Investments aligned with this Strategic Goal help to reduce or mitigate greenhouse gas emissions generated by agricultural activities and support the global transition to sustainable agriculture and sustainable food systems.

What

Dimensions of Impact: WHAT

Investors interested in deploying this strategy should consider the scale of the addressable problem, what positive outcomes might be, and how important the change would be to the people (or planet) experiencing it.

Key questions in this dimension include:

What problem does the investment aim to address? For the target stakeholders experiencing the problem, how important is this change?

Investments in this strategic goal aim to address greenhouse gas (GHG) emissions resulting from global agriculture and food systems.*

Agricultural Production
The current percentage of GHG emissions from agriculture are estimated to be roughly 26% (inclusive of forestry and land-use charge) (32). Emissions from crops and livestock are expected to increase by 30–40% between 2019 and 2050, and growing global demand for meat and dairy products continues to place unsustainable burdens on our planet’s limited resources (1). The World Resources Institute has found that if current dietary patterns continue, an additional 593 million hectares of agricultural land, an area almost twice the size of India, will be needed to feed the projected population of 9.8 billion in 2050 (2). Animal proteins have a significant environmental footprint in terms of GHG emissions and water and land use. The amount of land it takes to grow food to feed livestock makes meat production a leading cause of deforestation. In conventional industrial agricultural production, producing feed for livestock uses approximately one-third of total annual global water withdrawals and emits significant GHG (9). Pasture expansion is another key and related driver of GHG emissions. To keep global temperature rise to well below two degrees Celsius, humans must drastically alter their food production and consumption habits. We must transition to less carbon-intensive food production; decrease consumption of high-emissions foods; decrease food waste; and adopt climate-smart agricultural practices that maintain soil carbon, improve productive efficiency, and reduce emissions from livestock and fertilizers.

Human activities generate GHG emissions throughout all stages of the food system. Pre-production emissions result from the manufacturing and distribution of agricultural inputs such as seeds, fertilizers, pesticides, animal feed, and maintenance of animal breeding stock. Production emissions come from the production of foods, such as the energy used in the growth of fruits or vegetables in heated greenhouses. The composition of GHGs emitted through agricultural production comprises gases, such as methane and nitrous oxide, that drive significantly more warming per unit emitted as compared to CO2; this further emphasizes the sector’s role in exacerbating climate change (3). Soil degradation, likewise, is a critical issue. Degradation of soil impacts its ability to hold water and its capacity to produce food.

Climate-related disruptions can also drastically impact distribution patterns and quality of food, as well as access to it. Agricultural stability is central to sustaining livelihoods and supporting economic development. As just one example, agriculture employs 70% of the population in East Africa (4).

Note: Organizations focusing on smallholder agriculture (particularly in emerging markets) may find the IRIS+ Smallholder Agriculture theme most helpful. See the theme on IRIS+.

Food Waste, Consumer Behavior, and Access to Affordable, Nutritious Foods
Post-production emissions result from activities such as food processing, storage, packaging, transportation, and retail processes. For example, considerable GHG emissions are generated from waste: almost one-third of all food produced in the world is wasted (5). If food waste were a country, it would rank behind only the United States and China in total GHG emissions (6). Food waste occurs throughout the agricultural supply chain, including at the production, retail, and consumption stages. A multitude of factors lead to food waste. For example, factors at the retail and consumption stages include aesthetic preferences, over-purchasing, and poor portion control. If the global population decreased food waste, GHG emissions generated by the food system could potentially decrease by 11% (7).

Decreasing GHG emissions from agriculture will also require a decrease in global meat consumption, primarily in developed markets. Current average global consumption of ruminant animal protein (mostly beef and lamb) stands at three times the recommended level (8). Decreasing the amount of meat consumed will require educating consumers on the dangerously adverse effects of meat production, as well as providing consumers with nutritious options for a balanced diet.

Beyond the GHG emissions potentially mitigated by expanding sustainable agriculture and sustainable food systems—the main focus of this Strategic Goal—accessibility and affordability are important aspects related to obtaining nutritious, sustainably-produced food for all. Investors can support greater access to nutritious food through investment in small and medium-sized enterprises (SMEs) focused on these aspects.

