Trailhead Capital’s New Impact Metrics and the Future of Measuring Regenerative Agriculture

By Connie Cocroft

Earlier this year, Trailhead Capital kicked off a new initiative that seeks to capture comprehensive metrics around regenerative agriculture investing through the lens of our portfolio companies. Working with a company called Proof, we will be collecting a range of new data in an effort to accelerate the transition to a regenerative world through impact-driven investments.

In order to promote key end goals focused on improving climate, natural ecosystems and human health outcomes, we identified the key activities and metrics associated with those activities that can help drive these goals. Starting with the foundation of regenerative land management and increasing biodiversity, we’ll be looking at how effectively our portfolio companies sequester carbon, conserve water and improve food access and nutrition, among other things. We’ll also be considering the work they are doing to reduce energy consumption, reduce carbon emissions, reduce food waste, create jobs, drive food supply chain transparency and more.

In the long run, the standard ESG metrics are really just table stakes. You have to be looking at the Environmental, Sustainability and Governance performance of your portfolio to even show up these days. We would like to go beyond that to define exactly which impact metrics matter in regenerative agriculture, even if they are not yet being tracked systematically yet.

We want to define a set of impact metrics that go beyond what other investors are watching in the regenerative ag space. We would like to work with other firms and companies to develop consensus measurements (as much as possible) that can be applied across the industry. Because one of the challenges in talking about regenerative land management and biodiversity is that it can be very abstract and many people don't understand how much of an impact it can have on the environment and on human health. We’re hoping that by connecting the dots and really highlighting these metrics can move the whole conversation forward.

The fact is, our Limited Partners and investors across the board are becoming more and more interested in understanding not only the impact that we as a firm are driving through the portfolio, but also have access to verifiable metrics that prove that we are actually achieving our impact goals. It is one thing to make bold claims, but another to back them up with data.

It’s not just investors, either. One of the more interesting things that we see across the food industry is an increased focus on suppliers and what their impact is from a carbon perspective. They are asking “who are these farmers? How are they farming? Are they doing it in a way that is kind to the land and not creating a lot of additional atmospheric carbon?” And, as a result, many of them are coming back to regenerative land management as part of this global push to get to carbon net zero.

But part of this new metrics framework also is a desire to measure our success beyond the financial outcomes of the portfolio. We at Trailhead share an underlying belief that there are real market forces and demand driving in the direction of impact, so those financial metrics are a good indicator of success, but we want to see how closely the impact metrics and financial success are aligned. It’s been in our DNA since the beginning; now we are developing the structure to measure and share those results.