Schroders is today announcing the launch of a global equity portfolio that aims to invest in companies driving the transition towards more sustainable food and water.
The Schroder ISF1 Global Sustainable Food and Water fund will be managed by Mark Lacey, Felix Odey and Alex Monk. The fund forms part of the Schroders Global Transformation Range, a suite of funds giving investors long-term exposure to the most powerful and persistent themes shaping the world’s future.
The SISF Global Sustainable Food and Water fund will target emerging technologies and strategic industries integral to changing the food and water system. It will seek opportunities across key value chains, including the likes of water management, food production and processing, distribution, and recycling.
The team will have a high-conviction unconstrained approach and will look to allocate to 35-60 stocks. The fund will remain focused on finding long-term, sustainable earnings and cash flow growth at a reasonable value.
A ‘focus list’ of around 190 stocks has been developed using stock-level research and Schroders proprietary tools which will aim to filter the global equity universe for the companies actively contributing to making the food and water system sustainable.
Between its sustainability objectives and key investment areas, the fund is classified under the EU Sustainable Finance Disclosure Regulation as Article 9.
Mark Lacey, Head of Global Resource Equities and Portfolio Manager of the SISF Global Sustainable Food and Water, commented:
“Our current food and water system is untenable and will experience an unprecedented confluence of pressures over the next 30 years. By 2050 the world will need to produce 70% more food and drinking water, whilst producing less carbon and using 70% fewer resources2.
“Regulation, consumer behaviour, and new technology are changing fast, and are now starting to impact the long overdue change that is required to make the whole system less carbon intensive, wasteful and polluting, whilst improving biodiversity and encouraging healthier diets globally. Current estimates suggest this structural shift will require at least$30 trillion of capital reallocation by 20503.
“We believe companies whose products and services are facilitating this movement will be in great demand and can exhibit strong long-term growth potential. That is why SISF Global Sustainable Food and Water will invest across the entire food value chain, allowing us to capture this whole opportunity.”
Felix Odey, Portfolio Manager of the SISF Global Sustainable Food and Water, added:
“Food and water already account for 26% of global green house gas emissions4. If we are to sustainably feed a predicted global population of 10 billion in 2050 while meeting the two degree target set in the Paris accord5, real structural changes are needed.
“The development of new technologies improving yield and efficiency, shifting dietary habits towards organic plant-based food, combined with stricter government action expected in agriculture and food packaging, offer huge earnings potential for well placed companies that will disrupt and thrive in changing food and water markets.”
Hannah Simons, Head of Sustainability Strategy, Schroders, commented:
“Solving the global sustainability challenges we face requires a huge reorientation of capital. The United Nations suggests that there is a gap of between $5-$7 trillion dollars a year that needs to be invested in new technologies, companies and industries to meet their Sustainable Development Goals which are a ‘blueprint to achieve a better and more sustainable future for all’.
“Investors therefore have a critical part to play as we can deploy capital towards those companies enabling the transition to a more sustainable future. Not only does this new fund seek to address the challenge of providing food and water to our growing global population at the same time, it looks to reduce the environmental impact of these industries.”
1 Schroder International Selection Fund
2UN Food and Agriculture Organisation (FAO), 2011.
3FAO, EU, OECD, Schroders, July 2021.
4 OWIC, August 2020.
5 UN, 2021.