The Re:food Approach
The Re:food Approach
Theory must be applied to actually create an impact. Re:food used the building blocks described in the Research Lab to develop an investment approach for sourcing and investing in innovative food system companies. We look for leverage points in the food system where equity investments can help entrepreneurs scale solutions that will reduce pressure on planetary boundaries while generating strong financial returns and strengthening social foundations. Keep reading to dive deeper into our four themes and the leverage points we found, then visit the Portfolio & Impact section to see the results of using this approach for almost a decade.
The food system is complex, and with so many pressing problems, it can be difficult to know where to start looking for solutions. Rather than blindly investing in innovations that sound like they might work, we asked ourselves: how might we bring the same level of scientific rigor that led to identifying the four themes to our sourcing, due diligence, investing, and holding?
Our approach is to break down each of the four themes into segments, or areas of innovation, to arrive at a Segment Analysis that informs our sourcing and due diligence. While the four themes are fairly static, the segments are dynamic. Regularly, we review our segments to add, condense, remove, or reprioritize segments based on market trends, innovation breakthroughs, regulatory headwinds or tailwinds, and a host of other factors. We then use our Sustainability Framework for evaluating, monitoring, and supporting portfolio companies.
The foundation for this approach is the ABCD Method, an iterative 4-step processing in the Framework for Strategic & Sustainable Development (FSSD) that provides structure to decision-making.
Identify a Future Vision: Inspired by the work of the EAT-Lancet Commission, we created the Re:food circle as a model of the planetary boundaries and the ethical foundation for a sustainable and ethical food system.
Analyze Current Problems: We identified the current system’s most pressing root cause problems that violate the basic sustainability principles by directly or indirectly putting pressure on the planetary and ethical boundaries. We then broke down the biggest direct and harmful problems, picking them apart using the framework of the sustainability principles to understand their root causes and the barriers that are preventing the shift to a more sustainable system.
Identify Alternative Solutions: Instead of looking for bandaids to address the symptoms of these problems, we used systems thinking and the future vision modeled in Step A to identify four shifts, our investment themes, that would design the root cause problems out of the system: the shifts to sustainable proteins & fats, healthy soils, sustainable supply chains, and healthy diets. We then applied the Three Horizons framework to identify segments with the potential for transformative impact. Each segment defines a barrier to a shift and the innovations that could break it down if applied at the right leverage point.
Prioritize Alternative Solutions: Our ultimate goal was to identify the solutions best suited for Re:food to invest in based on their Impact Potential, Financial Potential, and Portfolio Fit. We dig deeper into our methodology in the link below. For the segments with the highest potential for us, we continuously perform Deep Dives to strengthen our understanding of what must become true for the segment to become a sizeable category in a future sustainable food system, what structural competitive advantage a winner in that category must possess, and the current landscape of innovations, companies, and investors in that segment. These deep dives give us a strong foundation when evaluating investment opportunities.
The ABCD Method ends with prioritization, but finding a high-priority segment is not the end of our work; it is the start of a long journey of sourcing, due diligence, and investing that culminates in a long-term partnership with a company. We are an active partner to the management in our portfolio, helping them with financing, strategy, operational high-stake decisions, and sustainability and impact goals.
Consuming animal-based protein is not an environmental problem per se; in fact, it’s been an essential source of nutrients for thousands of years and will remain a critical component of the food system, especially in developing regions. The root cause problem of animal-based food originates from the inherent inefficiencies in rearing animals for human consumption. As production volumes increase, these inefficiencies result in staggering resource depletion and food safety risks.
If you’re unfamiliar with these challenges or would like a refresher on the history of animal farming, we recommend reading our story: Is Animal-Based Food Really That Bad for the Environment?
Healthy soils – specifically, healthy topsoils high in organic matter with a thriving soil microbiome – are an essential cornerstone of the food system. In fact, the FAO estimates that 95% of the food we eat is directly or indirectly dependent on soil. But 90% of our soils are at risk of erosion by 2050 if we don’t change our growing practices. Re:food made Healthy Soils a prioritized investment theme because four of the food system shifts identified by EAT-Lancet directly or indirectly connect to improving soil health. Keep reading to learn how we applied the ABCD Method to identify and invest in high-potential solutions to improve soil health.
New to the concept of soil health and the current state of soils? Read our story on the topic:
Malnutrition is a global paradox: there’s more than enough food to feed everyone on this planet, yet hundreds of millions of people are starving, while billions are overweight or obese. Members of both groups are micronutrient deficient, and all forms of malnutrition (obesity, hunger, and micronutrient deficiency) are rising. On the flip side, a healthy diet transformation could prevent one in five deaths and is the strongest lever to improve both human and planetary health. What does a healthy diet look like? Each of us is unique, and a variety of factors from environment to genetics influence our nutritional needs. At the same time, no food is so unhealthy that it can’t be enjoyed in moderation, and many nutrients can come from more than one source. Rather than focusing on specific food items that are deemed “healthy”, we focus on healthy diets that promote optimal health while protecting against malnutrition and diet-related diseases.
Read more about how we think about healthy diets and the current state of nutrition worldwide in our Healthy Diets story.
Modern food supply chains are long, linear, and wasteful. They depend on numerous stakeholders and middlemen, with little transparency or ability to track the flow of goods, emissions, and financial returns through the system. These supply chains have enabled urbanization and introduced new foods and flavors to our palates. But they have also decreased visibility into where our food comes from, increased food, nutrient, and plastic waste, and yet fail to ensure that nutritious foods are available to all people around the world. And the growth of these depletive supply chains is unsustainable. The alternative is short, circular supply chains that help us stay within our planetary boundaries while still moving food and resources to where they need to be, even as our population and economy continue to grow. Investing in this alternative is a key focus for us.
Need a refresher on what a supply chain is and why it matters? Read our story on the topic here.