Why ESG Matters: A Comprehensive Overview for Agribusinesses

What is Environmental, Social, and Corporate Governance (ESG)?

ESG stands for Environmental, Social, and Governance. ESG allows socially conscious investors to invest their money in a tax-efficient and charitably capitalistic way. Major Asset Managers, including PIMCO and BlackRock, are focusing more on environmentally friendly and sustainable investments at the request of investors and clients. 

According to Forbes, over $20 trillion in investments follow ESG and Socially Responsible investment style factors. This number continues to grow and is one of the fastest accelerating trends in the asset management community for style factor investing. 

Scott Mather, PIMCO’s Chief Investment Officer for US Core Strategies, was named the Investment Leader of the Year in 2019 by Environmental Finance. He remarked on the growing investor demand for climate-linked investments, stating: 

“Climate change is catalyzing innovative ideas from experts in every field. At PIMCO, we aim to do one thing exceptionally well: We build fixed-income portfolios to help clients meet their financial and non-financial objectives; increasingly, climate risk mitigation is an explicit objective for global investors. We developed a climate strategy that focuses on both the risks and, importantly, the opportunities associated with the transition to a net zero emissions economy.”

How Do Vertical Farming and Agriculture Factor into ESG? 

You may wonder what this has to do with agtech and vertical farming. Like almost every other industry, there are environmental, social, and governmental considerations related to agriculture. Some might say our industry has more ESG considerations than most.

Environmental Considerations

It’s no real secret that the agricultural sector has a significant impact on the environment and has been the culprit of some unfortunate practices in the past. Fortunately, today’s agriculture industry is working to address these practices and turn the page toward a more sustainable industry. 

Some industry goals include reducing carbon emissions, conserving water, and reducing food waste. These are critical components of ESG in agriculture and vertical farming and are essential if the industry is to become more sustainable and environmentally friendly. 

Vertical farming has the potential to make great strides in this area. The practice uses less land and water than traditional agriculture. Vertical farms eliminate or greatly reduce the use of harmful pesticides. They can help improve the overall efficiency of agricultural operations. And they can reduce carbon emissions related to shipping because they frequently feature locations in densely populated areas, close to the consumers who will benefit from their crops.

Social Considerations 

Another area where agriculture has gotten things wrong at times has to do with social considerations. 

Farm labor has always been a physically demanding job, but the safety record for some large commercial operations has been abysmal. Workers may be exposed to dangerous chemical pesticides and paid ridiculously low wages. 

Today’s agricultural job opportunities are turning this around. Indoor vertical farms offer laborers excellent working conditions, with no exposure to harmful chemicals, a living wage, and even full benefits. Innovative and safe hydroponic systems can provide opportunities for local communities by creating new jobs, providing access to fresh produce, and supporting local agriculture. And the agtech world is attempting to spread diversity and inclusion with agtech scholarships and other programs designed to bring underrepresented people groups into the space in a positive, proactive way.

Corporate Governance 

Corporate governance is another area where forward-thinking agricultural organizations like Eden Green Technology are building a name for themselves. Transparency, ethical behavior, and responsible leadership are essential for agricultural and vertical farming companies to demonstrate their commitment to ESG principles. 

Companies in this sector can improve their ESG performance by adopting sustainable business practices, engaging with stakeholders, and regularly assessing and reporting on their ESG performance. Hydroponic farming companies with a clear humanitarian vision and a desire to promote sustainable practices and social development can make a difference in this space by moving their vision forward and inspiring future leaders to do the same.

Why ESG Matters 

Today’s investors are more committed than ever to promoting businesses and business concepts with ESG values at their core. Schwab recently found that nearly three-quarters of US investors let their values drive their investment decisions. 

ESG-focused companies tend to operate more efficiently than their competitors. They typically have less trouble retaining talent, reduced compliance costs, and greater cost savings overall. For investors, ESG-focused investing offers increased shareholder value as ESG funds tend to outperform the competition in the medium to long term.

Frequently Asked Questions 

What Are the Three Pillars of ESG?

The three pillars of ESG are Environmental, Social, and Governance.

  1. Environmental: This pillar focuses on a company's impact on the environment, including issues such as climate change, pollution, natural resource depletion, and waste management.

  2. Social: This pillar focuses on a company's impact on society, including issues such as employee relations, human rights, consumer protection, and community involvement.

  3. Governance: This pillar focuses on a company's internal management and oversight structures, including issues such as executive pay, board diversity, shareholder rights, and business ethics.

What is the Main Purpose of ESG?

The main purpose of ESG (Environmental, Social, and Governance) is to evaluate a company's sustainability and ethical practices beyond just financial performance. ESG factors are used to assess a company's impact on the environment, society, and its internal governance structure.

The goal of ESG is to identify companies that are well-managed, sustainable, and have positive impacts on society and the environment while also avoiding investments in companies that engage in unethical practices or have negative impacts on society and the environment. This approach is becoming increasingly important for investors who are looking to align their investments with their values and support sustainable, socially responsible companies.

Why Is ESG Important in the Food Industry?

Agriculture currently has a bad reputation when it comes to a lot of ESG-related concerns. The food industry risks losing consumer confidence due to high-profile, and far-reaching food recalls. Hydroponics food safety and other agtech approaches will go a long way to building consumer confidence, even while boosting operations and reducing risks.

How Can Greenhouses Be More Sustainable?

Greenhouses can become more sustainable by using energy-efficient lighting systems, water conservation measures, advanced soil management techniques, and renewable energy sources. In addition, greenhouses can reduce waste and emissions by using recycled materials in their construction and making sure they are well insulated. Ventilation can also be improved with the use of air circulation fans to better control temperature and humidity levels. Finally, implementing automated irrigation systems can help conserve water while providing optimal nutrient levels for plants.

What Is the Most Efficient Greenhouse Design? 

Eden Green Technology’s vertical farms within greenhouse environments are extremely efficient. They use 99% less land and 98% less water than soil-based outdoor farms. They’re also in the top 1% of all food-safe environments and feature less than 3% food waste. Daily harvests are grown less than 300 miles from the end consumer, and products hit store shelves a mere 48 hours from the time they were harvested. 

Learn more about vertical farming, Eden Green Technology’s ESG focus, and how we can offer premium private-label hydroponic produce at a reasonable price. 


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