfect Day have already been commercialised in several products in the US and Asia, both through its own B2C subsidiary and in partnership with multinationals such as Nestle and Mars. Culturally there is a greater acceptance of and interest in plant-based food and traditional meat alternatives and now technology is giving us the tools to make these products a viable reality.
“If we truly want to move away from the niche and into the mainstream where we begin to have global impacts, the products themselves need to be accepted by consumers on a much wider scale, and we are starting to reach that point.
“The industry is taking off and has an incredible future, especially for early investors.”
