A circular economy mindset for sustainable agriculture: Cocogreen


Sustainable agricultural

Andrew Shannon, partner at Circularity Capital, explores the positive impact circular business models are having right now and explains why finance can unlock the agriculture sector’s opportunities of tomorrow.

Reducing environmental pressures is essential to protect food security, natural resources and livelihoods.

Modern food systems constitute complex global networks of production, processing, manufacturing, supply, retail, services, and consumption. This makes agriculture a sizable economic sector but also creates a myriad of environmental challenges.

For example, agriculture is estimated to be the source of more than 11% of all greenhouse gases emitted in the EU and remains a significant contributor to the emissions of other harmful air pollutants.

It’s also a key driver of biodiversity and habitat loss through land conversion, soil degradation, overfishing, water abstraction, and chemical and nutrient pollution.

A strained food system

Sustainable agriculture

The world’s population currently stands at around 8 billion and is expected to reach nearly 10 billion by 2050. As the population grows, so does the strain on global food security, with developing countries feeling the brunt of this impact.

In today’s world of conflict, economic shocks, climate change-related extreme weather events and soaring fertilizer prices, it’s estimated that as many as 783 million people are facing chronic hunger.

Andrew Shannon
Andrew Shannon, partner at Circularity Capital.

It falls primarily to the agriculture sector to shoulder this burden, by finding new and innovative ways to not only build resilience but also rapidly increase yields to a scale able to plug both existing and future gaps in food security.

Existing “take-make-dispose” models of production and consumption are simply not up to scratch. Indeed, these incumbent, outdated processes are insufficient to support the world’s growing population in a socially responsible and environmentally sustainable way.

People in many developed countries are also increasingly shifting towards plant-based diets, with new eating habits further driving up demand for agricultural products, which puts further pressure on the limited arable land available.

Over a third of all food produced globally goes to waste, which offers a stark reminder of how inefficient and inequitable food systems have become. This is why food and agricultural businesses that utilise modern, circular and regenerative business models will prove so critical to changing the way we think about, grow, buy and consume food. 

There are several pioneers already working hard to drive real change in food and agriculture. Those at the vanguard are the ones making effective positive impact, while also benefiting from the long-term commercial advantage that circular business models consequently bring.

Circular economy in practice: Cocogreen

Sustainable agriculture

One organisation at the forefront of sustainable agriculture is Circularity Capital portfolio company Cocogreen. Founded in 2010 by Dr Suresh Fernando and Thomas Ogden, Cocogreen is a world leader in the design and manufacture of low-carbon, high-yield coir growth substrate for berries, salads, citrus fruit and avocadoes.

The company’s products are manufactured using a by-product of the global coconut industry, which is refined using proprietary product and process technologies. This provides a superior growing medium for agricultural customers growing berries, fruits, and other fresh food end markets.

Cocogreen’s products have a significantly smaller carbon footprint than associated incumbent peat-based growing media, Shannon writes.

In addition to improved nutrient distribution, minimising water use and delivering a higher production yield profile, Cocogreen’s products have a significantly smaller carbon footprint than associated incumbent peat-based growing media.

The use of peat has also started to be phased out by regulators due to the negative impact of harvesting peatland, which acts as a hugely powerful global carbon sink.

Cocogreen is an excellent example of circularity in practice. The business creates a technical, high-usage product from naturally occurring, abundant feedstock, with the added benefit of being reusable and compostable. 

Cocogreen’s circular business model is not limited to its manufacturing processes either. The company has also developed a sustainable supply chain to ensure its products are socially accountable and environmentally sustainable, from plantation and raw materials processing, through pressing and packaging, logistics, shipping and end-user support.

This business model is especially relevant in the current economic environment where agricultural supply chains are increasingly disrupted by conflict, price fluctuations, inflation and ever-changing international import and export policies.

Cocogreen has developed a closed-loop system that is effectively resilient against external economic and supply chain shocks while providing an environmentally friendly, yield-boosting line-up of sustainable products.

Harnessing finance to accelerate circular progress

Sustainable agriculture

Circularity Capital was founded in 2015 with the firm conviction that the entrepreneurs of businesses like Cocogreen, who are developing innovations to make the circular economy a reality, deserve a specialist investor with the right knowledge, experience and network to unlock their full potential.

The firm has worked hard to develop the specialist capabilities to make this a reality and is currently deploying its second dedicated circular economy private growth-equity fund – which, at €215m, is the largest of its kind globally.

Investees from both Circularity’s first and second funds include several leading circular businesses across Europe, but the ambition is to further grow this activity by supporting leading, innovative, circular businesses by adding value as a domain expert investor.

It’s clear to see that the circular economy provides a strong framework for decoupling business growth from resource constraints, enhancing resource productivity and driving competitive advantage.

It also highlights a subset of business models which are enabling this transition and can generate premium returns for investors. Indeed, circular economy thinking will drive industry for years to come.

The supply chain is set to experience rapid change over the coming years, with Circularity Capital set to play a leading role in the transition towards a more resource-efficient future.

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