The power of ‘True Value’ assessments for food system investments
Economically and environmentally viable food systems are the linchpin for a sustainable future. But we have a long road ahead to build food systems that provide food security and nutrition to a growing global population, provide dignified livelihoods to food producers and workers, and contribute to environmental sustainability. The good news is that solutions abound among rural farmers cooperatives, social enterprises, and alliances building new food systems with diverse markets that engage local and international conscious consumers.
But how do investors and donors catch up with these innovators to invest in the transformation?
One piece of the puzzle is a different approach to assessing the outcomes of investments. We need a more holistic approach that looks at the enterprise as part of a system that provides access to healthy foods, produces food in harmony with nature, and contributes for vibrant local economies. An approach that considers the true value — not just the financial returns — of an enterprise’s work.
As we have learned at the Transformational Investing in Food Systems Initiative (TIFS), promoting a business sector that internalizes the costs of producing food in harmony with nature, promotes healthy diets and invests in people and communities, requires a blend of grants, values-aligned finance and non-financial technical and business assistance. It requires that donors and investors view their investments for the systemic impacts, and that investors expand their definitions of risk, reward, efficiency and scale.
The assessments featured in the recently published True Value: Revealing the Positive Impacts of Food Systems Transformation help us understand how enterprises and other initiatives support biodiversity, ecological systems, healthy and nutritious meals and thriving communities.
For instance, Community Markets for Conservation (COMACO) has created a model that runs the ‘It’s Wild’ food processing company alongside the interests of the community cooperatives in the Luangwa Valley of Zambia and urban consumers. Through the partnership of producers, consumers, Indigenous leaders, and investors, COMACO has helped the community end wildlife poaching, deforestation and food insecurity. Farmers are reaping many benefits from improving soil health, including access to carbon credit payments. The model incentivizes long-term wildlife, soil and forest conservation.
The leaders who are creating transformative business models look at the external costs of the food system and address them directly. They manage risks in new, future-proof ways. They defy current financial and market systems by contributing to knowledge sharing, resilient systems, self-reliance of rural communities, and health and well-being of all communities they engage.
Investors may support these businesses in many ways, but they need to look creatively at how they deploy their assets. Donors, philanthropists, and investors need to align their investments with each other and, crucially, with the requirements of enterprises, farmers and the environment. This requires the philanthropic sector and impact investors to be more strategic about providing the right type of capital in the right form at the right time.
The full range of financial tools — including loan loss funds, long-term patient capital, low or no interest rate capital, combined with technical and business assistance — are required. Investors of different stripes also need to furnish not just financial resources and technical assistance, but also need to provide networks, to facilitate community organizing, governance and other acts of solidarity to make the case for economic and policy reform. And, methodologies like True Cost Accounting or impact accounting can play a powerful role in aiding and informing decision-making.
To hear more stories of inspiring enterprises and their investor partners, please view the recording of our recent event Investing in Food Systems Transformation: The role of enterprise, community, finance, and philanthropy with Biovision Foundation.
