The World Economic Forum has said that the main obstacle to transforming global food systems is not a lack of capital, rather the need to develop investment structures that can attract and deploy funding at scale.
An article published by the Forum’s Aurora Matteini, specialist, sustainable finance, FMS, and Tania Strauss, head of sustainable growth and people agenda, notes that while trillions of dollars circulate through global capital markets each year, the food and agriculture sectors often struggle to attract investment at the scale they need.
Financing the transition
Food systems currently attract around $95 billion of climate finance annually, or 7% of the total, however around $1.1 trillion per year will be required by 2030 to support the transition to more resilient and sustainable food production, the authors note.
“Why is it so difficult to channel capital into one of the world’s most essential sectors?” Matteini and Strauss noted. “The issue is not simply the availability of capital. It is the ability to channel capital towards opportunities that meet investors’ requirements for risk, return and scale.”
While food transition solutions such as regenerative agriculture have demonstrated their value, many initiatives require upfront spending, offer uncertain short-term returns and remain fragmented across supply chains – meaning that many projects remain stuck at pilot stage. However, coordinated action has the ability to unlock portfolio investments, according to the authors.
Mobilising commercial capital
“Financial models capable of mobilising commercial capital into food systems have been identified and tested,” Matteini and Strauss commented.
“Corporate procurement leaders are already reshaping sourcing strategies to create the long-term demand signals that investors need and in line with all competition and antitrust laws and regulations. And the financing structures that can bring together commercial lenders, development finance institutions and philanthropic capital are no longer theoretical – they exist, and are working in practice.”
The Forum has published a new report, From Pilots to Portfolios, which sets out a template for coordinated action across the full food systems investment chain. More information can be found here.