Investments aligned with this Strategic Goal can:

  • support sustainable agriculture technology (“ag-tech”) that increases agricultural productivity at reduced social and environmental costs;
  • help farmers transition to more sustainable practices;
  • enhance the biodiversity of farmland, improve soil health, and strengthen the resilience of rural and agrarian communities;
  • back healthy food companies and retailers, including companies that seek to ensure the accessibility and affordability of nutritious, sustainably produced food; and
  • support companies that offer food products with lower GHG footprints, such as plant-based meat alternatives, or that offer solutions to manage food waste.

Note: See more about the GIIN’s resources on Climate Finance.

What is the scale of the problem?

Agriculture generates an estimated 26% of annual global GHG emissions (inclusive of forestry and land-use change), making the sector a key driver of climate change. Climate change and agriculture are also inextricably linked, as abrupt and rapid changes in climatic conditions can threaten food security on a global scale. Given the reality that a stable and robust agricultural sector is critical to life on Earth, emissions from agriculture are a critical global issue.

Who

Dimensions of Impact: WHO

Investors interested in deploying this strategy should consider whom they want to target, as almost every strategy has a host of potential beneficiaries. While some investors may target women of color living in a particular rural area, others may set targets more broadly, e.g., women. Investors interested in targeting particular populations should focus on strategies that have been shown to benefit those populations.

Key questions in this dimension include:

Who (people, planet, or both) is helped through investments aligned with this Strategic Goal?

Since food consumption is a universal human need, and since the production of food requires significant energy and resources, leading to massive GHG emissions, both people and planet are the ultimate target stakeholders of investments aligned with this Strategic Goal. More specifically, the following target stakeholders are especially helped through aligned investments.

Planet: Through investments that help to mitigate or avoid land degradation and emissions in agriculture and instead enable and expand sustainable agriculture practices, the planet as a whole can experience improved soil health, climate resilience, and ecosystem preservation, as well as decreased losses in biodiversity.

Agricultural Workers: The transition to sustainable agriculture has profound implications not only for reducing GHG emissions but also for the livelihoods of the roughly 2 billion people worldwide—or 25%—who are currently employed in agricultural work. Investing in the transition to sustainable agriculture supports both the long-term livelihoods of agricultural workers worldwide and long-term success of farms (10). For example, studies have shown that complex crop rotation systems, a more sustainable and land-friendly farming practice, can outperform traditional monoculture farming in terms of both crop yield and profitability (11).

Consumers: The degradation of farmland through industrial agriculture makes that land even more vulnerable to the extreme weather events—such as floods or droughts—that climate change is already exacerbating (12). Extreme weather combined with insufficiently resilient farmland can lead to disruptions in food availability and domestic or global supply chains. As sustainable agriculture also reduces the need for pesticides, sustainable practices can increase the long-term resilience of farmland and improve human health. The food waste think tank, ReFED, has demonstrated through extensive study and analysis that reducing food waste by 20% could result in significant consumer cost savings of USD 5.6 billion annually (13).

Indigenous Peoples and Rural Communities: Though they inhabit more than half of the world’s land, Indigenous peoples and other rural communities are legally recognized as owning just 10% of that land (14). Investments aligned with this Strategic Goal can support sustainable agricultural practices by Indigenous peoples and rural communities, which are often informed by centuries of deep knowledge of local land characteristics. Such investments play an especially important role as the physical impacts of climate change adversely impact crop health and yields. 

Women: Women are a critical cohort in agricultural production, constituting almost half of the agricultural workforce in developing countries, as well as roughly 36% of farmers in the United States (16,17). As in many other sectors, women face inherent gender bias that limits opportunity and prosperity. For example, they face disparities compared to their male peers in accessing opportunities for land ownership and agricultural credit. As sustainable agriculture increases soil health and crop yield over time, investments in this Strategic Goal can positively impact women’s prosperity, helping to tackle gender inequity. For consumers, women likewise are key target beneficiaries, since women are responsible for 70–80% of all U.S. consumer purchasing decisions (18).

What are the geographic attributes of those who are affected?

The geographic attributes of the impact target are ultimately universal, but this Strategic Goal particularly emphasizes heavily agrarian regions where agricultural workers are a particularly high percentage of the overall workforce.

