Private investor-backed finance is key to funding food security

Greater investments from the private sector are needed to protect biodiversity and boost food security, according to a new report.

In a report published today from Imperial College Business School, Can Markets Save Nature? Investing in Nature to Help Tackle Biodiversity Loss and Enhance Food Security, the authors argue that private sector investment will be key to narrowing the nature financing gap, at a time when conflict and climate change make food security even more precarious. Despite the required funding to conserve biodiversity ranging from $600-800 billion annually, only $41 billion is invested by the private sector each year, the report estimates.

Private investors, the report finds, will be crucial in mobilising additional funding for nature investment in the agriculture sector and creating more resilient agri-food systems.

The report, from the Centre for Climate Finance & Investment at Imperial College Business School, identifies European companies in the food agriculture and pharma industries with a total value of $4.8 billion that are already integrating nature into their operations through ambitious circular economy and sustainable land use principles. The report estimates that this value will grow to around $40 billion in the coming years. 

Tackling underinvestment in agriculture

Co-authors of the report, Pernille Holtedahl, Alexandre Koberle and Michael Wilkins from the Centre of Climate Finance & Investment, argue that new business models that embrace and integrate natural capital rather than undermine it are urgently needed. Investments in agriculture and the food value chain stand out as a particularly ripe opportunity, both because of the need to reduce emissions from these activities and because of the traditional underinvestment in these sectors.

“Nature investing is an opportunity waiting to happen. Our report highlights the opportunities which lie in the New Nature-Positive Economy and the potential triple win for nature, climate change and food security.” Pernille Holtedahl Research Fellow, Centre for Climate Finance & Investment

The report has been supported through the Centre for Climate Finance & Investment’s long-term partnership with Standard Chartered Bank. The authors identified eight market instruments for investing in nature. The authors distinguish between financial market instruments and nature market instruments; the former, represent easy-to-access structures for capital markets, whereas the latter can provide exposure to real assets, which some investors may welcome.

However, the success of nature investing in tackling biodiversity loss and the food crisis, the authors note, hinges on five enablers. These include investments being repayable through revenues or cost reductions; innovations that make nature investments more attractive for mainstream investors; making the asset class attractive to institutional investors; adequate levels of information being made available through impact measurements; and ensuring that legitimacy and equity are key ingredients.

Reflecting on the findings of the report, Pernille Holtedahl, lead author of the paper and a Research Fellow at the Centre for Climate Finance & Investment said: “Nature investing is an opportunity waiting to happen. Our report highlights the opportunities which lie in the New Nature-Positive Economy and the potential triple win for nature, climate change and food security.”

Michael Wilkins, co-author of the paper and Executive Director of the Centre for Climate Finance & Investment added: “Investments in sustainable agriculture can also benefit nature and contribute to developing more resilient food systems, creating opportunities for innovative market instruments that address both nature loss and food security.”

The report is available to download from the Business School’s website.