Fazenda Diamantina: ESG Dilemmas of a Brazilian Coffee Farm

In 2022, two coffee growers in Matas de Minas, Brazil, were at a crossroads about the future of their coffee farm. Their original goal was to create an environmentally and socially responsible (ESG) coffee farm. However, due to low profitability and other challenges, they began to consider several alternatives. The options on the table included i) divesting from the farm altogether and returning to their corporate roles, ii) partially divesting to an ESG fund, even though this fund is suspected of mere greenwashing, and iii) staying with their investment and seeking to expand their direct sales outside of Brazil, thereby further advancing their ESG goals. Each of these potential paths requires a comprehensive profitability study, which ultimately leads to the crucial question: how much are they willing to give up to advance their ESG mission?