Beth Richtman: Investing in “Polysolutions"
As the world becomes rife with interconnecting environmental and social challenges, the World Economic Forum introduced the new term “polycrisis” in their annual Global Risk Report for 2023[1]. They posit that a “polycrisis” happens when present and future risks interact with each other to form a cluster of related global risks with compounding effects, such that the overall impact exceeds the sum of each part.
If there can be polycrises, then there can, and should, be “polysolutions”. We will define these as solutions that solve for more than one crisis at a time. We currently face many crises- climate change, biodiversity loss and ecosystem collapse, pollution and plastic waste, water scarcity, food insecurity, cost of living to name a few… Frankly, humanity doesn’t have the luxury of solving for one problem at a time. We need to fund and nurture business models that can have simultaneous and compounding positive effects across multiple crises. We need tech solutions that elegantly fix (or enable fixing) more than one thing in such a way that the overall impact exceeds the sum of the individual solutions.
To look for polysolutions, it’s helpful to first identify key drivers of the current polycrisis. One such driver is the food system.
For much of human history, land was basically wilderness. Now, half of the world’s habitable land is used for agriculture[2]. The most recent Living Planet Report[3] states that between 1970 and 2018, there was an average decline of 69% in global wildlife populations. 69% average decline in 48 years is a stunning decline. But it’s not entirely surprising given the scale of land use change that occurred during that time period. In their 2021 research paper[4], Winkler et al found that on average, a land area of about twice the size of Germany (720,000 km²) has changed every year since 1960. There’s also the concerning way the food system’s practices around phosphorous create marine dead zones[5].
As if driving biodiversity loss weren’t bad enough, the food system is also a key driver of climate change. A 2021 UN backed study found that global food systems are responsible for more than one-third of global anthropogenic greenhouse gas emissions (GHGs), with some two-thirds of the emissions coming from the land-based sector, comprising agriculture, land use and land use changes.[6]
At a time when the scale and practices involved in producing food for people are pushing ecosystems toward collapse and the climate toward great chaos (and yet nearly a billion are going hungry), it’s shocking to recognize that 30-40% of food is wasted globally. This waste not only taxes the land and adds to price pressure but also drives unnecessary emissions of methane, a potent greenhouse gas.
Additionally, the food we are producing may not be as pristine and nutritious as we’d like. There are human health implications of the chemical pollution[6] from industrial farms, plastic particulates[7] and heavy metal contamination[8] in the food and water supply and the declining nutrient density[9] in our food.
We have a land use and food system problem. We need large scale transformation of both. And, we have to do this transformation in the face of a climate that is changing. Climate change is increasingly affecting food security through increasing temperatures, changing precipitation patterns, and greater frequency of extreme events[10]. We need large scale transformation toward a food system that works with, and restores nature, that avoids waste and pollution and that has built-in resiliency to adapt to the changing climate. We need a food system that solves for the growing food insecurity felt around the world, driving hunger, migration and geopolitical risks.
Trailhead focuses on business models that touch land and food in ways that restore, adapt and regenerate land and the communities that produce, surround and/or derive food from that land. We look for business models that improve profitability for farmers, food producers and landowners because of their positive environmental and health impacts- creating impact flywheels when good unit economics drive the compounding of positive effects. We think our portfolio companies offer &/or support the types of polysolutions that can help deliver the positive transformation we need.
In 2021 the US lost 6950 farms[11] continuing a trend[12]. Through the portfolio, Trailhead endeavors to bring new income streams and cost reductions to support farmers who we see as important stewards and food producers who can improve biodiversity, nutrient density, food security and ecological harmony
The companies we invest in often focus on fixing the root causes of crises by offering root cause solutions that elicit and enable behavioral and systemic change. Here we highlight a few that seek to fix our food system, help us sequester carbon and improve humanity’s relationship with the world’s land and biodiversity:
Clean Crop Technologies utilizes the 4th state of matter- plasma (which your teachers may not have taught you about in school). Clean Crop uses electricity to boost yields, kill pathogens, prevent food waste and lower GHG emissions in supply chains. They help food producers deliver more and safer food to their customers without additional land use conversion, water use or residues affecting the food quality. Their tech also supports climate adaption for the food system by providing seed treatments that help farmers get from seed to harvest with less water and at higher temperatures. By reducing food waste and increasing resiliency their plasma polysolution can improve the ecological and carbon footprint of food, as well as food security, in both developed and emerging economies.
