Vertical Farming Industry ESG Thematic Report, 2023

Environmental, Social and Governance (ESG) in the Vertical Farming Industry

For a responsible investing, Environmental, Social and Governance have been very crucial part for decision making and investment in the recent decade.

Vertical farming space have been developing widely due to urbanization, population growth as well growing demand for eco-friendly products. Conventional agriculture is one of the largest contributors to GHG emissions that contributes to 1/4^th of the total global emissions. Vertical farming segment has been gaining interest due to various reasons, lesser land-use, reduced greenhouse gas emission, lesser water usage, prevention of chemicals and pesticides. However, this theme drawback when it comes to affordability, availability, energy consumption.

The companies which are on focus have been gaining interest, tackling current climate change and environmental issues with innovation

ESG Trends

Considering ESG for this segment it has both Environmental and Social impact, with reduced land-use maximizing space (SDG 9 –Industry, innovation, and infrastructure), increasing productivity per unit area and reducing challenges posed by conventional agriculture like biodiversity loss and deforestation. Abandoning conventional destructive farming techniques which contributes around 80% of total deforestation as per European commission.  Transportation of vegetables and herbs to urban areas creates significant carbon footprint(SDG 13- Climate Change) and this segment reduces the same as such innovation is feasible in any urban area with lesser land availability. Moreover, consumers get fresh vegetables without any preservatives, pesticides, or chemical use, especially such practices reduce Eutrophication of water bodies with nitrogen and phosphorous which are used for conventional farming procedures and ensure survival of plants and animals in the water (SDG 14 Life below Water). Last but not least, provision of organic and healthy food (SDG 3-Good health and wellbeing) is one of the key features of vertical farming.

ESG Challenges

Vertical farming segment faces a lot of challenges both Environmental and Social factor; starting with environmental impact, even though transportation has been reduced along with carbon footprint but few other factors also have to be considered. Vertical Farming requires a lot of equipment ranging from LED lights, air humidifiers, air dryers, AC’s, Water Purification systems, automation systems, sensors etc. which in turn causes high energy consumption (SDG 12- Responsible consumption and production) which is a source of indirect emission. In addition to that this equipment has been transported and carbon footprint for same has been scrutinized and questioned. Availability and affordability (SDG 10-reduced inequalities) has been strongly criticized as such technology and equipment has not been accessible in the market, moreover a normal farmer can’t afford such costly equipment.

Growth of the Vertical Farming Market

Global vertical farming market size has been valued at USD 4.34 billion in 2021 and is expected to increase at a compound annual growth rate (CAGR) of 25.5% from 2022 to 2030. Introduction of renewable energy, energy saving equipment can enhance the market of market. In addition to this a business model favoring Circular economy can also boost the potential of this segment going forward. Various legal frames work like International Building Code are including zoning of such vertical farming as one among the main update soon.

Key Companies in this theme

    • AeroFarms (U.S.)

    • Illumitex, Inc. (U.S.)

    • American Hydroponics (U.S.)

    • Agrilution GmbH

    • Brightfarms Inc.

    • Everlight Electronics Co., Ltd.

Scope of the Vertical Farming Industry 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 of the Vertical Farming Industry ESG Thematic Report

    • Developing a comprehensive understanding of macro-economic, Policies & Regulations and innovations affecting the Vertical Farming space, globally

    • Key insights into environmental developments and ESG issues affecting the theme

    • Identifying ESG risks and opportunities to business among leading players in the Vertical Farming

    • Obtaining a clear and relevant understanding of company actions, progress, and impact and find opportunities for investment into the sector