Is climate change a silver bullet or pot of gold for Monsanto?

The risks and opportunities for the agriculture industry.

The business of Monsanto
The agriculture industry has had a significant place in the world economy for hundreds of years, and Monsanto has been a significant player in the industry for decades. Founded in 1901, Monsanto’s first product was saccharine, the artificial sweetener found in sodas and other confectionery goods [1]. However, Monsanto is most widely known for its transition into biotechnology in the agriculture space with the first genetic modifications of a plant cell in the 1980’s. Numerous innovations throughout the years have dramatically improved the efficiency of farming, with herbicides and genetically modified organisms being some of the most controversial.

Beyond GMO’s
Putting aside the numerous health concerns over both the uses of chemicals and genetic modifications in agriculture, Monsanto’s core business is selling seeds to farmers. Traditional farming is one of the most at-risk industries to climate change as crop yield is heavily dependent on temperature, rain, wind, and other weather patterns. Per a report on the economic risks of climate change in the United States, “without adaptation, some Midwestern and Southern counties could see a decline in yields of more than 10% over the next 5 to 25 years should they continue to sow corn, wheat, soy and cotton, with a 1-in-20 chance of yield losses of these crops of more than 20%”[2]. The challenge for Monsanto and the agriculture industry in general is how to innovate to address the need to feed the growing population, and to do so sustainably. Because of this, competition in this space is increasing. “AgTech” startup Indigo Agriculture is using new technology surrounding microbiomes to increase yields, while also improving water efficiency [3]. Furthermore, as with any big company, they have their own carbon footprint and face increased societal and regulatory pressures to mitigate any further contribution to climate change. The risks are plentiful.
Effect on operations

Current changes to operations
The first thing that you see when you visit Monsanto’s website is an eye-catching graphic titled “Taking Action to Fight Climate Change.” Monsanto is clearly trying to take measures to at least appear as if they are doing their part in responding to the issue to climate change.

“Monsanto has a strategy for addressing the components of climate change that are related to agriculture. These include:
• Collaborating with others to advance climate change adaptation and mitigation in agriculture
• Improve our operations to reduce our own environmental footprint
• Help lead agriculture in the fight against climate change” [4]

While these sound generic, the abundance of information provided on the website about carbon neutral crop production, working with partners like World Business Council for Sustainable Development, and establishing an internal carbon price appear legitimate [4]. Additionally, Monsanto appears to be embracing the risks as opportunities for growth in their bottom-line through the acquisition of Climate Change corporation in 2013, involvement in the production of water efficient maize and cotton, and continued involvement in crops for biofuel [5].

However, for all its supposed efforts in environmental protection, the Company still has a $545 million environmental and litigation reserve as of August 31st related to, among other items, “environmental remediation of sites associated with [subsidiary] Pharmacia’s  former chemicals and agriculture business”[6]. Furthermore, per review of the Company’s 10-K, there is no mention of the quantitative impact of some of these initiatives. As such, I question whether Monsanto may be a “greenwasher” and inflating the substance of their actions through an abundance of qualitative information about their partnerships, commitments, and goals without taking measurable steps to improve their sustainability. Even more telling, while the word “sustainable” is plastered all over the website, when the word is searched in the 10-K, the only use of it is “sustainable source of cash and gross profit”[6].

Future changes to operations
In an interview with the Wall Street Journal, Chief Executive Officer, Hugh Grant, was asked about his concern over climate change. Grant responded that, he sees challenges in the warming temperature and that “in the much longer term, we’re going to have to focus on breeding to accommodate those temperature shifts” [7]. The question is whether the firm will choose to be proactive, or reactive to those shifts. While it appears that they are at least aware, the apparent lack of urgency as well as the lack of information on measurable impact does not give me great hope at the actions they plan to take in the future. My recommendation would be to take it one step at a time, and take significant actions regarding that step. Instead of trying to tackle the broad issues of greenhouse gas emissions and water conservation, focus on one measurable change that the company can make and be forthright about the impact.

(797 words)










DONG Energy: Transforming the Renewable Energy Industry


The same old process, but much cleaner: International Paper

Student comments on Is climate change a silver bullet or pot of gold for Monsanto?

