There’s a slick, seductive story doing the rounds in agri-tech boardrooms, investor decks, and ESG-aligned portfolios: that vertical farming is the future of sustainable food. High-yield crops grown in repurposed warehouses using LED lights, robotic arms, and zero pesticides — all within a stone’s throw of urban markets. What’s not to love?

Apparently, nothing, if you’re a pension fund manager under pressure to go green. Vertical farming ticks all the boxes: tech-driven, sustainable, urban, resilient to climate change – and perhaps most importantly, PR gold for investors desperate to demonstrate environmental responsibility. But scratch beneath the glossy renderings and breathless pitch decks, and the reality is far murkier.

Welcome to the great vertical farming swindle.

Built to Impress, Not to Feed

Let’s be clear – vertical farming can grow food. But what it actually grows is far more niche: microgreens, herbs, and the occasional boutique strawberry. These are high-value, low-calorie crops grown for high-end consumers, not staple foods for mass markets. The economics of scaling to grow anything substantial – like commodity crops – simply don’t stack up.

The energy costs alone are eye-watering. Artificial lighting, climate control, dehumidification, irrigation systems, and round-the-clock automation all require industrial-scale electricity. Given the on-going energy costs along with the embedded carbon within the infrastructure, your ‘eco’ lettuce is probably more carbon-intensive than field-grown produce – even when factoring food miles.

Follow the Money: Why Pension Funds Are Targeted

So why the massive investment? Why the ongoing rush of institutional capital – particularly pension funds – into vertical farming?

Two words: greenwashing opportunity.

Pension funds are under increasing scrutiny from regulators, members, and the public to show they are aligning with net-zero goals. But genuine sustainable infrastructure takes time, carries risk, and doesn’t always photograph well. Vertical farming, on the other hand, looks like the future – shiny, high-tech, and full of ESG buzzwords. It’s ESG theatre, packaged for PowerPoint.

Add to that slick founders, charismatic futurists, and VC money already inflating valuations, and you have a perfect storm. Many pension funds – with limited agri-tech expertise — have been drawn into projects with lofty promises but questionable fundamentals.

The Fallout: Tech Wrecks and Vanishing Yields

Now the cracks are showing. Some of the sector’s biggest names have downsized, pivoted, or gone bust. This month we have lost JFC and previous to that we have seen the demise or drastic downsizing of Perfectly Fresh, Eider, OneFarm, Smartkas, Aero Farms, InFarm and Plenty to name but a few.  Projects once hyped as food system game-changers are quietly selling off kit or seeking emergency bailouts.

And who’s left holding the bag? Often, it’s pension funds – those managing the life savings of nurses, teachers, and civil servants – that find themselves locked into underperforming, capital-intensive operations with no path to profitability.

A Better Way Forward

This isn’t a takedown of all vertical farming. There are real innovators in the space, working on solving legitimate problems like food deserts and climate-proof growing systems. But the sector needs a serious reality check – and so do the investors fuelling it.

If we’re serious about sustainable agriculture, we should be backing:

• Regenerative field-scale farming
• Localised, low-energy greenhouse models
• Post-harvest loss prevention in developing economies
• Smarter cold chains and infrastructure

All of these deliver real impact – and often better returns – without the theatre.

Final Thought

Pension funds need to wake up. Just because something glows purple and uses AI doesn’t make it sustainable – or investable. Vertical farming isn’t a green revolution. It’s a shiny distraction, and in many cases, a costly con.