Investing in Tomorrow’s Food Supply

We depend on nature for our food. The rising prices of commodities such as rice, sugar, and cocoa make the effects of climate change felt globally. The increasing scarcity resulting from the degradation of ecosystems forces companies and investors to view nature through a new lens. For the greatest possible impact per invested euro, particularly in emerging markets, opportunities abound. By making the impact of financing measurable and increasing transparency, small businesses in emerging markets become accessible to investors.

Nature deserves our protection, not just for its beauty but as a source of inspiration. The efficiency with which organisms process waste, utilize water, or convert food into energy is unparalleled.

Opportunities in Emerging Markets

Businesses that align with nature or cleverly use these natural processes offer tremendous green investment opportunities. Green companies operating in established European and American markets are already well-known to investors. For instance, de Vegetarische Slager (a producer of plant-based meat substitutes), through its acquisition by food giant Unilever, gains the distribution network essential for scaling up. Similarly, Koppert, a producer of organic crop protection, can grow globally with the investment from HAL.

In emerging markets, access to financing is particularly limited for small businesses. Agricultural and forestry enterprises that integrate nature conservation into their business models are limited in their growth opportunities, even though they play a crucial role in protecting vulnerable ecosystems. In the short term, nature-inclusive agriculture is often more expensive, allowing competitors to offer cheaper alternatives.

In the long run, protecting biodiversity leads to higher and more consistent yields per square meter. Small businesses are harder to distinguish from one another. By making them more findable, investors can tap into a promising market, investing in the preservation of biodiversity, strengthening local communities, and protecting important ecosystems against climate change.

Making Smaller Businesses in Emerging Markets Accessible to Investors

The Just Sustainability Transitions (JuST) Institute aims to remove the limited transparency for investors, to make financing solutions more widely accessible to small entrepreneurs. To measure the impact of financing, JuST, in collaboration with the Global Environment Facility (GEF), the International Fund for Agricultural Development (IFAD), and BNP Paribas, has developed a new measurement method. This can, for example, map out how many people benefit from a sustainable investment and how much land is protected. Thus, the impact of financing becomes visible.

Jason Spensley, climate specialist at GEF, says: “Accessible and local microfinancing provides hundreds of thousands of small farmers and businesses with the capital they urgently need. To reach the level of climate adaptation and resilience necessary, the entire financial sector must commit to developing products that respect nature and make communities more resilient to climate change.”