Climate change, biodiversity loss and pollution are critical issues that impact our food systems, including production, distribution and consumption. At the same time, there is a growing awareness that our food systems need to transition to be more sustainable, resilient, and equitable if we are to meet the needs of a growing population without compromising future generations ability to do the same. To meet these goals and achieve the 17 UN Sustainable Development Goals (SDGs), we need to increase funding of up to USD 350 billion per year by 2030.
The financing gap for sustainable food systems is huge, but so is the opportunity. Financial institutions can play a crucial role in driving the transition towards sustainable food systems and addressing these interdependent challenges.
“A holistic approach must correct systems inefficiencies and promote sustainable practices that benefit us. It must help redirect about 2 trillion dollars of capital towards healthier outcomes. This requires offering improved terms of lending, facilitating access to investments in sustainable technologies, de-risk transactions through lending finance.”H.E. Kőrösi Csaba, the president of the 77th session of the UN General Assembly.
Banks, asset managers, insurers, and policymakers can influence clients and suppliers across value chains to improve their policies and practices, demand accurate quantitative monitoring and reporting from investees, and drive financial flows, as stated in the newly published report “Driving Finance for Sustainable Food Systems: A Roadmap to Implementation for Financial Institutions and Policy Makers” by the United Nations Environment Programme Finance Initiative (UNEP-FI) and the Climate Finance Unit (CFU) of the United Nations Environment Programme.
The Driving Finance for Sustainable Food Systems report outlines a roadmap for financiers to drive significant capital flows towards sustainable food systems, identifies pillars to develop an enabling policy environment to promote sustainable finance, and highlights good practices demonstrated and promoted by the Good Food Finance Network’s High Ambition Group. Several examples of finance solutions are featured through the publication, including blended finance, sustainability-linked loans and bonds, and securitization instruments that can foster more capital flows for sustainable food systems when implemented and scaled-up. Financial institutions play a crucial piece of the puzzle:
- Policy makers have the potential to drive the development of new and innovative financial instruments and channels in the financial services industry through the establishment of effective signaling, guiding policies, and strong enforcement mechanisms. Incentives can be created through the implementation of emerging green taxonomies and the harmonization of relevant policy tools such as repurposed agricultural subsidies, green trade policies, green fiscal policies, and the phasing out distortive policies. These measures can help foster an enabling policy environment that channels sustainable finance towards food systems.
- Policy makers can also foster the utilization of new forms of sustainable debt products, such as green or sustainability-linked sovereign bonds and debt-swaps and increase regulatory compliance and disclosure requirements on environmental, social and governance practices.
- Private financiers can play a crucial role in driving significant capital flows towards sustainable food systems through a series of strategic steps. These include identifying the impacts of their financing activities and operations, measuring and assessing their performance, setting targets, monitoring progress, and continuously adjusting the course of action.
- The GFFN’s High Ambition Group, a leadership initiative aiming to mobilize public and private funds towards sustainable food systems, has demonstrated the effectiveness of this approach by setting and implementing exemplary targets in high-impact areas. The first cohort of the High Ambition Group includes prominent members in the food + finance sector, including FIRA, Global Environment Facility, Rabobank, Nuveen Natural Capital, Signature Agri Investments, and Phatisa. GFFN plans to facilitate a second cohort of this initiative this year to continue pioneering sustainable finance solutions. To get involved, please contact the GFFN Secretariat at email@example.com.