CDPQ, S2G Ventures Partner on $125M to Invest in Sustainable, Climate-Friendly Food and Ag

September 24, 2020

By Lynda Kiernan, Global AgInvesting Media

Global institutional investor Caisse de dépôt et placement du Québec (CDPQ) and S2G Ventures, a multi-stage investor specializing in food, agriculture, oceans, and seafood opportunities, have announced a co-investment partnership.

Through this agreement the pair will invest up to $125 million over the next three years in ventures that are developing concrete solutions that would make agriculture and food more sustainable and climate friendly.

“We are excited about this partnership with CDPQ and the potential to invest behind leading entrepreneurs in the food system,” said Sanjeev Krishnan, managing director and CIO, S2G. “CDPQ shares our long-term vision of combating climate change, and brings to the table tremendous experience investing in leading companies worldwide.”

Impact and socially responsible investing has gained serious traction in recent years, however, the UN estimated that there remains a $2.5 trillion (with a “t”) funding gap per year between current impact investing levels and what is needed to achieve the UN’s 17 Sustainable Development Goals (SDGs) in emerging countries alone.

Talk among governments and funds has also spread of the need to value nature and to do things more sustainably. The Paris Agreement, which went into force on November 4, 2016 – was originally ratified by 55 countries responsible for at least 55 percent of global emission, and grew to be ratified by 125 countries by early 2017, and 189 today.

The stakes are ever rising. In his article, Investment Resilience and Adaption to a Changing Climate, published in GAI News in April 2020, Angus Ingram, investment manager with Kilter Rural, noted, “In the lead up to its 50th gathering in Davos, Switzerland, the World Economic Forum released its annual WEF Global Risks Report 2020. For the first time, the top five risks in terms of likelihood have been occupied by environmental risks.”

Right in the middle of these shifts, in 2017, CDPQ committed to reducing the carbon footprint of its portfolio by 25 percent per dollar invested by 2025, making it the first institutional investor in North America to establish a reduction target for greenhouse gas intensity covering all of its asset classes. 

Climate considerations are now a part of every investment decision for the investor, that has seen its portfolio of low-carbon assets reach a value of $34 billion as of December 31, 2019 – up 95 percent from 2017.

This partnership with S2G Ventures was born of CDPQ’s connection with New York-based CREO Family Office Syndicate (CREO), a not-for-profit organization designed to draw capital into low-carbon ventures, and is also part of a larger innovation platform designed to leverage opportunities with strategic partners.

After undertaking a full review of potential partners, S2G was selected based on the two organizations’ common core principles and goals, including a long-term strategy and commitment to sustainable investing. S2G has been investing in successful food and agriculture companies for six years, building out a portfolio that includes Beyond Meat, Apeel Sciences, sweetgreen, Greenlight Biosciences, MycoTechnology, and other category leaders. 

Kim Thomassin, executive vice president and head of investments in Québec and stewardship investing at CDPQ, said, “By enabling investments in ventures and growth equity companies involved in the production, supply chain and consumption stages, this partnership will help reduce the agri-food industry’s carbon footprint.”

“S2G is a leading investment firm in this sector and we are delighted to partner with them to support cutting-edge entrepreneurs who will make the food and agriculture industry more sustainable.”

And as global food production accounts for 37 percent of all greenhouse gas emissions, it is imperative that investors in the space assume a leadership stance in regard to allocating capital to its mitigation, while also investing in profitable ventures that generate attractive returns. 

Jeremy Stroud, analyst with Bonnefield Financial, and Marcus Mitchell, chief investment officer with Bonnefield Financial, said in their GAI News piece The Role of Farmland in Mitigating Climate Change, “With the adoption of modern and sustainable farming practices that encourage additional carbon storage through increasing soil organic matter (“SOM”) over time, farmers can play a part in reducing total emissions.”

“The effects that modernizing agriculture have had in enhancing soil carbon storage capacity suggest significant improvements are still to come – both an important undertaking and a deeply encouraging thought.”

 

– Lynda Kiernan is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, and HighQuest Group’s Oilseed & Grain News. She is also a contributor to the GAI GazetteShe can be reached at lkiernan@globalaginvesting.com

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