Hydroponics Industry ESG Thematic Report, 2023

Environmental, Social, and Governance (ESG) in Hydroponics Industry

Sustainable investments have become key trends in recent times, where the corporations, governments and consumers are striving to make a change in an impactful manner.

The hydroponics industry is one such market, which is seen as an alternative to the conventional and traditional method of farming. The key leaders in the hydroponics market present the methods of producing the food materials in a more environmentally efficient manner, where various kinds of methods are used to produce the food, thereby promoting it as an eco-friendly manner of farming.

The market is projected as a sustainable agriculture method, which uses fewer natural resources and yields more than that of a normal, orthodox method of agriculture and farming.

ESG Trends

In hydroponics plants are grown without using soil, for all long years and unlike conventional methods of agriculture where seasons are a limit for growing the plants.

The hydroponics method is quoted as a sustainable method to fight climate change and reduction of environmental damage is also one of the consequences of hydroponics farming. It must be reiterated that the yield is more than 20-25% when compared to that of the traditional farming methods, hence making it ecologically and economically viable and helping in freshwater conservation. Furthermore, hydroponics farming uses at least ten times less water than that used in the regular farming method.

Leading players in the market use different methods in this regard, such as aeroponics, where the nutrients such as nitrogen, phosphorous, Sulfur, calcium, magnesium, and potassium are sprayed to the plants in the form of mist, thereby removing the use of soil, helping in soil preservation and conservation.

The hydroponics market and its ability to support the development of sustainable communities

The other methods such as nutrient film technique, where the said nutrient solution is passed through the bare roots of the plants, giving them the necessary nutrients required for the nourishment, removes the dependency on the soil, instead using rice husk and wood fiber as medium, thus using the urban infrastructure. This use helps in reducing and offsetting the environmental damage happening in the urban areas, as well as increases the local production of the food, helping the local communities, thereby creating a positive impact on social aspects within ESG. This is in line with the United Nations’ Sustainable Development Goal 11, which aims for inclusive, sustainable, and resilient communities. 

In hydroponics farming, the atmosphere is controlled and the chances of weed plants growing and pests and insects’ growth is very less. Hence the usage of chemical fertilizers as well as the pesticides is zero, thereby reducing the damage to soil.

The impact Of The Hydroponics Market On Reducing inequality among minorities

Since hydroponics products are locally produced and distributed, the value chain impact on the environment is also reduced, as it doesn’t include the logistics and storage, which is used in the conventional farming products value chain, thereby lessening the emissions. This has a positive social impact on communities operating locally which helps local sourcing making these local traders inclusive and in line with the SDG 10 – reduced inequalities.

However, the key challenge for the hydroponics industry within ESG is in terms of environment, since the hydroponics uses artificial light for the production, where the energy is sourced from non-renewable fossil fuels, creating a strain on the environment. The future of this market can be more aligned with sustainability where renewable energy can be used for production using the method.

Growth Of The Hydroponics Market:

The hydroponics market as of 2020 is economically valued at USD 2.1 billion, and is expected to expand with a CAGR (Compound Annual Growth Rate) of 20.7% per annum from 2021 to 2028. The hydroponics market being projected as a sustainable alternative to that of orthodox agriculture and the positive impact on climate change as well as the ecological crisis, the hydroponics market helps in attaining the UN SDGs.

Key Companies in this theme:

    • AeroFarms (U.S.)

    • Illumitex, Inc. (U.S.)

    • American Hydroponics (U.S.).

Scope Of the Hydroponics Industry Sector ESG Thematic Report:

    • Macro-economic and ESG-variable analysis of the industry, including regulatory, policy, and innovation landscape

    • Key insights on infrastructure developments and ESG issues affecting the theme

    • Identify key initiatives and challenges within the industry

    • Identify ESG leaders within the industry

    • Understand key initiatives and the impact of companies within the sector to fuel an informed decision-making process

    • Analysis of industry activities based on multi-media sources, including significant controversies and market sentiment

Key Benefits the Hydroponics Industry ESG Thematic Report

    • Offers a global perspective of the hydroponics goods market and the policies and measures taken by the players, for overcoming the challenges faced in terms of Environment, Social and Governance.

    • Key insights into the sustainability practices of major players in the market.