Why We Invested in Epoch | Driving Resilience, Sustainability and Decarbonization in Soft Commodity Supply Chains
THE MARKET NEED
The majority of soft commodities are produced in the global south, by producers that are the most vulnerable to climate shocks.
Global brands are increasingly looking at decarbonization to meet their net-zero targets, while they work on hardening their supply chains to be more sustainable against climate changes.
Regulators are incentivizing entire industries toward more climate positive practices including the deforestation-free products (EUDR) and the Corporate Sustainability Due Diligence Directive (CSDDD), which place traceability and verification requirements on companies.
As a result, Large Fast-Moving Consumer Goods (FMCG) companies are replacing carbon offsets by insetting. Insetting involves a company investing in their own supply chain to promote regenerative agriculture practices. A crucial need, given that the agriculture sector represents 10–20% of GHG emission globally.
Epoch’s insetting approach not only drives resilience and transparency for FMCG Brands, it also drives economic gains to the producers at the base of their supply chain, while creating a positive impact on climate and biodiversity.
We are excited to support smallholder farmers who are the most vulnerable to climate change, to benefit from the green transition.
Solutions like Epoch are essential in leveraging the necessity of this transition to build a more just and equitable future.
THE EPOCH SOLUTION
Epoch offers one of the best platforms connecting brands and local producers in their supply chains. Brands’ inset budgets will be conveyed directly to producers in exchange for implementing nature positive regeneration practices. While Epoch provides the MRV (monitoring, reporting and reporting) capabilities, it focuses more on the fintech side: managing the insets payments (via cross border channels and last mile mobile money networks) down to the local producers.
Here’s one of their partners, a farm data management company Farmerlink, describing the value Epoch brings to the demand side:
“With Epoch, our customers in agricultural and forestry supply chains are able to satisfy compliance requirements like EUDR and various climate disclosure requirements, with minimal overhead or disruption to their day-to-day operations. Epoch makes it easy for our clients to monitor their Scope 3 emissions reductions and manage them down with targeted interventions with their suppliers.”
Wim Simonse, CEO, Farmerlink
Notably, there are real economic benefits to the demand side with this approach — a supply chain that is more productive, resilient to shocks and in the case of food ingredients, nutrient dense. Adding to that the ability to tap into government incentives, lower-interest sustainability-linked notes and brand differentiation make a strong business case for FMCG companies to leverage Epoch.
THE INSETTING MARKET
Epoch’s target market includes 12 major commodities, 48M sq kms, 2 billion farms, 10 Gt of emissions. The estimated carbon value is $200B worth of incentives.
Ultimately, Epoch wants to become the go to solution for creating more sustainable supply chains. A transparent and open platform in which: producers can select the type of projects to work and estimate the potential benefits for them, brands can monitor closely their supply chains and get access to quality data, project developers can find producers to work with, and financial institutions can invest in nature-based solutions projects. In a nutshell the platform in which organizations can effectively access the resources they need to reach the net-zero targets and producers can benefit from the green transition with increased climate and financial resilience.
What excites us most about Epoch is the capability to directly channel brand’s inset budgets to producers for the implementation of nature positive regenerative practices allowing them to have more sustainable agricultural production and increased financial health. It is one of pioneers for insetting targeting global south producers.
“We are fortunate to have an opportunity to bring meaningful economic uplift to the most vulnerable communities, drive emissions emissions reduction in the order of gigatons, AND drive meaningful economic value to the buyers, brands and retailers in agriculture and forestry-linked supply chains. This is exactly the right time to be working on this opportunity and we are excited about what the future holds.”
THESIS AREA — CLIMATE SMART FINANCIAL TECHNOLOGIES
Epoch is at the intersection between Climate and Fintech and the team background reflects both sides. As a pioneer, the team is convinced that Climate Monitoring, Reporting and Verification technologies are key but only when supported by more and more sophisticated financial services (cross border payments, insurance, climate backed green financing etc…) so that more producers can be included so that highly quality projects and serious positive climate outcomes can be achieved.
Epoch channels global brands’ insets funding to local communities, farmers, and producers at the base of their supply chains to incentivize new, regenerative production methods and nature conservation projects as part of their net zero efforts. We believe Epoch can play a key role to strengthen, adapt, and improve livelihoods through more sustainable agricultural production methods and higher income for smallholder farmers.
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