“This system can be compared to a vast universe, with individuals and communities playing distinct roles that ultimately affect the entire ecosystem,” he says.

One gram of soil could contain up to 10bn microbes. But ‘could’ is the operative word. The quality of soil is being degraded by the destruction of these micro-organisms. The primary cause of this degradation is intensive farming, which includes the use of heavy machinery and synthetic fertilisers, and focuses on maximising yield.

The UN Food and Agriculture Organisation estimates that 33% of the Earth’s soils are already degraded, with more than 90% at risk of degradation by 2050.

Solena Ag’s Chief Operating Officer, Gerardo Guerrero López, highlights some important implications of this: “If we cannot eat, we die, but this is the extreme part. In the process, we are going to see inflation in terms of food.”

A 2018 review by the United Nations Convention to Combat Desertification predicted that without urgent action, the global economy would lose $23tn by 2050 through land degradation in what it called “a crisis of unseen proportions”.

All stakeholders along the food supply chain – farmers, companies, banks, investors and the government – are now turning their attention to regenerative agriculture. This is, essentially, farming in harmony with nature, which includes considering the importance of micro-organisms.

In January 2023, the UK government launched the Environmental Improvement Plan, in which it committed to bringing at least 40% of agricultural soil into sustainable management by 2028. Much of the investment in companies working on boosting the microbiological diversity of soil comes from venture capital funds such as CerraCap Ventures, which invested in Solena Ag last year.

But the banking sector has also extended its support to regenerative agriculture. In October, Lloyds Bank, in collaboration with the Soil Association, launched the Soil Association Exchange. Lloyds is offering the service – which helps farmers find “financial and environmental advantages” for the land and to move more quickly to net zero – to up to 1,000 of its biggest agriculture customers. Soil health will be covered alongside carbon emissions, water quality, biodiversity, animal health and the social and community impacts of farming.

There are also specialist asset managers dedicated to sustainable investing, such as impact investor Triodos, which runs the Food Transition Europe Fund. But more generalist asset managers are also now considering best practices along the supply chain in a bid to meet environmental, social and corporate governance (ESG) standards.

Blythe sums it up: “Businesses connected with the continued degradation of soil are likely to rate poorly [on ESG metrics], which will impact on the potential to raise capital from discerning asset managers and banks.”

But understanding the value of healthy soil and analysing exposure to it along the supply chain is complex, as Stephanie Race, founder and Chief Executive of Earth Analytics Group, notes: “There is not a direct relationship between the value of soil independent of the context for how the land is used.”

Race points out that a global consumer products company that operates in approximately 70 countries and sells more than 70,000 products, with approximately 5,000 ingredients, sources from farmers globally.

“The environmental impact of how they are produced is needed by asset managers to understand how the microbiome connects to the commodity costs and inventory values in the corporate income statement and balance sheet. [But] asset managers will not typically analyse this level of detail as part of conducting due diligence on the impact of climate change and biodiversity loss on their asset portfolios.”

Surath Sengupta, former Managing Director at HSBC Commercial Banking and founder of supply chain and sustainability consultancy Aadvos Limited, agrees.

He says: “There needs to be a standard set of metrics to measure the outcomes of sustainable practices. The financial sector can play a role by bringing the companies using these methodologies into their overall credit decision process.”

The Taskforce on Nature-related Financial Disclosures (TNFD) published its final recommendations in September 2023 – a step in the right direction. The global, market-led initiative will arm market participants with a risk management and disclosure framework to assess their nature-related risks and opportunities. Done right, it will be challenging work. In the framework, the TNFD defines ‘land’ as “all dry land, its vegetation cover, nearby atmosphere and substrate (soils, rocks) to the rooting depth of plants, and associated animals and microbes”.

“Satellite data can be used to identify crops being grown in an area and assess their suitability for both the soil and the climate, and ensure what is being financed is coming to fruition.”

He also says that blockchain can be used to enable traceability and transparency. “Corporates and food retail companies play a big role in transitioning supply chains. They need to ensure they are using this technology for traceability in order to source food and raw materials from regenerative farms and ensure they are rewarding best practice. Success cannot be tentative. Success has to be definite.”