Resources on Food System Finance

Food Finance Architecture, Financing a Healthy, equitable & sustainable food system

World Bank, September 2021

The Summit’s “Finance Lever” (made up of the World Bank, IFPRI and SYSTEMIQ’s Food & Land Use Coalition, working with Rabobank and the World Business Council for Sustainable Development) has developed a new Food Finance Architecture which lays out the building blocks for how banks, institutional investors, development finance institutions, food companies, farmers & fishers, governments and philanthropy can shift capital out of a high-carbon, unequal, extractive food assets and into nature-positive, inclusive, climate-smart, circular business models which create value for people, planet and the economy.

The Food Finance Architecture contains five core “imperatives” needed to optimise public spending and mobilise private capital for a global food system transformation:
1. Reshape public support and incentives using subsidies and market mechanisms to redirect capital out of unhealthy, destructive assets to support public goods;
2. Integrate health, environmental and social risks into financial decision-making, future-proofing portfolios by measuring & disclosing food system risks and redirecting investment into new business models to mitigate exposure;
3. Scale fit-for-purpose financial products and business models, mobilising private capital by derisking and mainstreaming innovative financial instruments & regenerative assets while improving access to finance & services for primary producers through new supply chain partnerships;
4. Secure equitable food systems by rebalancing bargaining power, investing in rural infrastructure to drive sustainable production & development and implementing fair prices and living wages to ensure access to affordable, healthy diets; and
5. Strengthen food governance and stability as the underpinning foundation of the entire food system to build physical and financial resilience to shocks.

Driving Finance for Sustainable Food Systems, A Roadmap to Implementation for Financial Institutions and Policy Makers

United Nations Environment Programme, April 2023

While sustainable food systems are critical to addressing all major development challenges, the transition requires additional financial resources of up to USD 350 billion per year by 2030 (IFPRI 2022). Public financial resources, including multilateral development assistance, are not sufficient. Private finance is essential to fill the funding gap to support the rapid transition of food systems.

This report addresses how private finance can overcome significant hurdles on the path to fostering sustainable food systems, focusing on:

• Institutional Changes Needed
• Credit risk mitigation and financial innovation
• Develop an enabling policy environment, including

1. Develop a risk framework for the food value chain
2. Repurpose and develop an incentive framework
3. Market signaling

Financial imperatives to food system transformation, article Naturefood

Eugenio Diaz-Bonilla, Brian McNamara, Johan Swinnen & Rob Vos, July 2023

The article first of all summarizes the work done by the UNFSS Finance Lever of Change (FLC) since its creation in 2021 and further building on its publication of 'Food Finance Architecture' (see above). It summarizes the multi stakeholder dialogues held, focusing on the key challenge: 'how to redirect and enhance all financing sources for food system investments, to simultaneously promote sustainability, resilience, healthy diets, food security and nutrition. In short, the challenge is not just to tap into new finance, but also to do better with available resources.' 'The five imperatives of the UNFSS Food Finance Architecture should guide further dialogues on how to change the food finance architecture and mobilize the necessary resources. In fact, they have already helped to build consensus on the main objectives of food systems transformation, clarified the scope of finance as relevant to food systems, and aided the calculation of costs of alternative interventions and investments.'

Secondly the article gives an opinion on future greater efforts necessary to address the political-economy constraints before we can expect to see more persuasive financial reform. The writers address the importance of including finance in the National Pathways. This in combination with strengthened international cooperation in order to enable LMIC to invest in long-term food system-resilience and sustainability.