2021: The Year in Negative Foods

The Year in Review (36th) Edition of the Negative Foods Newsletter

The end of each year is an opportunity to pause and reflect on our journey as astronauts on Spaceship Earth.

I’m ending this year optimistically. Not because of the current state of the world, which is a shitshow, but because we’ve got momentum. Business turnarounds don’t feel successful until the second half. Compound interest is the strongest force in the world, but it doesn’t feel like much in the early days. Foods that reverse climate change are on the rise, and the forces behind them are gathering momentum at an encouraging pace.

Follow the Money. The most important development of 2021 was the consensus among investors that climate is the biggest threat and opportunity of our lifetimes. When was the last time that nearly all investors, big and small, smart and dumb, public and private, agreed on a looming secular shift in the global economy? It was the Internet in the late 90s and early aughts. And although capital markets got too hot, and then too cold, the inexorable march of the Internet to transform every part of our economy never stopped. Today, the same thing is happening with respect to the transition to a carbon net zero future.

• Leaders of World’s Largest Asset Managers. The largest and most successful asset managers are staking their money and their reputations on the reality of a changing climate:

  • Larry Fink of Blackrock: "If 5 percent or 10 percent or 20 percent of our clients are starting to ask these questions and trying to design strategies to effectuate the climate theme over a long horizon, that in itself is a capital reallocation" and "We’re starting to see more evidence of climate change and its impact on capital allocation. I do believe that if you’re a long-term investor, you’d better frame all your investments through that lens."

  • David Rubenstein of Carlyle: "Everybody that I've talked to, with very few exceptions, accepts the fact that climate change is occurring. Some subset of that group, maybe 15 percent, are not yet convinced that it’s man-made as opposed to naturally occurring. That means, therefore, at least from the people I've talked to, 85 percent of them believe that man-made factors are contributing to climate change and that something needs to be done about human behavior" (IMF)

  • Ray Dalio of Bridgewater: “It is pretty clear to me that humanity and natural evolution are doing great damage to the environment that will be very costly in both money and quality of life.”

• Sovereign Wealth Funds & University Endowments. It doesn’t matter what your fool uncle said at Thanksgiving, because here’s the POV of members of the International Forum of Sovereign Wealth Funds: “93% recognize that climate change is a risk and/or opportunity for their portfolios. Eighty-eight per cent of sovereign wealth funds … take climate change into account in their investment processes.” Harvard’s endowment announced recently that it will entirely divest of the fossil fuel industry, a trend that appears to be gaining momentum. When sovereign wealth funds and endowments mandate climate-centric investing strategies, the world’s most influential asset managers will fall in line.

• Lions of Sand Hill Road. Chris Sacca, who built one of the best-performing venture funds of all time now runs a fund, LowerCarbon Capital, focused squarely on the climate opportunity, and he’s not alone. John Doerr of Kleiner Perkins just released a best selling book laying out the OKRs for solving climate change. Khosla and Sequoia, among others, are all planning to bet (and make) billions on the carbon transition.

• Specialized Venture Funds. S2G, which has “raised over $1 billion to back startups whose food solutions are paving the way for a healthier planet,” demonstrates that investing in the climate friendly future of food is a serious path to becoming a venture capital heavyweight. Newcomers and specialists are successfully raising and deploying funds with a focus on the future of food and agriculture, such as Ellie Rubenstein’s Manna Tree, Mark Lewis’ Trailhead, Sarah Nolete’s Tenacious Ventures, Closed Loop, Renée Vassilos’s investments for the Nature Conservancy, Social Impact Capital, Rose Marcario’s Regen Ventures, Eric Smith’s Neglected Climate Opportunities fund of the Grantham Environmental Trust, Sam Kass and Jeff Dunn’s Acre Venture Partners, Joshua Posamentier and Abe Yokell’s Congruent Ventures, Better Food Ventures, David Yocom’s iSelect Fund, the Collaborative Fund, AgFunder (I’m an LP), Jason Jacob’s MCJ Collective (I’m an LP) and many, many more.