  1. Excellent post, and I think you’re right on by doubting Monsanto’s intentions. One look at Monsanto’s business practices towards small farmers to see that they’re anything but sustainable. At the very least, farmers using Monsanto seeds are required to throw away any (perfectly useable) extra seeds after planting. Then there’s Monsanto’s long history of producing incredibly dangerous chemicals, all in the name of a more perfect lawn. As a 2008 Vanity Fair exposé points out: “Monsanto was a chemical giant, producing some of the most toxic substances ever created, residues from which have left us with some of the most polluted sites on earth” . With such a company on our hands, is it any surprise “sustainable” and Monsanto make strange bedfellows?

  2. I also agree that being skeptical on Monsanto placing into practice what it “preaches.” I do commend Monsanto for recognizing the impact of climate change and the need for action, as this is the first step. Bayer announced an acquisition of Monsanto in September 2016, after a somewhat lengthy, and certainly public, battle with BASF for the company. Although the acquisition is still subject to regulatory approval, Bayer has committed a $2 billion breakup fee if the deal fails due to antitrust issues, showing their confidence in the transaction. Bayer, unlike Monsanto, has an entire section in their Annual Report that discusses sustainability and has created a Chief Sustainability Officer. Included in their outlined initiatives are sustainable food supply and environmental protection. This value of sustainability will undoubtedly be transferred to Monsanto, post-acquisition closing, which will hopefully bring it closer to a path of actual sustainability!

  3. Your post brings out one of the largest fears that I have about a focus on climate change in corporate America – the buzz word “sustainable” is being tossed around due to a recent public focus on the environment, but in reality these initiatives are not deep rooted in companies. To provide an example from my experience, each year for our annual meeting of investors we had to prepare a slide covering “corporate social responsibility” efforts of our portfolio companies. It was very much framed as a priority initiative within the various companies. In reality however, we would stretch to provide good examples of environmentally friendly actions among others. They were very much a side-show and due to the low return on investment, never a real focus area. It appears that this is the same phenomenon with Monsanto, as they talk up a big game but have little actual quantifiable results to back up claims. I agree with JC, and hope that the pending merger can change the importance level of sustainability within Monsanto!

  4. While I definitely understand the skepticism towards Monsanto, I’m not convinced that the lack of sustainability references in the 10-K and the existence of an environmental remediation & litigation reserve is sufficient to dismiss their efforts. Monsanto appears to be aware of changes they need to make regarding sustainable agriculture, albeit moving at a slower pace than society or industry may expect. For example, Monsanto’s governance structure includes a Sustainability and Corporate Responsibility Committee that monitors the performance related to sustainability, environmental issues, etc. which demonstrates (some) degree of leadership buy-in [1]. Additionally, in their Annual Sustainability Report, they identify a number of “material issues” related to the environment that are critical both to external stakeholders as well as to their business success [2]. Finally, their Sustainable Agriculture White Paper goes into two metrics they are targeting – to double yields by 2030 and to develop agriculture practices that use 1/3 fewer resources by 2030 [3]. They could integrate these measures more holistically throughout the organization to make them fundamental drivers of their business and I am curious how they approach product stewardship and life cycle management. But at least on the surface, they appear to be shifting from a reactive mode to more of a proactive mode. It still begs the question if they will be able to course correct, or if their business practices will continue to hinder progress.

    [1] Corporate Governance Structure. Monsanto. Accessed from:\.
    [2] 2015 Sustainability Report. Monsanto. Accessed from:
    [3] Sustainable Agriculture White Paper. Accessed from:

  5. You are absolutely right that Monsanto has an uphill battle to prove the company contributes to sustainable outcomes. Even some of our colleagues across the river at Harvard Graduate School of Arts and Sciences have noted that Monsanto’s Round-up Ready seeds have led to the creation of superweeds that ultimately require more herbicides than if these GMO seeds have ever been created ( Furthermore, application of additional herbicides can increase nitrous oxide emissions (, a greenhouse gas 300 times more potent than carbon dioxide ( Thus, even as Monsanto continues business-as-usual activities, they are ultimately creating indirect contributions to emissions. Monsanto would need to discontinue its core product and actually focus on GMO seeds that use less water, less fertilizer, and can withstand temperature shifts to truly contribute to sustainability efforts; the use of the word sustainability only in regards to their profits in their 10K shows you exactly where they stand on this issue as you mentioned though, so it doesn’t look like we’ll be leveraging their expertise to change the world any time soon.

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