In June 2024, Transformational Investing in Food Systems (TIFS) published Financing for Regenerative Agriculture, alongside Pollination and The Rockefeller Foundation. Geared toward investors with access to large-scale capital and an interest in regenerative agriculture and food systems, this report synthesizes learnings and insights gained from over 40 primary interviews with practitioners in the field. The report organizes existing information, describes pathways for investors, and provides illustrative examples of investment mechanisms to deploy capital in regenerative agriculture.
Importantly, the report acknowledges a range of interpretations of regenerative agriculture. We use a spectrum of “shallow” to “deep” to explain the spectrum of regenerative initiatives, recognizing that there are many different points of departure. Projects on the “shallow” end of the spectrum might only focus on mitigating the negative environmental impacts of agricultural production, such as reducing greenhouse gas emissions. “Deep” regenerative initiatives take a more holistic approach that includes sociocultural and power dimensions atop ecological.
Though knowledge on investing in regenerative food systems is growing, it remains fragmented. Many investors are aware of climate risks, but few consistently integrate these risk factors into their investment processes. As a result, current assessments mischaracterize the risks and returns of conventional vs. regenerative agriculture and the financing of regenerative agriculture remains nascent across most geographies. The primary barrier to increasing capital deployment for regenerative agriculture is missing confidence that the financing will fit financiers’ current risk and reward standards, rather than a problem of the lack of capital itself.
“This report organizes a growing body of evidence and opportunities to invest in a maturing sector that is generating net-positive financial and non-financial returns,” said Rex Raimond, Director of TIFS. “The global financial sector has a tremendous opportunity to serve innovative farmers and companies with financial products that build regenerative agricultural systems, and thanks to this report financial actors now have at their fingertips many viable pathways to utilize for regenerative agricultural investments.”
Hidden Costs of a Global Food System
The hidden environmental, health, and social costs of global agrifood systems equate to nearly USD $20 trillion each year. Regenerative and agroecological production offers an alternative. As a net-positive approach to agriculture production that makes more than it takes, regenerative agriculture changes the risks inherent in growing food. Transitioning to regenerative approaches could unlock $4.5 trillion in new investment opportunities per year and $5.7 trillion of costs per year saved in damages to people and the planet. The funding gap to shift to regenerative food systems is estimated between USD $250-430 billion annually for the next decade.
Investing for Food Systems Transformation
Recognizing the complexity of navigating the transition from the current early stages toward greater market maturity for financing regenerative agriculture, we created the report to showcase the growing body of evidence for regenerative agriculture approaches that create economic value and the financing mechanisms that support implementation at various stages of market maturity.
Both commercial and concessional capital providers play a key role in accelerating capital deployment for regenerative agriculture. Growth in the market for regenerative agriculture financing requires continued development of the underlying commercial model, establishment of supporting markets, and entry of large institutional capital. The regenerative agriculture financing market will not accelerate toward maturity without significant pools of concessional capital with high risk tolerance deployed across a range of opportunities.
Private Investment is Essential
We are interested in engaging with private sector investors, including family offices, asset managers, institutional investors, and food corporations to mobilize ten times the amount of current private capital invested in regenerative agriculture, increasing from USD $11 billion to $110 billion annually. This can be achieved by:
- Applying comprehensive approaches to risk assessment and capital allocation that account for the ecological, social, and financial values created in regenerative systems.
- Joining existing initiatives to learn from others, avoid past mistakes, and co-create financial mechanisms supporting regenerative agriculture.
- Leveraging blended finance and other structures that promote regenerative practices.
- Advocating for policies that support rather than penalize regenerative producers.
Major philanthropies Urge Massive Scale Up of Agroecology and Regenerative Approaches
Report authors, TIFS, The Rockefeller Foundation, and Pollination are part of a call to action launched at COP28 in December 2023 to catalyze a transition to 50% regenerative and agroecological systems by 2040, and to ensure all agriculture and food systems are transitioning by 2050. The philanthropic partners participating in this initiative are also calling on their peers to mobilize ten times the amount of current philanthropic capital committed to regenerative agriculture, increasing from USD $700 million to $7 billion annually.
Iterative Learning, Future Transformation
Through our recent convening at Bellagio with Metabolic and The Rockefeller Foundation, and our event at Climate Week NYC, we have had the opportunity to utilize the tools set out in this report to explore opportunities to scale financing for regenerative agriculture in specific geographies.
We look forward to the continued use and development of the concepts laid out in this report. If you’re an investor interested in beginning a conversation with TIFS about how best to move capital into regenerative food systems, reach out to Rex Raimond at rraimond@tifsinitiative.org.