“FOOD FINANCE ARCHITECTURE” LAUNCHED AT UN FOOD SYSTEMS SUMMIT
Five “Food Finance Imperatives” could unlock $4.5 trillion a year in new business opportunities, end hunger, tackle climate change and transform food systems
The Food Finance Architecture is a roadmap to unlock capital for a better food system for all.
Roadmap to unlock food finance
The Food Finance Architecture provides the building blocks for how banks, institutional investors, development finance institutions, food companies, farmers & fishers, governments and philanthropy can shift capital out of a high-carbon, unequal, extractive food system and into nature-positive, inclusive, climate-smart, circular business models which create value for people, planet and the economy.
Redirecting finance and implementing five core “food finance imperatives” could unlock $4.5 trillion in new business opportunities every year by 2030 and ensure a more sustainable food system that supports a faster recovery from the Covid-19 pandemic, creates new jobs, supports resilient livelihoods, ends hunger, prevents food loss & waste, protects nature, and tackles climate change, whilst creating new value chains for regenerative farmers and sustainable fishers.
By contrast, our food system currently generates massive hidden costs – generating at least $12 trillion a year in social, economic and environmental costs. Existing food financing flows contribute to these hidden costs. At the same time, investors, banks, governments, food companies and food producers are exposed to these same costs – as the climate changes, loans to agricultural businesses will under-perform; low wages keep employees from eating a healthy diet undermining their ability to work effectively; and the health impacts of poverty, hunger and obesity add to overburdened public healthcare budgets.
The following five “Food Finance Imperatives” are needed to help optimise public spending and mobilise private capital to accelerate the transformation of our food systems:
Reshape public support and incentives using subsidies and market mechanisms to redirect capital out of unhealthy, destructive assets to support public goods
Integrate health, environmental and social risks into financial decision-making, future-proofing portfolios by measuring & disclosing food system risks and redirecting investment into new business models to mitigate exposure
Scale fit-for-purpose financial products and business models, mobilising private capital by de-risking and mainstreaming innovative financial instruments & regenerative assets while improving access to finance & services for primary producers through new supply chain partnerships
Secure equitable food systems by re-balancing bargaining power, investing in rural infrastructure to drive sustainable production & development and implementing fair prices and living wages and incomes to ensure access to affordable, healthy diets
Strengthen food governance and stability as the underpinning foundation of the entire food system to build physical and financial resilience to shocks
The five Food Finance Imperatives build on the notion that solutions need to be farmer centric. Farmers need appropriate incentives and support to access and invest in technologies and practices that deliver triple-wins.
food finance leadership
The Food Finance Architecture was launched by David Malpass, President of the World Bank Group on behalf of the Finance Lever of the UN Food Systems Summit which is made up of the World Bank Group, IFPRI, the Food & Land Use Coalition and the Blended Finance Taskforce (with support from impact investor, SYSTEMIQ and incubator, Partnerships 4 Forests).
The Finance Lever works closely with the World Business Council for Sustainable Development and Rabobank who have just launched the Good Food Finance Network, in collaboration with a number of partners.
Agnes Kalibata, UN Secretary-General's Special Envoy to the 2021 Food Systems Summit said “Today’s food system is suboptimal. It is hurting people’s health, damaging the environment and driving poverty and climate change. That costs society $12 trillion a year. The Finance Lever has designed these five food finance imperatives to help mobilise capital to address these issues and accelerate the shift to a sustainable food system. I urge banks, investors, food companies and governments to act now, work with farmers and follow this pathway to meet the 2030 Sustainable Development Goals.”
“A high-performing and equitable food system is within reach” says Jeremy Oppenheim, Founder of impact investor, SYSTEMIQ and Chair of the Food & Land Use Coalition, one of the Finance Lever partners. “The Food Systems Summit can help everyone play their part. We have had much talk of food system reform over the past decade. Now is the time to act. The Food Finance Architecture provides specific ways to unlock capital for the transformation by ‘double clicking’ on implementable solutions. There is an incredible global movement of food system entrepreneurs, activists and citizens ready to take action. If we can change the menu, then they can change the world.”
Martien van Nieuwkoop, Global Director, Agriculture and Food Global Practice, World Bank said, “The Food Finance Architecture as an outcome of the Food Systems Summit is a roadmap towards changing the way we produce and consume food to sustainably feed everyone in the world while raising incomes, improving health and nutrition, and restoring our natural resource base. Governments and the private sector could jumpstart the implementation of the Food Finance Imperatives by joining hands through a global compact under which public support for de-risking investments in healthier, more inclusive and more resilient food systems is matched by raising and mainstreaming ESG standards of private investments in support of these same outcomes.”
Geeta Sethi, Advisor and Global Lead for Food Systems, World Bank said, “On the day after the Summit, attention should pivot to countries to transform their food systems to achieve post-COVID economic recovery, climate change mitigation, and health security. But to get there, national financing architectures must have innovative mechanisms, including derisking instruments, to unlock billions of dollars awaiting investable opportunities.”
Johan Swinnen, Director General of the International Food Policy Research Institute (IFPRI) says, “Research shows that we can eliminate hunger and sustainably transform food systems with existing, but restructured, global and national financial resources. These Food Finance Imperatives take the essential next step of laying the groundwork for the institutional structures and systems to unlock these resources and drive food systems transformation that is sustainable, equitable, and provides healthy diets to all.”
Rob Vos, Director Markets, Trade and Institutions, International Food Policy Research Institute (IFPRI) said, “Smart repurposing of the US$720 billion governments spend every year on agricultural support will be game changing. We have to and we can fundamentally reset food market incentives by using these resources by doubling R&D spending for sustainable technologies and redirecting subsidies as payments to farmers who adopt those technologies and as incentives to consumers buying healthy and sustainably produced foods.”