• Insurers. The insurance industry, which doesn’t care about your politics, is cold-blooded about calculating risk, and is preparing for massive losses and premiums related to climate change.

  

  Hopefully the largest banks are also getting serious and will soon follow suit.

The Rise of Flexitarians & Plant-Based Consumer Demand. “Around 30% of the U.S. population follows some sort of flexitarian diet” according to Progressive Grocer, and one of the key factors for this shift in consumer behavior is the impact of our food choices on the environment. This bodes well for consumer demand being the strongest lever to motivate food companies and farms to transition to regenerative supply chains.

Voluntary Carbon Markets Paying Farmers to Sequester Carbon. According to a recent article in the New York Times, “Global cropland has the potential to sequester as much as 570 million metric tons of carbon per year. New projects that pay farmers to adopt climate-friendly practices could help.” In 2021 we saw projects go mainstream in which large companies voluntarily pay farms to sequester their carbon. If this movement continues, it will spur the transition of farms to regenerative agriculture practices that will help reverse climate change.

Unilever. This year, one of the largest food companies in world released “The Unilever regenerative agriculture principles with Implementation Guides 2021” which I hope will be a lighthouse for the rest of Big Food.

Unilever’s Regenerative Agriculture Principles

Carbon Footprint Labels. This was the year that the industry began to understand that carbon footprint labels on food will shift consumer demand, as we saw several Big Food players, including Unilever, announce major carbon label strategies. It feels like we are still in the “demonstration stage” of this movement, as we saw a pop-up supermarket in Stockholm “where the listed ‘price’ of every item was its carbon dioxide equivalent (CO2e)” and with carbon footprints labelled on COP26 cafeteria meals.

The carbon labels for soups at COP26 cafeterias

The Rise of Negative Foods in So Many Categories. It was heartening to find leaders in so many categories bringing to market foods that will help us reverse climate change, including products in bread, chicken, oysters, dog food, beef, beer, seaweed, wine, olives, cheese and many more categories. These early adopters will enjoy competitive advantages and be well positioned to capture market share over the next several years.

The Young People. The best and brightest business school grads of my youth would race to Goldman Sachs, Morgan Stanley, BCG or McKinsey. Those grads today are dedicating their careers to reversing climate change, and I love it! Join the MCJ Slack Community to get inspired by young people doing great work! This year gave rise to this, the Negative Foods newsletter, and it gave me chance to create and share my manifesto, and that’s what keeping me young!

Of course we still have a ton of heavy lifting ahead of us. Next week I’ll share my predictions and wishes for 2022. In the meantime, happy holidays!

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Feedback:

Kylie Wagner of Kiss the Ground: “Love to read these newsletters! Have you heard of Regen Poultry? Reginaldo's regenerative poultry production system he co-developed in the Midwest.”

Gary Oppenheimer of AmpleHarvest.org: “Good article, but you missed something important. Raising chickens isn’t only for the farming industry.   Those of us who raise chickens at home (USDA says  1% of all households) also reduce carbon emissions.  How? Chickens are essentially pigs with feathers… you can feed them nearly any kitchen scraps.   Since, when thrown away, those kitchen scraps like all other food waste contribute to climate change, giving them to chickens, who then convert it to both food (meat/eggs) and fertilizer, is a great solution. BTW… since we got chickens, we now put out the garbage cans every 2 or 3 weeks… it greatly reduced our carbon footprint.”

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For Your Consideration:

COP26 coalition worth $130 trillion vows to put climate at heart of finance

Sovereign Wealth Funds Put Climate Change Centre Stage at IFSWF Annual Meeting

Mexico’s wheat fields help feed the world.  They’re also releasing a dangerous greenhouse gas

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The views in this newsletter belong solely to Paul Lightfoot (and not to BrightFarms or other organizations). This newsletter accepts no advertising. Learn more about this newsletter at https://paullightfoot.substack.com/about.