Louis Dreyfus and Nature Conservancy collab could grow to solicit capital

The Nature Conservancy’s Michael Wironen says the pair contemplate ‘there will be an interest and need in attracting capital’ as the regenerative ag and habitat conservation partnership develops.

A collaboration between Louis Dreyfus Company and non-profit The Nature Conservancy could eventually solicit capital to support regenerative agricultural practices and efforts to eliminate deforestation and conversion of agricultural land.

Netherlands-headquartered LDC and Virginia-based TNC said they will work to promote and implement regenerative and habitat conservation practices in an announcement earlier this month. Initial focus will be on sustainability in production of grains, oilseeds, cotton and coffee in North and South America.

Greg Fishbein, TNC’s director of agriculture finance, told Agri Investor the LDC collaboration is at its early stages and still focused on building on existing work developing financial mechanisms and incentives to encourage shifts in farmer behavior. He explained that although TNC’s NatureVest unit – which helps connect investors with relevant sustainability opportunities when appropriate – is not yet involved in its partnership with LDC, that could change as the projects develop.

“We certainly contemplate that, as those [projects] get further fleshed out, there will be an interest and need in attracting capital to that, including various forms of capital including working with banks but potentially investors of various types in funds that could be set up to support that,” he said. “That’s part of the partnership; to figure out what those products and mechanisms are and how to attract the capital.”

The collaboration includes a pillar dedicated to regenerative agriculture with an initial focus on the US, Canada, Brazil and Argentina, as well as an expansion of an existing collaboration between LDC and TNC on deforestation and conversion-free production that has focused largely on Brazil. Also included within the two organizations’ plans are projects focused on citrus farming in Brazil and coffee production in Vietnam, Indonesia, Uganda and elsewhere.

TNC director of corporate engagement for food and water Michael Wironen told Agri Investor the partnership with LDC comes at a time when companies throughout the ag supply chain are engaging on regenerative agriculture without a particularly robust understanding of what it entails.

“What LDC has recognized is that if they want to be successful as these critical intermediaries between producers and the market, they are going to be asked by the customers to deliver regenerative commodities that meet certain environmental attributes. To do that they need to have robust and credible ways of measuring impact in exactly the same way as a KPI-linked bond or some other financial instrument with environmental performance criteria might have,” said Wironen, who joined TNC in 2018 after 10 years as a senior sustainability specialist at New York-headquartered consultancy Ecology and Environment, according to his LinkedIn profile.

“[LDC] are a trader; they are not an agronomy company, so bringing in a partner like The Nature Conservancy provides that trusted but critical third-party perspective on what is robust, what is rigorous and what is credible and will help them ensure that when they are bringing products to the market that are ‘regenerative’ or ‘sustainable’, that it means something,” said Wironen.

LDC has an existing commitment to eliminate deforestation and conversion of native vegetation of high conservation value to agricultural production by an initial target date of 2025, with a final cut-off date in 2030. Those efforts include plans to support regenerative practices on three million acres managed by a network of approximately 30,000 farmers already in its network.

Fishbein described existing efforts in Brazil to build upon commitments by traders not to source from agricultural production sites created through deforestation or conversion of properties after 2020 as particularly important.

“We’re going to have to be looking to these pastures that were cleared decades ago as the potential opportunity to meet growing demand for soybeans in a way that eliminates conversion,” Wironen added. “Otherwise, the commitments that we are seeing from the food companies and from the Walmarts of the world are going to be much harder to meet, or they are going to be met with things that really don’t hold up the scrutiny that we would demand.”