The private debt strategy, which provides long-term expansion debt and technical assistance to support growing agri-businesses, has drawn investment from public and private investors.
Impact investment manager responsAbility said it had mobilised $106m (€98m) for a blended finance strategy focused on “climate-smart” agriculture and food systems via investments from a number of financial institutions.
The private debt strategy was launched in February 2022 in association with the Consultative Group for International Agricultural Research (CGIAR) – a food security partnership – and with German development bank KfW as anchor investor. Others to have invested since include Global Affairs Canada, Dutch development bank FMO, Danish development finance institution IFU, Visa Foundation, Calvert Impact Capital, Bank of America and family office Ceniarth.
The strategy aims to provide long-term expansion debt and technical assistance to growing agribusinesses in Asia-Pacific, Latin America and Africa to help tackle climate change, make value chains more resilient to the impact of climate change and reduce food loss.
Climate-resilient food systems
Such initiatives help to pull investment into a sector that is severely under-resourced, through there is still a long way to go. UN organisations estimated in 2021 that an additional $350bn a year of funding was needed to improve global food systems.
Suhasini Singh, responsAbility’s head of sustainable food debt, said that emissions from the global food system alone could raise global temperatures by 1.5°C by 2050, so business as usual was no longer possible.
“It is an absolute priority to transition to low-carbon and climate-resilient food systems. We have an opportunity to showcase that there are investable projects in this grossly unfunded space,” he said.
Harjit S. Sajjan, Canada’s international development minister, said the country was investing $36.8m to the Climate Smart Food Systems Fund to provide loans and technical assistance for up to 30 agricultural small and medium enterprises. Denmark’s IFU said it was investing $15m.
The strategy is part of a broader approach to agricultural investments by the investment manager which was acquired by M&G in 2022. In March, responsAbility said it had raised $173m at the first close of its second Sustainable Food Asia fund and $101m at the first close of its Sustainable Food Latin America fund.
In November 2022, the company said the African Guarantee Fund would provide a loan portfolio guarantee facility of $5m for a vehicle aiming to support African agricultural SMES with a focus on activities related to crops and farming products or commodities.
