Fund Solutions

Cibus Funds Reap Rewards of Impact Focus

Specialist outlines performance against SDGs and sustainable agriculture objectives in first sustainability report. 

Eighty-eight percent of Cibus investee companies are aligned with four or more of the UN Sustainable Development Goals (SDGs), according to the first annual sustainability report published by the manager, which specialises in sustainable food and agriculture investments.  

Investments have also been assessed on their contributions to the manager’s specific impact objectives. These include agricultural labour welfare, improving agricultural water use and quality, and nutritional quality of life.  

The manager’s Environmental and Social Management System (ESMS) drew on the Global Impact Investing Network’s (GIIN) IRIS+ framework to review credible agriculture-related listed measurable objectives and impacts, identifying those which best correlated with the sustainable ambitions of the Cibus.  

These include increased average agricultural yield per hectare, decreased or avoided greenhouse gas (GHG) emissions from agricultural and food system activities, and decreased average units of agricultural waste.  

This has been paired with Sopact’s ‘Theory of Change’, which is a monitoring, evaluation and learning system combining indicators of progress along with indicators of change to identify factors enabling or inhibiting the behavioural changes needed to ensure impact.  

“To get the clearest understanding of impact, we first measure the individual impact of a company through our selected KPIs and then map those against the fund-level impact objectives,” Georgie Thomas, ESG Associate at the Cibus funds, told ESG Investor. 

Cibus has increased the overall proportion of renewably-generated energy across its portfolio companies by investing in solar energy projects and encouraging companies to switch to energy suppliers with higher percentages of renewable energy sourcing, the report noted. The proportion of renewable energy across all portfolio companies increased from 46% in 2018 to 58% in 2021.  

Investors need to look deeper than the SDGs when measuring the full scope of the environmental and social impact of their investments, said Thomas. 

“SDGs are not designed with the investor in mind,” she noted.  

Asset owners and managers have increasingly turned to the SDGs when developing and implementing their impact investing strategies, with US$5-US$7 trillion a year needed to achieve the global targets by the end of the decade. 

“But there are so many different impacts a business could be having on a wide variety of environmental and social issues. Investors need to ensure they have visibility of all of these unique impacts in order to best understand the degree to which their investments are making a real-world difference,” said Thomas. 

Natural solutions 

Cibus’ portfolio firms include fruit producer The Summer Berry Company (TSBCo), having bought a stake in 2019.   

Traditional berry farms typically use environmentally damaging practices like tillage, drainage, intercropping and extensive usage of pesticides and fertilisers.  

Since Cibus invested, the company has adopted more nature-friendly methods of production to contribute positively to local biodiversity. One of these measures was the implementation of ‘biocontrols’ – introducing the natural enemies of pests to both prevent damage to the berries and reduce the use of pesticides. 

Since 2016, the company has reduced its usage of insecticide and herbicide by 74% and 60% respectively.  

The company has introduced a number of other measurable sustainable solutions to its business operations, including planting hedges to serve as a windbreaker and bank for pollinators, cover cropping, and maximising the area of wild vegetation between crop rows.  

“Agriculture is such an important and wide-ranging sector – there are so many areas it touches on that aren’t specifically outlined in the small print of the SDGs, but which feasibly contribute to the overarching goals,” said Thomas, such as providing shelter to predatory insects and providing them with better food sources.  

TSBCo has two sustainable initiatives planned in 2022. The first is the circular economy-focused trialling of using waste fruit as pest lures to further reduce its use of pesticides and support a more biodiverse habitat. The second is to create a nursery at the farm for the propagation of native perennial plants, ensuring the growth of year-round flowering plants to feed beneficial insects, improve soil quality and aid rainwater infiltration. 

Engaging with impact 

Cibus has been using the data it collects from companies to inform its engagement efforts and identify areas for further impact. 

“There’s no doubt that it’s challenging and time-consuming to collect ESG-related data, particularly if you don’t have majority ownership. But if investors really utilise that data and carefully review it, it can add real value to engagement efforts,” said Thomas. 

Data can inform the investor of the degree of impact a company is already having before investment and to identify areas in which impact can be improved or the extent of positive impact can be increased.  

A growing number of impact measurement tools are becoming available to help investors secure the data they need in these interactions.  

GIIN’s COMPASS methodology gives investors practical examples of how they can measure their impact across the SDGs. Investors can track their contribution to SDG 6.1 (universal access to clean water) by measuring the regional percentage change in the number of people accessing clean water compared to the previous year. 

More recently, GIIN has launched the first of a series of sector-specific impact benchmarks, the Financial Inclusion Impact Performance Benchmark. It aims to provide data across a set of KPIs to assess financial opportunities, resilience and economic development within the financial services sector.  

The 2° Investing Initiative has consulted on and created the Climate Impact Management System, which provides investors with guidelines on how to devise, refine and communicate about impactful climate strategies.  

Launched in November and coordinated by the Impact Management Project, the Impact Management Platform was developed to improve cohesion between existing sustainability reporting standards and support impact-related dialogue between the investment industry and policymakers. 

Investors shouldn’t wait for the perfect data to begin engaging with companies on their impact, Cibus’ Thomas noted. 

“Ultimately, it’s about progress over perfection,” she said. 

The practical information hub for asset owners looking to invest successfully and sustainably for the long term. As best practice evolves, we will share the news, insights and data to guide asset owners on their individual journey to ESG integration.

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