Contribution

Dimensions of Impact: CONTRIBUTION

Investors considering investing in a company or portfolio aligned with this strategy should consider whether the effect they want to have compares to what is likely to happen anyway. Is the investment's contribution ‘likely better’ or ‘likely worse’ than what is likely to occur anyway across What, How much and Who?

Key questions in this dimension include:

How can investments in line with this Strategic Goal contribute to outcomes, and are these investments’ effects likely better, worse, or neutral than what would happen otherwise

Organizations can consider contribution at two levels—enterprise (investee) and investor. At the enterprise level, contribution is “the extent to which the enterprise contributed to an outcome by considering what would have otherwise happened in absence of their activities (i.e. a counterfactual scenario).” To learn more about methods for assessing counterfactuals, see the Impact Management Project.

Investments aligned with this Strategic Goal can support the transition towards climate-smart agriculture as follows:

Signal that Impact Matters: By investing in technologies, products, services, and solutions that support the transition towards sustainable agriculture, investors send a clear message that global food production and consumption systems must be transformed if the world is to mitigate the impacts of climate change. A signal can also be sent by moving away from companies whose revenues and profits are primarily dependent on food production or consumption with outsized emissions.

Engage Actively: Investors can proactively engage management teams in the food and agriculture sector to improve their environmental and social performance. They can influence companies to adopt Science-Based Targets to reduce GHG emissions, not only at the company level but also across the agricultural value chain. Beyond the food and agriculture sector, importantly, investors can also engage with retailers and companies in the household and personal care industries. Given the prevalence of emissions-intensive agricultural inputs—such as palm oil—in both food and personal care products, investor awareness and advocacy for responsible sourcing can deeply impact overall mitigation and reduction of greenhouse gas emissions.

Grow New or Undersupplied Markets: The food and agriculture industry is on the cusp of a revolution transforming how we produce and consume food, powered by technology and innovative trends such as vertical farming, aquaculture, biotech, seed treatment, and online food delivery. Investors with higher risk appetites can provide the necessary patient capital to propel such innovation and minimize the impact of emissions from the food and agriculture industry. Further, lack of access to finance for such SMEs has traditionally been a barrier to growth. Through such mechanisms as blended finance, investors could fill this critical funding gap (21).

Provide Flexible Capital: Small-scale local food and agriculture companies that are in the informal sector or in the early stages of developing their products or technology are often higher risk. For example, agribusinesses tend to require longer-term capital to invest in new technologies. Investments in agriculture may also need adjusted repayment schedules; external factors, such as weather, tend to make agriculture a riskier sector, ultimately reducing the overall capital available. Addressing these factors may require some flexibility from investors, either by providing concessional capital or lowering their risk-adjusted return expectations. The many disruptions and dislocations caused by the COVID-19 pandemic have compounded this need for targeted assistance and for flexible and patient capital.

How Much

Dimensions of Impact: HOW MUCH

Investors deploying capital into investments aligned with this strategy should think about how significant the investment's effect might be. What is likely to be the change's breadth, depth, and duration?

Key questions in this dimension include:

How many target stakeholders can experience the outcome through investments aligned with this Strategic Goal?

Given the universal human needs for food and for a planet that sustains both agriculture and human life, there is no limit to how many can receive the outcome through investments aligned with this Strategic Goal. Investments in sustainable agriculture and sustainable food systems can create positive outcomes with respect to both needs, and outcomes for both apply to the entire global population.

How much change can target stakeholders experience through investments aligned with this Strategic Goal?

Change achieved through investments aligned with this Strategic Goal is ultimately multi-generational. Investments today in converting to sustainable agriculture and sustainable food systems will lay the groundwork—literally—for the resilient farmlands of the future, necessary to feed the growing human population and to do so in a way that cuts emissions through food productions to the level that creates a sustainable future for people and the planet. By cutting GHG emissions from food production as well, they create a sustainable future for both people and planet. The duration of the change depends on how broadly and quickly a large-scale transition can be made to sustainable agriculture and food systems. The scale of the change is potentially profound. As just one example from the ag-tech space, substitution of plant-based meats for meats could reduce emissions by 90% (19). Once plant-based meats reach just 10% in overall market share, they will reduce CO2 emissions by roughly 500 million metric tons annually, roughly the equivalent of 100 million passenger vehicles being driven for a year (20,23).

