An opinion piece by Bastien Sachet, CEO, Earthworm Foundation
15 min read
Since the 1960s, Louis and his father, before him, have ploughed their land, a 120-hectare farm in Normandy.
Louis ploughed deeper and deeper as more powerful tractors came into the market. At the time, he loved seeing this black, moist soil when turned over and then working it with the harrow to make it “fine as sand” until he could sow their potatoes into it. He loved it until one day, after a heavy rainfall, his potatoes and a good part of his topsoil fell down the road in a river of mud. Louis didn’t know that as he worked his soil, instead of looking after it, he was slowly degrading it.
That beautiful capital he had inherited from centuries of farmers before him had lost half of its value in just two generations. The “Value” of agricultural soil is its organic matter content—in other words, the quantity of humus—which greatly influences its fertility.
In the 1980s, to balance that loss of fertility and mitigate the weakness of the plants growing on his soil, he started to use more fertilisers and pesticides. As commodity prices reduced, his costs increased, making farming less profitable.
Today, consumers and clients ask him to move towards more agroecological, regenerative practices. In practice, it means not ploughing the soil anymore and covering it most of the year with a cover crop. Farmers who have pioneered those techniques have seen the fertility levels of their fields increase once more and have reduced their costs; not working the soil constantly with a tractor and letting earthworms do the job saves much fuel, indeed!
However, moving towards this method of farming requires investment. A direct seeder costs about EUR 40’000, and covering the soil with cover crops each year costs about EUR 80/ha. Add to this the time it takes for re-training, and account for a few crop failures initially. That’s not cheap. So, farmers need funding to realise their transition.
On the other hand, large goods and agriculture brands are very keen to see the farmers supplying them with raw materials transition towards low-carbon, regenerative agriculture. Their shareholders, too – large pension funds or private investment funds – are pushing them hard. The financial world has seen the risks linked to climate change and is pushing all the businesses they are invested in to adopt and implement “Net Zero” – “Climate Positive” targets. These mostly need to occur at the forest or farm level (on average, at least 60% of greenhouse gas emissions of a large food business come from their ingredients and packaging (farms and forests).
But herein lies the challenge: paying more for ingredients per ton of product is difficult because inflation and consumer demand for cheap products keep low costs under strong pressure. So, how can we, as a society, transition to these conditions?
Think for a few seconds about an image which is not so pretty, not so romantic, but which corresponds to how the Western world (and now most of the world) has been looking at Nature: a source of goods and materials that provide food, fibre, construction materials, flavours and fragrances, energy…a kind of natural factory that produces tons of goods every day.
Its energy is the sun, which gets its machines (plants and trees) to convert the raw materials (CO2 and water) into wood, potatoes, sugar, vegetable oil, etc.
Picture it this way: if you want your factory to keep churning out top-notch products, you’ve got to invest in upkeep and improvements. Otherwise, things break down, and productivity tanks. Similarly, to keep our planet in good shape, we must invest in renewing and maintaining its farms and forests.
But who should invest in maintaining this "factory"? Should it be the consumers who end up eating and using those products? Should it be the companies that extract these natural resources to create goods? Or should it be the governments of the countries where these resources exist?
The logic in sustainability for the last 30 years, since the emergence of labels and certifications, is that if it costs more to be “sustainable”, the price needs to be paid by the consumer. Is he not the one asking for sustainability after all? At Earthworm, as we navigate the supply chain between consumers, brands, industries and producers, we have witnessed in despair an endless game of actors trying to throw onto the other the cost of changing practices.
In the middle of all this, there’s always been the hope that governments will invest in their land. It would be logical to have large governments pay to restore soil or boost forests. Some have successfully gained forest cover (e.g., France). Still, nowadays, we see governments struggling with emergencies, and their help comes in the form of writing cheques to various actors to compensate for the losses caused by extreme frost, drought, or other extreme weather events.
So, companies are seen as having the means to invest. Large corporations indeed have leverage through the large volumes they purchase and can send strong signals. But they, too, are under pressure from the market and their investors, who are asking for low prices on one side and high margins on the other.
Let’s look at our factory analogy and see if we could change the point of view: When a leading soda brand upgrades its ageing factory with a multi-million-dollar bill, does it increase the price of the can of soda to the end consumer? No. It creates an investment plan for its investors and depreciates that investment over many years.
We advocate a similar approach to heal the planet. “Factory Earth” needs a massive reinvestment. Its machines (soils, forests) are dying and won’t produce anything anymore if the current trend of climate change and biodiversity loss continues. The costs for society, businesses, investors, and governments will be huge. In 2023, the price of cocoa rose fourfold due to climate change and sick plantations in West Africa. For decades, chocolate companies have been reluctant to pay producers 10% more for the cocoa they buy “because the consumer doesn’t accept it”.