How Good: provides the data and tools that can drive polysolution decision-making at food companies, enabling better food design. Their cross-functional tech and insights empower decision-making, goal tracking and marketing communication across social and environmental impacts by going deep on over 33,000 food ingredients. They help food companies understand the environmental and social characteristics, performance and risk of their food supply chain at a high level of granularity. This enables both strategic decision- making to improve sustainability performance and the necessary ingredient data to provide consumers with transparency to make choices that are better for their health, the planet and the people and communities who grow their food.
Local Line supports independent farmers with useful software and increased market access, improving food system diversity, transparency and security in the process. By providing large customers with connectivity to local suppliers in the markets they serve, Local Line enables reduction of greenhouse gas emissions and transportation costs and improved freshness of foods for such customers supply chains. By also providing customers with useful data about the social and environmental attributes of the local supply options, Local Line helps support, reward and scale regenerative and organic practices. Importantly, by enabling smaller and more thoughtfully run farms to reach bigger customers, Local Line supports local environments and benefits local economies.
Mad Capital and Fractal leverage existing finance structures to create innovations that build the financial bridges farmers need to transition farms to regenerative and organic practices and that investors need to invest in support of such farm transitions. Their finance platforms aim to help farmers and investors invest in building more profitable and resilient agricultural businesses that also have positive ecological co-benefits such as improved water quality, biodiversity and carbon sequestration by working with nature rather than against it.
White Leaf Provisions offers regeneratively produced food with a focus on purity and transparency from farm to shelf. White Leaf is setting the highest standards in terms of transparency, nontoxicity and environmental impact to meet the expectations of one of the most demanding consumer segments: families with young kids. By focusing on nutritious food grown in regenerative ways for young kids, they focus on making both the planet and people healthier together.
Eion removes atmospheric C02 via enhanced rock-weathering. While their technique uses a natural cycle to sequester carbon, it also performs pH buffering and reduces nitrate leakage, which both help the plant growth environment and protect the downstream ecosystems from nitrate runoff. This polysolution has potential for gigaton carbon removal, agronomic benefits and downstream ecosystem protection while not requiring a practice change from the farmer.
Funga provides a nature-based carbon sequestration solution, while simultaneously leveraging and supporting biodiversity at the soil microbiome level. Funga’s polysolution is also expected to improve forests’ water holding capacity and fire resilience, while also generating positive biodiversity impacts beyond the microbiome.
Land Trust enables people to have access to more places to interact with wildlife while incentivizing landowners to support biodiversity on their properties. By enabling wildlife experiences on previously inaccessible private lands, its service improves profitability to landowners (typically farmers and ranchers) while incentivizing landowners to protect and restore the natural capital on their land, through regenerative and/or conservation practices.
Pantheon Regeneration, a Trailhead Venture Studio effort, focuses on visionary ecosystem projects with high potential for biodiversity impacts and carbon removal. Pantheon is constructing biodiverse nature- based carbon removal portfolios and developing innovative frontier projects- ranging from restoring degraded peatland habitat to solving for root causes of carbon emissions in food, fiber and material supply chains with “insetting” solutions- that mitigate climate change while also supporting biodiversity.
Sources
[1] Global Risks Report 2023 | World Economic Forum | World Economic Forum (weforum.org)
[2] Land Use - Our World in Data
[3] Living Planet Report 2022 | WWF
[4] Winkler, K., Fuchs, R., Rounsevell, M. et al. Global land use changes are four times greater than previously estimated. Nat Commun 12, 2501 (2021). https://doi.org/10.1038/s41467-021-22702-2
[5] https://www.newyorker.com/magazine/2023/03/06/phosphorus-saved-our-way-of-life-and-now-threatens-to-end-it
[6] Crippa, M., Solazzo, E., Guizzardi, D. et al. Food systems are responsible for a third of global anthropogenic GHG emissions. Nat Food 2, 198–209 (2021). https://doi.org/10.1038/s43016-021-00225-9
[6] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9231402/
[7] https://www.bonappetit.com/story/microplastics-food#:~:text=How%20much%20plastic%20are%20we,annually%20from%20various%20food%20sources.
[8] https://www.fda.gov/food/chemical-contaminants-pesticides/environmental-contaminants-food
[9] Fruits and vegetables are less nutritious than they used to be | National Geographic
[10] https://www.ipcc.ch/srccl/chapter/chapter-5/
[11] Farms and Land in Farms 2021 Summary 02/18/2022 (usda.gov)