Global Finance Dialogue summary

The Global Finance Dialogue (Monday 14 June 2021) brought together public and private stakeholders to tackle barriers to investment and to build an ambitious shared vision of a Food Finance Architecture that mobilises largescale capital for more sustainable food systems. 

Participants entered with a shared recognition that financing a more sustainable food system is critical if we want to curb climate change, protect biodiversity – including tropical rainforests, tackle poverty, create jobs, support covid recovery, ensure food security, build resilience and improve human health. Yet today’s food systems are not fit for purpose. Global hunger and other forms of malnutrition (including obesity) are on the rise and agri-food production methods come at the cost of severe environmental degradation and inequality.  This costs the global economy over $12 trillion dollars a year.

The financial system is currently undermining rather than underpinning productive, sustainable and regenerative food systems. Incentives for investments in nature-positive, nutritious and equitable agri-food systems are inadequate. Investments in agriculture and food systems are considered high-risk. A transformation of food systems will require changes to both the real economy and the financial system, and an additional annual investment of over $300bn. This is significant, but achievable and could unlock an additional $4.5 trillion in new business opportunities each year. A coordinated approach is needed to rally stakeholders behind a shared vision and identify solutions to adapt, replicate and scale.

Panel Discussion

Following keynote remarks from Dr Agnes Kalibata (UN Special Envoy for the Food Systems Summit) and Dr Juergen Voegele (Vice President for Sustainable Development, the World bank), the session kicked off with a panel discussion, moderated by David Nabarro (Director, 4SD).

Sunny Verghese (CEO & Co-Founder, Olam International; Chair WBCSD) highlighted the opportunity for large agri-businesses in embracing and promoting sustainable practices. Olam’s decision to do so has benefited the company through improved talent acquisition, access to cheaper capital (the company recently launched the first sustainability linked fixed-rate note issuance in Asia, excl. Japan) and risk mitigation across the value-chain.

Ishmael Sunga (CEO, Southern African Confederation of Agricultural Unions) cautioned that while sustainable practices may be beneficial for large multi-nationals, farmers continue to lack the incentives to make investing in sustainable solutions worth their while. More must be done to improve access to finance, inputs and markets to empower farmers to become drivers of a sustainable food system transformation.

Sabrina Mustopo (CEO, Krakakoa) built on Ishmael Sunga’s comments. She highlighted the challenges that she faces in leading and scaling a regenerative business – producing high-quality, premium chocolate from cocoa beans that are organically-grown and sourced from small farms that practice sustainable farming methods, and our partner farmers are paid more than the Fairtrade Minimum price for their harvest. Businesses like hers struggle to access finance – with even blended finance instruments often inaccessible based on ticket size and risk profile. More must be done to improve the inclusivity of innovative finance instruments and to incubate nascent regenerative/ forest-positive business models like Sabrina’s.

Tanja Havemann (Co-Founder & Director, Clarmondial) described how the Food Securities Fund seeks to overcome some of these challenges while generating returns for investors. The Fund provides unsecured working capital for farmers in the pre-harvest phase through a blended finance model that crowds in private investment and uses impact KPIs to inform loan renewals. Value-chain players take partial risk on transactions. As a fund rather than a bank, it is not hamstrung by traditional and regulatory constraints. MDBs need to create new investment products like the Food Securities Fund that can anchor and attract institutional capital to improve access to finance for farmers.

Naoko Ishii (Executive Vice President, University of Tokyo; Director, Center for Global Commons; former Deputy Vice Finance Minister, Government of Japan) laid out the profound ways in which our food system depends on nature & the ecosystem services it provides. She offered three key priorities to protect & restore our “global commons”: (i) better integrate the true cost of unsustainable practices into investment decision-making and risk assessments, (ii) improve due diligence on investments – including demanding supply-chain traceability, supported by emerging technologies, and (iii) leverage public and philanthropic capital to accelerate the development of promising forest/ nature-positive opportunities and business models.

Rachel Kyte (Dean, The Fletcher School, Tufts University) pointed out that bottom-up and top-down action is required to deliver the scale of transformation required. We are not looking to mobilise trillions of dollars that are not already in the system, but rather to redirect & reallocate resources in a far more efficient, productive, equitable and resilient way than we are doing today. This means enabling those who grow our food to do so in a way that protects & regenerates nature and human health, and to afford to feed themselves and their families. And it means understanding the policy drivers that will force the sector to price correctly & adhere to standards of production across global value-chains.

Jeremy Oppenheim (Founding Partner, SYSTEMIQ) reflected on the remarks shared by the group. While the transformation occurring / required in the food system is as significant as that of the energy system, or even more so, the financial community has not yet woken up to the scale of disruption in the same way that they have done so in energy. There is a huge reckoning required to account for the massive & mounting risk in the way that we are running our food systems today – and in the huge opportunity that thoughtful, urgent, bold action can unlock.

ROUNDTABLES

Following the panel discussion, attendees broke into 11 roundtables, each exploring a key aspect of food finance systems. Participants discussed barriers to catalysing finance for transformation of food systems. However, they consciously sought to identify the priorities to address these barriers and unlock progress.

Roundtable discussions included:

  1. True Cost of Food, Sheryl Hendricks, University of New Zealand

  2. Vision for Change, Berry Marttin, Rabobank

  3. New Incentives to support sustainable flows, Eugenio Diaz-Bonilla, IFPRI

  4. Sustainable flow of funds – Country perspective, Mohamed Manssouri, FAO

  5. Financing the food transition – getting financialization right, Simon Zadek, Finance 4 Biodiversity

  6. Aligning agricultural finance with the Paris Agreement, Helena Wright, FAIRR

  7. Accountability & Reporting, Gerbrand Haverkamp, World Benchmarking Alliance

  8. Innovation to scale finance for sustainable agriculture, Jennifer Baarn, CoSAI

  9. Building inclusive food finance systems, German Velasquez, Green Climate Fund

  10. De-risking investment into food and agriculture, Bettina Prato, SAFIN

  11. Scaling investment in regenerative business models, Felipe Faria, P4F Latin America

A summary can be found here.