Proterra Investment Partners on driving sustainability across the value chain

This article is sponsored by Proterra Investment Partners

Proterra’s investment strategies are influenced by the senior leadership team’s longstanding tenure with Cargill, a global leader in providing food, agriculture, financial and industrial products. Our current sustainable fund was formed based on our understanding of the need to transform supply chains to align with food companies’ evolving ESG commitments.

The fund is focused on some of the secular trends transforming the food and agribusiness industry. We see three powerful currents are running in parallel, driving the need for significant capital investments.

First is escalating consumer demand for sustainably grown, organic and ‘better for you’ products.

Second, combined with consumer demand, there is a constantly evolving corporate food companies mandate to offer better, healthier and sustainable products.

Third, government policies and NGOs are pushing for sustainable products and animal welfare. All of these are driving the need for significant infrastructure investments in agriculture across the full value chain.

We believe a key differentiator for us is our ability to source deals given our longstanding Cargill relationship history with food companies. These deep relationships with food companies and partner producers allow us to successfully pursue and complete investments that are win-win for both parties. For our existing fund, we came to an agreement with food companies on long-term, cost-plus contracts with our partner producer. These mutually beneficial agreements provide the supply businesses are looking for to meet their ESG goals while providing the security and profitability needed to make the investment in these assets.

An example is our sustainability fund’s investments in cage-free egg production. We acquired a layer farm in the Pacific Northwest that mainly had conventional egg production. State laws in Oregon and Washington require all egg production to be produced by cage-free layers by January 2024. To support the capital needed to build these new cage-free facilities, we worked with key food companies to successfully establish long-term, profitable supply contracts. These contracts allow the food companies to make progress toward their customers’ desire for cage-free eggs (and their own corporate ESG commitments) and provide a profitable return for converting our businesses to cage-free production.

Overall, we believe the fund has created profitable business models by investing in demand-driven projects that fulfill the key themes that food companies commit to support in their ESG reports. This approach ensures that we stay aligned with their needs and has allowed us to build a robust pipeline of potential deals. We further believe opportunities will grow as new commitments and themes emerge, and as we continue to proactively provide solutions to meet supply chain needs.