December 2023 Community Meeting
What does it take to create a food system that avoids greenhouse gas emissions, supports biodiversity and fosters social well-being?
Hear deep dives on this topic from Leslie Kapin, Director of Sustainability and Impact at Astanor Ventures, and Dr. Ilissa Ocko, Senior Climate Scientist with Environmental Defense Fund in our December 7 Community Meeting.
Understanding Holistic Impact with Astanor Ventures
“We invest from soil and sea to gut, going one step further than farm to fork,” explained Kapin as she introduced Astanor’s Investor Profile, highlighting how impact is centered throughout their investment process, which she said extends throughout the value chain.
This gives a “really holistic view of how we want to tackle this entire sector.”
One of the ways they aim to have a holistic understanding of how a potential portfolio company’s product or service could impact the planet is by mandating life-cycle assessments (LCAs) during their Investment Documentation stage. Kapin said that this is one way they evaluate against Astanor’s GHG emissions KPI.
Importantly, Kapin said that Astanor does not conduct LCAs for their portfolio companies, but will supply them with experts and consultants so that they can build internal capacity to produce dynamic LCAs.
Astanor’s investment workflow
However, Kapin explained, “We are not a climate fund. We are an impact fund focused on agrifood. So it’s not only about climate. It’s about nature, clearly, and about people as well.”
As a result, Astanor established five other non-GHG impact KPIs to understand the impact their portfolio companies have on the planet and its people: biodiversity, water use, social, health, and impact intelligence. For example, impact under their social KPI can mean higher remuneration to the farmers, but also increasing access to nutritious food.
Five of Astanor’s impact KPIs apply to solutions that are direct contributors, while one, “impact intelligence” integrates facilitating solutions, such as “companies that are bringing impact insight to the others [along the value chain] to be able to make better decisions and decrease environmental footprint.”
All potential investments at Astanor must positively impact at least one and up to three of their impact KPIs while, importantly, not posing significantly harming any others. To compare these impacts, Astanor applies its Impact Valuation Model which converts net positive impacts of portfolio companies into a monetary value.
“Sometimes you can convert [impact into] greenhouse gas emissions, [such as] in cars removed from the world,” said Kapin. “But … we realized that in order to scale impact investing, we needed to find a better way to measure impact and a better way to communicate impact.”
Another area of Astanor’s focus is supporting their portfolio companies to integrate ESG into their operations.
“ESG is about the internal health of a company,” she said. “We could invest in the most impactful product in the world with the biggest impact to net economics, but if you don't put the right practices in place in-house, this company will not be a longstanding company.”
That is in part why Astanor encourages their portfolio companies to seek B Corp certification, said Kapin, and recently received their own. “We've been supporting our portfolio companies to be B Corp certified for years and for us to be able to show that we lead by example, we walk the talk, is extremely important.”
Detangling Short- and Long-Lived Emissions with Environmental Defense Fund
When it comes to mitigating the potential harm of climate change, understanding that human actions are responsible for warming and that our actions will continue to determine our future is not enough, explained Dr. Ocko.
“These are the well-known climate science facts and they make it clear that there's this problem. We know the cause and we generally know the solution,” she explained. “And so this can be very motivating in taking action. But there are these lesser known facts that I think are really key to identifying the most effective climate actions once we are motivated.”
Pollutants also cause short-term global cooling
While GHG emissions create warming, “the planet would actually be much warmer without air pollution,” noted Dr. Ocko. The reason? “Human-induced cooling is masking some of this additional warming and around 80 percent of that cooling is coming from emissions of air pollutants,” Dr. Ocko explained.
“So this means as we clean up our air — especially because these cooling pollutants are very short lived and the warming pollutants are much longer lived — and we reduce greenhouse gas emissions at the same time, it will take a long time for the human induced warming to disappear, but the human induced cooling will be gone immediately.”
Carbon dioxide emissions are only responsible for around half of today's warming
While CO2 lasts longer in the atmosphere, there are other pollutants that require targeted intervention and are responsible for a significant amount of the short-term warming.
These short-lived climate pollutants include methane, carbon monoxide, volatile organic compounds (VOCs), HFCs, black carbon, and NOx. While they don’t build up over time, they can have an immediate impact on warming when their emissions are reduced or avoided.
Disaggreating climate pollutant data is key to understanding the most appropriate actions
The rate of warming, Dr. Ocko said, “determines the pace of shifting weather patterns and extremes and how intense and extreme those extremes become. It determines the timing of really uncertain but catastrophic tipping points, spreading vector diseases, society and ecosystem's ability to adapt and keep up to a changing climate.”
Equally important is the maximum extent of warming, which “will determine the overall extent of ice loss and sea level rise, and it will determine shifts in coastlines and biomes and crop zones.”
“The sooner we act on both, the more warming we can reduce immediately and the more warming we can prevent in the future,” Dr. Ocko said. “What's at stake here if we aren't mindful of these distinctions is that we end up with suboptimal climate actions and missed opportunities to slow down warming and the solutions here to really have distinct strategies for each set of pollutants.”
In other words, collapsed metrics such as CO2e may lead to misguided climate action. Investors should separate GHG emissions, rather than presenting information in a single metric.
This allows for the best picture of different actions for slowing down warming versus limiting maximum warming.
If a single metric is needed, Dr. Ocko recommended using a two-value global warming potential with both a 20 and 100 year time horizon, which is also explored in Section 1.1.4 of Frame’s methodology guidance, Pre-Investment Considerations.
This was also the takeaway of Dr. Ocko and her team’s research “Future warming from global food consumption,” published in Nature Climate Change in March 2023.
They found that “global food consumption alone could almost add, could add almost a degree Celsius of warming by end of century, and about 60 percent of this is coming from methane,” she said.
“The bottom line here is that these are insights that cannot be gained when you combine greenhouse gases into a single value.”
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