Risk

Dimensions of Impact: RISK

Key questions in this dimension include:

What impact risks do investments aligned with this Strategic Goal run? How can investments mitigate them?

The following are impact risk factors for investments aligned with this Strategic Goal.

  • Execution Risk: Often time-consuming, capital-intensive research and technology will be needed to transform traditional food and agriculture systems. Investees working to improve agriculture yield or to conserve land and water resources may not see immediate positive results, risking loss of investor confidence and capital that could abruptly stall such critical initiatives. Investors can mitigate this risk by offering patient capital and supporting investees with management tools and techniques to overcome the challenges of reimagining and transforming the current agricultural system.
  • External Risk: Supply-chain resiliency in food and agriculture systems will be key to feeding the world. Global warming and more frequent extreme weather events, from severe droughts and wildfires to flooding, hurricanes, and tornadoes, intensify the climatic uncertainty that farmers have long faced. Such events can make it difficult to source pre-production agricultural inputs or to store and transport agricultural produce in a timely and efficient manner. The resulting disruptions across global supply chains could lead to substantial risks and negative impacts for investors in these sectors. Investors must be aware of these risks and work towards their mitigation through resilient supply-chain systems and climate modeling. In addition, pestilence events, such as locusts, present an ongoing risk, and, as with extreme weather, their severity and probability are only exacerbated by climate change. The UN’s Food and Agriculture Organization (FAO) forecasts in 2020 that locusts could threaten the food security of 25 million people (22). To mitigate these risks, governments, corporations, investors, lenders, and other stakeholders increasingly transfer weather risks, like rainfall and temperature, to insurance-linked investment managers of a portfolio of global weather risks. Such weather risk transfers can effectively protect balance sheets, smooth profitability, and stabilize livelihoods.
  • Stakeholder Participation Risk: Though physical, digital, and biological technologies that provide alternatives to certain food and agricultural products with high GHG emissions, the consumer can be another primary disruptive force. Some consumers may find it difficult to change their consumption patterns, thereby slowing the adoption of more environmentally friendly food products. Similarly, small and local farmers, who are an integral part of the food chain, may not find it immediately economically viable to adopt and implement sustainable agriculture practices. To mitigate these risks, investors can support programs that create awareness and educate consumers about the benefits of more sustainably produced food. They can partner with non-profit organizations that work with local farmers to encourage sustainable practices. And given the prevailing gender inequity in the agriculture sector, particularly in geographies where women are not allowed by law or practice to own land, investors can seek out opportunities to specifically invest in women working in agriculture.
  • Unexpected Impact Risk: Volatility in soft commodities, food price inflation, free trade agreements, and policies that internalize externalities can slow or accelerate the pace of adoption of sustainable agriculture. Investors should hedge their investments against the adverse impacts of such unexpected market events, trade regulations, and climate-related policies.

What are likely consequences of these impact risk factors?

In cases where these risk factors materialize without appropriate risk-mitigation measures in place, investors may fail to reduce GHG emissions from the agriculture sector. Beyond the above examples of how investors can mitigate each of the four types of risk, investors can also, where applicable, track the percentage of crop value that is re/insured. At a high level, investors can additionally mitigate risk through the use of existing public and private tools and frameworks (for further detail, please see “Aligned Resources”), as well as through the use of publicly available data from leading global and national entities, such as NOAA (National Oceanic and Atmospheric Administration) in the United States, ABARES (Australian Bureau of Agricultural and Resource Economics and Sciences), or FAO (The Food and Agriculture Organization of the United Nations).

Illustrative Investment

Tyson Ventures, the investment arm of the meat company Tyson Foods, invested a total of USD 23 million in Beyond Meat, an alternative protein company, making its first investment in 2016 in exchange for 5% of the vegan company and increasing its holdings to 6.5% the following year. Beyond Meat is the company behind the “Beyond Burger,” a plant-based, vegan, meat-alternative burger. In 2017, Beyond Meat closed another round of funding topping out at USD 55 million and led by Cleveland Avenue, a venture capital firm founded by former McDonald’s CEO Don Thompson. Beyond Meat used this funding to triple its production footprint, support research and development, and expand sales and distribution (23). In 2019, Beyond Meat completed a successful IPO and expanded their operations and sales abroad in the EU and Asia. These investments have led to a decrease in GHG emissions. From cradle to distribution, the Beyond Burger generates 90% fewer GHG emissions and requires 46% less energy, 99% less water, and 93% less land compared to a quarter-pound of U.S. beef (24).

