Lombard Odier Investment Managers Launches Food Strategy

Amanda Cheesley

12 July 2022

Lombard Odier Investment Managers has launched a New Food Systems strategy, designed to capture opportunities linked to the transition to more sustainable food systems.

The high conviction equity strategy is the latest addition to Lombard Odier’s suite of CLIC® thematic strategies – including Climate Transition, Natural Capital and the TargetNetZero range – as the firm continues to bolster its sustainable investment offering across public and private markets.

The strategy focuses on agriculture, forestry and other land uses systems, which are deemed to be primary drivers of planetary boundaries transgressions as they account for 24 per cent of greenhouse gas emissions, 90 per cent of forest degradation, and 25 per cent of biodiversity loss, the firm said.

This news service is covering agriculture, food production and related business at a time when surging food prices have made food a hot investment topic.

According to Lombard Odier, there is broad consensus that to address AFOLU’s encroachment on the earth’s stability, 1 billion hectares of land must be returned to nature by 2030. To do so, agricultural land – which now claims 50 per cent of all habitable land on earth – must shrink by 20 per cent. The commitment, backed by 115 countries through pledges on climate and biodiversity, will catalyse a profound transformation of our food systems, the firm added.

As the world transitions to a new model that can nourish a growing population, while helping to restore planetary boundaries, the firm foresees major shifts in the risks and return profiles of hundreds of listed companies operating across the food and agricultural value chains.

Lombard Odier believes that the strategy is a well-diversified, high conviction portfolio of 35 to 50 quality companies, selected from three key sub-themes with a clear focus on capturing the upside of the sustainability-driven transformation of food systems.

These include sustainable food production, namely companies which produce biological and synthetic inputs, and agricultural products such as sustainable aquaculture, green fertilisers, new food additives and ingredients.

It also focuses on enabling solutions, involving companies that provide specialised enabling products and services along the value chain such as electrified farming equipment, technological solutions for precision agriculture to optimise crop productivity, and new forms of food packaging and logistics.

Finally, it includes sustainable food consumption, notably consumer-facing companies, such as food manufacturers, retailers and restaurants focused on distributing tomorrow’s diets, the firm stressed.

The strategy is managed by Conor Walsh, who joined LOIM in May 2022 as lead portfolio manager. Walsh brings more than 15 years’ expertise in global equity investing, having previously worked at Sanlam and Bank of America.

Based in London, Walsh will work closely with Alina Donets, Co-PM and LOIM’s Sustainability and Investment Research teams to assess companies set to thrive through sustainability challenges, and to exercise active ownership, engagement and stewardship.

LOIM, the asset management business of the Swiss Lombard Odier Group, will provide investors with a detailed sustainability report to show the positive impact on society and the planet, and to report on stewardship progress across the portfolio.

Highlighting the benefits of the strategy, Jean-Pascal Porcherot, co-head of LOIM and managing partner at Lombard Odier said: “Returning 20 per cent of land to nature and improving the quality of the earth’s remaining agricultural land will be a critical part of realigning our economy with the earth systems that support it. This will leapfrog the sustainability-driven transformation of our food systems and unlock a market worth at least $1.5 trillion in annual revenues by 2030.”

“At Lombard Odier, sustainability is fundamentally an investment conviction. Our New Food Systems strategy seeks to capture these market opportunities, targeting companies with attractive business models and robust valuations with the objective to generate compelling sustainability-linked alpha returns for investors,” he added

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