Stavros Koutsantonis by no means imagined that his investing profession within the U.S. would leverage the information he discovered whereas working weekends on his grandfather’s farm in southern Greece. Koutsantonis, who grew up as a “metropolis child” in Athens, moved to the U.S. to pursue his training and construct a profession on Wall Road. However he by no means absolutely left behind the teachings of working his household’s grape vines and walnut bushes.
“Agriculture is, in a fashion of talking, in my blood,” he mentioned. “My father grew up on a farm in southern Greece that we’ve got owned for generations, and I spent weekends and holidays visiting my grandparents there. However if you happen to had informed me 30 years in the past that I used to be going to focus my profession on agriculture, I wouldn’t have believed you.”
Over the previous three a long time, Koutsantonis has efficiently mixed his agricultural background with funding roles at a number of the largest monetary companies on this planet. These included world asset supervisor Constancy, hedge fund Millennium Companions, and personal fairness large Brookfield. In his roles, he centered on “actual asset” investing, overlaying areas equivalent to water, infrastructure, renewable power, and commodities.
Navigating the Intersection of Investing and the Atmosphere
Since 2016, Koutsantonis has been a managing director and head of agricultural investing at Conservation Assets, a personal fairness agency, the place he has additionally served as chief working officer. Conservation Assets, which was based in 2004 and headquartered in Exeter, NH, sits straight on the confluence of sustainability and investing. Over the previous 20 years, the agency has raised over $1.4 billion in funds, advertising and marketing to establishments, household workplaces, and ultra-high-net-worth traders within the U.S. and all over the world.
The agency’s investments, which cowl each agriculture and timberland-focused methods, have a twin mandate: to each generate returns for traders and to make a constructive environmental influence. A lot of these methods match into the broader class of “influence investing,” which accounted for greater than $1.5 trillion of belongings as of late 2024, in line with the International Affect Investing Community.
Farmland as an asset class has grown considerably over the previous a long time, notably for institutional traders equivalent to endowments and foundations. Many of those traders search out farmland in its place asset with the potential for regular returns over very long time intervals. As well as, farmland has proven little correlation to the efficiency of shares and bonds, that means that farms can nonetheless generate constructive returns even in a bear marketplace for conventional monetary belongings.
Remodeling Farms, Whereas Including Each Financial and Environmental Worth
Whereas farmland has grown in significance for traders — and everybody must eat whatever the financial scenario — researchers have more and more centered on the agriculture sector’s vital contributions to local weather change. In actual fact, agriculture produces a overwhelming majority of greenhouse fuel emissions (GHGs) globally, following solely the power sector (together with transportation) as a contributor to GHGs.
Information from sustainability agency Local weather Watch discovered that agriculture produces about 12% of worldwide GHGs, primarily pushed by methane produced as a part of livestock digestion. In line with nonprofit analysis agency Assets for the Future, different GHG sources from farming embody nitrous oxide, which is usually launched because of fertilizer and manure utilization; and carbon dioxide emissions, which come up from the decomposition of plant matter, though these emissions are partially offset by the elevated plant matter saved in cropland soils.
“Should you’re attempting to scale back emissions and also you’re not addressing agriculture, you’re type of ignoring a giant a part of the answer,” Koutsantonis mentioned. “If one believes that emissions want to come back down, then agriculture may be very clearly part of the answer. However to be able to do this, it’s a must to change the way in which you deal with and farm the land.”
Conservation Assets does simply that by solely investing in farms that meet strict standards. This includes buying high-quality farms with the potential for including much more worth by way of sustainable administration practices. Such practices enhance the standard of the land whereas additionally supporting the wants of a productive farm that may generate wholesome returns for traders.
“We’ve obtained an impact-focused method that develops each the agricultural values in addition to the environmental values and finally monetizes each of these,” Koutsantonis mentioned. “We’re trying to purchase a distinct kind of farmland property that passes muster as an institutional-grade property that’s absolutely farmable and has good soil and water. However then there additionally must be some type of environmental facet that we develop, understand, and finally monetize.”
