Agtech deals are on the rise, as both mainstream private equity funds and impact investors look for innovative approaches to the food economy. These businesses try to use technology to maximise the production and nutritional benefits of current agricultural processes.
Malnutrition, food waste and damaging agricultural practices have all created a renewed focus on how food is financed, grown and distributed. These existing issues have all been exacerbated by the Covid crisis, as increased strain is placed on supply chains.
Food businesses are inherently well suited for non-financial, ESG-focused metrics. As economies try to #BuildBackBetter, investors of all types can look to the broader impact of their portfolio. In many cases directors and asset managers already have sufficient flexibility to consider broader ESG issues in their decision making.
Another way to get food businesses to sell healthier products is through corporate governance mechanisms. Instead of focusing on shareholder profits, food companies could establish diet-related health as a core purpose. Here, there is ample scope to join the growing ranks of “B corporations”. These are businesses that emphasise “social and environmental performance” alongside shareholder value. This could easily include health as a metric for food businesses.