Today, the price of cocoa has risen 400%, and everyone has had to bite the bullet. Maybe an approach which would have consisted of regular reinvestment into the farming communities, tree replanting, best management practices in soil health, and producer training in Ivory Coast and Ghana could have avoided that.
At Earthworm Foundation, our mission is the regeneration of the soils and forests of our planet.
We team up with big brands and producers to positively impact people and the planet through their supply chains and in the places, they source from. Our model relies on companies and donors funding transformation projects worldwide. While many companies have a long way to go to become fully sustainable, some are making strides. In our day-to-day work, many companies committed to change struggle to invest more in our efforts. Tackling deforestation, improving soil health, boosting farmer livelihoods, and balancing company operations with community well-being are tough challenges. But by engaging, companies can figure out where investment could be needed, what works and what doesn’t and what’s missing to get there. If it’s not rebuilding capital fully, at least it’s paying interests and rebuilding the trust capital.
Investors are pivotal in advancing our mission by directing capital towards environmentally and socially responsible projects.
However, many have adopted risk mitigation strategies to address sustainability concerns and remain far removed from the “factory Earth” floor. These strategies often include negative screening—avoiding investments in companies or industries deemed harmful to the environment or society—or integrating Environmental, Social, and Governance (ESG) criteria into investment decisions. While these approaches help minimise exposure to unsustainable practices, they fall short of driving substantial change. The issues become a mark on a report, a few boxes to tick and maybe, sometimes, an email to challenge the company, hoping that the company will bring a “satisfactory answer” so that business as usual can continue.
For a meaningful impact, investors should engage more directly with the companies they invest in. If, on one side, they are asking these companies to lead the regeneration journey, they need to support them. Ground-level engagement allows investors to support innovative solutions to systemic challenges.
Take, for example, HSBC's involvement and support for Earthworm’s Living Soils initiative in France. This initiative is part of HSBC's broader commitment to supporting environmental sustainability and combating climate change, which they ask all their corporate clients to do.
The Living Soils project aims to promote regenerative agriculture practices that improve soil health, increase biodiversity, enhance carbon sequestration, and accelerate farmers' adoption of these practices.
Funding from HSBC has enabled Earthworm to develop the cross-functional ‘enablers’ of the Living Soils project, alongside companies and other organisations like LIDL, Nestlé, Vivescia, Mc Donalds, Mc Cain and others. Thanks to this initiative HSBC are now in a position to help their own clients structure financial products that enable an acceleration on the sustainability topics.
(Earthworm Foundation, along with its members, is on its way to achieving the 2030 goal of engaging 15,000 farmers) in regenerative agriculture and generating 600 million euros worth of support for the farmers).
While sustainable finance is often described as trillions of dollars, it’s nowhere near creating an actual impact in terms of scale, quality, or intent. The lack of investment in regenerating “Factory Earth” is the symptom of a more pressing issue: a lack of engagement.
Globally, investments in sustainability fluctuate between $2.5 and $3.5 trillion. According to a UNDP report, this is nowhere near the $6 trillion (just 7.7% of global assets under management) necessary for the world to meet its SDGs (Sustainable Development Goals).
We've attempted to engage investors and financial institutions at Earthworm Foundation but with limited success. Sometimes, it feels like we are speaking two different languages, that the world of finance, with its mathematical models and culture, and the world of farming and forestry are at odds with each other. Our messaging is often too technical, complex, and unclear.
By default, impact investors fall back on looking for companies/start-ups that revolve around farming and forestry: carbon platforms, data and MRV tools…Yes, we will need those alongside the regeneration journey, but what is most needed from investors, banks, and financiers is their ability to support the reinvestment in Factory Earth.
How to do that? We see a few potential steps for investors and companies:
Take an interest in what issue you are linked to. Is it Cotton farming in India? Is it cocoa replanting in West Africa? Is it fibre production from Swedish forests? It will always be a [raw material x theme x a place/region]
Learn to speak “another language” by supporting projects driven by partners (like Earthworm!) worldwide for supply chains, farming, forestry, and oceans.
Bring your know-how and contribute to the emergence of business models that support regeneration, conservation, etc.
Create the breathing space: Allow for a few years (3-5) for less margin to be made on raw material purchases or product lines to give producers financial breathing room to upgrade their practices and “reinvest” in their farms, forests, and communities.
Develop new business with all the companies in the world that are facing climate change and have no choice but to find a financial partner and investors to reinvest in planet Earth.
