Unlocking creative financial strategies for food systems transformation

In recent years we have seen a vital transformation in the financial sector. Investors are making bold commitments to contribute to the Paris Agreement net-zero target, environmental, social, and governance (ESG) investing, and the Sustainable Development Goals.

While this progress is welcome, finance leaders must go further. This week, the Global Alliance and the Transformational Investing in Food Systems Initiative (TIFS) published Mobilizing Money and Movements: Creative Finance for Food Systems Transformation to inspire the change needed.

The report features six insightful stories and analysis aimed at impact investors, fund managers, public donors, and philanthropic grantmakers. Developed from our conversations with visionary leaders of food-focused initiatives, it offers a comprehensive roadmap of creative finance strategies for creating more healthy, equitable, and sustainable food systems. Here are some of the highlights:

• Those we spoke with raised the importance of financial and non-financial investments — that public, private, and commercial finance should be complemented by contributions of advocacy, creativity, time, and movement building. In Zambia, blended finance opened doors for Sylva Food Solutions, supporting the social enterprise to popularize traditional food by partnering with over 25,000 smallholder farmers. The business has accessed financial and in-kind support from various sources, including the Government of Zambia, international NGOs, University of Zambia engineers, World Bank, the U.K. Department for International Development, and others. Each partner contributes a unique element to the success of the business, whether it’s paying the salaries of interns, providing technical expertise to develop technology for farmers, or helping expand production capacity with grants.
• Successful food systems initiatives pursue business and operational strategies that are grounded in solidarity economy principles. The founders of the Pun Pun Center for Self-Reliance in Thailand live simply and train people to use all community and environmental resources available on their land. They also encourage farmers and community members to join forces to dig wells, build houses, prepare fields, and complete other tasks without exchanging money. The approach engenders community relations and a sense of independence through interdependence.
• A food systems investing approach enables public and private finance to be better coordinated and aligned, which results in maximized environmental and social benefits. In the capital of Denmark, the Municipality of Copenhagen set a target of stocking its public kitchens with 90% organic products. It directs its public budget toward procuring such foods and training kitchen staff on how to reduce costs and food waste by preparing meals from scratch. The city-led initiative set the tone for the maturation of Denmark’s organic food sector and nurtured new relationships between vendors and municipal kitchens. These efforts have helped achieve Copenhagen’s social and environmental objectives and are improving the quality of meals served in public institutions.
• Organically Grown Company is the first business in the United States to restructure to a steward ownership model. This has enabled the company to scale its business while staying true to its sustainability mission. Rather than prioritizing profits for shareholders, OGC divides its returns between five stakeholder groups: employees, farmers, customers, community allies, and investors. Stakeholders have shared governance of the business but no one alone can make sole decisions. Investors and donors should do more to support, replicate, and scale initiatives like this that demonstrate a successful proof-of-concept for emerging business and ownership models.
• In Mexico, beekeeping cooperative Educe Cooperativa achieves multiple positive impacts for farmers, the environment, gender equity, and Indigenous rights. The cooperative also improves the economic well-being of its beekeepers by providing a guaranteed market for their honey and leveraging its organic and Fair Trade certification to provide beekeeper members with regular, advance payments of up to 60% of their honey. This guaranteed market stabilizes farmer income and is upfront working capital that beekeepers invest in new beehives, agricultural inputs, and other essential household costs. Investors and donors should look to food-focused initiatives that deliver diverse returns and catalyze meaningful change.

The six stories call on investors and donors to think in new and different ways to bring about the urgent, transformative change needed. They also demonstrate that the investment community must look beyond the Global North to find lessons and creative finance strategies. This week’s African Agroecological Entrepreneurship & Territorial Markets convening in Kampala, Uganda, will undoubtedly provide additional beacons of hope to galvanize finance leaders.

Investors are beginning to understand the need for urgent action on climate and other market-spanning risks to their portfolios. Let’s learn from these initiatives and work together to nurture a business sector that internalizes the costs of producing food in harmony with nature, promotes healthy diets, and invests in people and communities.

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Rex Raimond is director of Transformational Investing in Food Systems (TIFS), an Allied Initiative of the Global Alliance for the Future of Food. TIFS partners with the Agroecology Fund and other aligned initiatives to advance the work in food systems transformation.