The food value chain contributes a substantial portion of the world’s greenhouse gas emissions. But food systems transformation remains chronically underfunded. In a recent co-authored report called Green returns: Unleashing the power of finance for sustainable food systems, Deloitte and the World Economic Forum (WEF) identified five powerful financial vehicles that the global finance community can use to lead the way to sustainable food systems.
Food and agriculture systems account for nearly one-third of global climate emissions,1 of which 39% are tied to agricultural production, followed by land use (32%) and supply chain activities (29%).2 Food systems are also responsible for more than 80% of tropical deforestation and biodiversity loss as well as 70% of global freshwater withdrawals.3
These emissions are projected to increase 60% to 90% between 2010 and 2050 unless transformative measures are taken.4
The transition to a sustainable food system represents a major opportunity for the global finance community to achieve progress against climate change. With appropriate financing, it can drive 20% of the emissions reductions needed to reach 2050 climate goals and generate US$4.5 trillion in new market opportunities each year.5 Such a transformation requires the deployment of new financial tools, alongside at least a 15-fold increase in investment in food systems, to meet the US$300 billion to US$350 billion yearly expected investment needs over the next decade.6
Green returns: Unleashing the power of finance for sustainable food systems
Sustainable food systems transformation remains chronically underfunded, making up only approximately 4% of climate finance,7 including the following estimates:
Filling this gap and addressing the transformation investment needs of the food and agriculture sector thus represent a significant growth opportunity for the finance sector.
Agriculture transformation-specific versions of five financial vehicles could help to mitigate climate and food value chain risks, drive market growth and lead to better socioeconomic outcomes such as creating jobs and improving farmer resilience and equity. Banks, asset managers, insurers, development finance agencies, philanthropic organisations and governments all have roles to play.