Environmental, social, and governance (ESG): investment analysis in agribusiness from the perspective of investment funds

Abstract

Agribusiness is deeply related to ESG (Environmental, Social and Governance). Both agriculture and livestock farming rely on natural resources for the production process. Furthermore, it is a labor-intensive sector that faces the challenge of establishing a solid succession process to ensure the business's longevity. Based on the above, qualitative and exploratory research was conduct to understand how asset managers are managing agribusiness resources and integrating ESG principles into their investment decisions. A multiple case study was developed with three asset managers. The findings were: (1) there is significant potential for agribusiness growth through various forms of financing via the capital market; (2) ESG will be a valuable tool for improvements in the sector; (3) there is a need for the development of an ESG framework specially tailored to the agribusiness sector; and (4) the challenge of agribusiness lies in communicating to the world that it is possible to produce (and that we are producing) sustainably.