Event

Though there is no single definition, broadly speaking, green finance is finance for boosting public and private investments in economic activities that produce positive environmental impacts and contribute to a transition to a sustainable economy. Green finance is concerned with enabling sustainable business models, low-carbon investments, technologies, trade practices, and policies that encourage environmentally sustainable development, through appropriate financial instruments and related legal, economic and institutional framework conditions. Applied to the agriculture and food sector, green finance aims both to mobilize capital for “green” investments in the sector and to deliver finance to farmers and agrifood enterprises to adopt environmentally-friendly practices and technologies that can deliver positive climate and environmental outcomes around agriculture and food value chains.

“As the single largest sector using 60% of the world’s ecosystems and providing livelihoods for 40% of today’s global population, the food and agriculture sector is critical to greening the economy. There will be no green economy without agriculture.” (FAO, 2012). With “business as usual” no longer an option, a shift to new, green and more responsible ways of doing business in agriculture and food seems fundamental. This in turn requires not only the mobilization of more finance for green investments but also a full alignment of financial flows to a green agenda for the sector (in other words, “mainstreaming” a green agenda into finance for food and agriculture). Indeed, this is one of the central concerns of the ongoing discussion on the role of finance as a “lever of change” surrounding the United Nations Food Systems Summit, which will take place in September 2021.

Despite substantial investment opportunities and needs (FOLU 2019), scaling up green finance for food and agriculture has proven difficult. Challenges have included inadequate environmental awareness among food systems and financial actors, lack of robust data on sustainable financing needs, insufficient analytical and implementation capacities among different stakeholders, poor regulations and incentive frameworks, weak coordination, high investment costs and high risks associated with investing in new and innovative approaches and products, as well as a plurality of standards for what constitutes green investments in the sector. In recent years, collaboration among actors has been growing, new solutions have emerged, and interest in the agenda has gained momentum among both investors and governments. However, a large gap remains between needs and action.

Some of the questions raised in different forums today include: How can we better align finance with sustainability and integrate environmental risks and opportunities into decisions that drive lending, investment, and insurance? How can policies be designed to capture the “triple dividend” (Global Commission on Adaptation, 2020) by supporting investments that contribute to reducing future losses; that reduce risk, increase productivity, and drive innovation through greater adaptation; and lead to improved social and environmental conditions? What are the systemic changes and adjustments in the enabling environment that are necessary to improve risk-return ratios to finance the shift to sustainable agri-food systems?

Answering these questions requires systemic mindsets and cross-sectoral solutions. This includes collaborations across the public and private sector in various forms – including using blended finance to redistribute some of the costs and risks associated with developing and testing new business models and growing the green investment market in the sector (SAFIN and Convergence, 2021). A paradigm shift is required both in food and agriculture and in finance to develop efficient markets around sustainable financial flows for the sector, including true cost valuations of environmental services.

The workshop will build on the preliminary findings of a global stock-taking by CABFIN of the current state of green and climate finance for agriculture, which will be presented in the first technical session. Subsequent sessions will touch on some of the challenges identified in the stock-taking and discuss some key drivers of change and examples of innovative solutions.

The event is co-organized by the CABFIN Partnership and the SAFIN network to share learning among partners and stakeholders and to identify priority areas for further research and action. The event will contribute to the elaboration of a future knowledge and capacity-building agenda for CABFIN and SAFIN.