In 2018, Viking Global Investors, one of the world’s largest hedge funds, led a USD 70 million round of funding alongside Andreessen Horowitz, Upfront Ventures, and S2G Ventures in Apeel, a California-based food waste company (25). Apeel, which got its start in 2012 with a grant from the Bill and Melinda Gates Foundation, develops plant-derived shelf life extension technology for fresh produce that improves quality and reduces food waste at almost every step of the supply chain, from packers to retailers to consumers at home (26). The new funding will enable Apeel to continue its international expansion, especially in places like sub-Saharan Africa, Central America, and South America where there are higher rates of both food waste and food insecurity (27). Apeel’s latest sustainability report shows that, taking the Apeel product footprint into consideration, introducing Apeel into the produce supply chain reduced potential impacts across all categories in the IMPACT 2002+ methodology by 16–22% in most produce types (28).

In 2020, One Acre Fund secured USD 20 million to catalyze institutional capital for African farmers. The non-profit, founded and led by social entrepreneur Andrew Youn, has been a leader and innovator in investing in smallholder farmers in sub-Saharan Africa with the dual goals of tackling poverty and hunger—recognizing that, perversely, too many farmers worldwide face the problem of hunger (29). In the 2020 investment, a coalition of philanthropists (including the MacArthur Foundation, which deployed a USD 10 million program-related investment) lent USD 20 million in subordinated debt to One Acre Fund. This catalytic capital is meant to help One Acre Fund then secure additional financing from development and commercial banks and other institutional lenders (30). The social impact will be substantial; in 2019 One Acre Fund reached the milestone of serving 1 million farmers per year, and estimates that its services could benefit another 50 million farmers across Africa. Through its track record of success and 97% credit repayment rate from farmers, One Acre Fund has also gained the confidence of impact investors that its strategy works while ensuring the integrity of its mission to focus on the poorest farmers worldwide.

Draw on Evidence

This mapped evidence shows what outcomes and impacts this strategy can have, based on academic and field research.

NESTA: 3
Climate Change and Land

IPCC. “Climate Change and Land.” (2019)

NESTA: 2
Land Degradation and the Sustainable Development Goals: Threats and Potential Remedies

Vlek PLG; Khamzina A; Tamene L. “Land degradation and the Sustainable Development Goals: Threats and potential remedies.” CIAT Publication No. 440. International Center for Tropical Agriculture (CIAT), Nairobi, Kenya. (2017) 67 p.

NESTA: 1
Feeding Ourselves Thirsty: Tracking Food Companies' Progress Toward a Water-Smart Future

Ceres. “Feeding Ourselves Thirsty: Tracking Food Companies’ Progress Toward a Water-Smart Future.” (2017)

NESTA: 1
Strengthening Corporate Sustainable Sourcing Commitments for Water Quality in U.S. Row Crops

Ceres. “Strengthening Corporate Sustainable Sourcing Commitments for Water Quality in U.S. Row Crops.” (2020)

NESTA: 1
Agriculture and Climate Change

McKinsey and Company. “Agriculture and Climate Change.” (2020)

NESTA: 1
Fight Climate Change by Preventing Food Waste

WWF. “Fight climate change by preventing food waste.”

NESTA: 1
A Roadmap to Reduce Food Waste by 20 Percent

ReFED. “A Roadmap to Reduce Food Waste by 20 Percent.” (2016).

NESTA: 1
Agricultural Sustainability: A Review of Concepts and Methods

Bochtis, Dionysus, Maria G. Lampridi, and Claus G. Sorenson. “Agricultural Sustainability: A Review of Concepts and Methods.” (2019).

Each resource is assigned a rating of rigor according to the NESTA Standards of Evidence.

Define Metrics

Core Metrics

This starter set of core metrics — chosen from the IRIS catalog with the input of impact investors who work in this area — indicate performance toward objectives within this strategy. They can help with setting targets, tracking performance, and managing toward success.

Additional Metrics

While the above core metrics provide a starter set of measurements that can show outcomes of a portfolio targeted toward this goal, the additional metrics below — or others from the IRIS catalog — can provide more nuance and depth to understanding your impact.