To realize their land-improvement objectives, farms within the Conservation Assets portfolio follow both regenerative or natural farming strategies (or a mixture of the 2). Which means their farms don’t use artificial chemical substances or fertilizers, and that in lots of instances farmers make use of strategies equivalent to planting cowl crops and including plant variety to strengthen the soil and doubtlessly make it extra productive for future seasons. These approaches are inclined to result in extra productive farms, higher returns for traders, and more healthy land.
Battling the Scourge of Greenwashing
Whereas Conservation Assets goals to mix an environmentally pleasant method whereas providing traders a stable return on their funding, Koutsantonis sees a number of main headwinds for broader sustainable investing, notably because the class stays extensively misunderstood by each the general public and traders.
First, he factors to the potential perils of “greenwashing” — the follow of corporations or fund managers utilizing deceptive or deceitful advertising and marketing practices to place themselves as being environmentally pleasant, even when they might not dwell as much as these assertions. Greenwashing is particularly tough to police as a result of there are nonetheless no broadly accepted industry-wide requirements or definitions in these areas.
“The time period ‘sustainability’ remains to be essentially the most prevalent time period used to explain influence and ESG investing, however it’s ailing outlined and generic and might be manipulated to seize investments that aren’t very ‘sustainable’ or ‘impactful,’ Koutsantonis mentioned. “Fund managers take nice liberties in touting the environmental and social impacts of their investments, benefiting from the dearth of extensively accepted measurement, verification and certification requirements, in addition to traders’ restricted bandwidth and nonetheless fuzzy nomenclature.”
Conservation Assets takes quite a few measures to scientifically show their constructive environmental influence. The agency makes use of third-party testing to measure, confirm, and certify that they’ve elevated the degrees of carbon sequestration in soil on their farms. Conservation Assets makes use of this information to generate carbon credit, which they’ll then promote on carbon exchanges. Conservation Assets additionally voluntarily complies with the {industry}’s strictest anti-greenwashing protocols.
Overcoming Misperceptions About Sustainability-Centered Funds
Along with the deceptiveness of greenwashing, Koutsantonis additionally factors to continued misconceptions — notably within the U.S. — that traders should sacrifice funding efficiency when investing in ESG or influence investing funds. That’s simply not true. Whereas efficiency has different over time, in lots of instances sustainability-focused funds have, the truth is, outperformed their conventional counterparts.
A 2024 examine by the nonpartisan Institute for Vitality Economics and Monetary Evaluation discovered that sustainable mutual funds and exchange-traded funds (ETFs) throughout each equities and stuck earnings have accomplished higher than funds that didn’t think about ESG components of their funding course of. Whereas ESG funds haven’t escaped the more and more poisonous politicization round sustainable investing, the efficiency argument in opposition to these funds merely doesn’t maintain water.
Recommendation for Sustainability Profession-Seekers
Koutsantonis gives pragmatic recommendation for younger individuals and potential profession switchers desirous about “inexperienced careers.” In his view, individuals trying to make a constructive environmental influence ought to put themselves in positions the place they’ll have actual affect, which regularly means leveraging financial and financial energy.
“All of us need to save the world. It’s simple to get on the proverbial cleaning soap field and level fingers at what went unsuitable and what wants to vary,” he mentioned. “However having the ability to affect and direct capital, effectively, towards real-world environmental options is a talent that can be in nice demand. Put one other manner, when actual environmental influence meets superior returns, it’s an incredible mixture.”
Total, Koutsantonis has constructed a long-lasting profession out of making constructive monetary outcomes for traders whereas concurrently producing tangible environmental advantages. A sustainable future could depend upon many others having the ability to create comparable “win-win” situations by which what’s good for the underside line can also be good for the planet.
Take the Subsequent Step
For extra insights and steering on navigating the evolving panorama of sustainability and different associated points, keep tuned to our weblog for future updates and knowledgeable analyses. And assist us construct a extra sustainable and affluent world by way of accountable funding practices by changing into a member of the Advance ESG neighborhood. It’s free to hitch and there are not any future monetary obligations. Collectively, we are able to make a distinction in safeguarding our planet for future generations.
*Neither Advance ESG nor the writer have any affiliation with Conservation Assets
