Joining forces to mitigate climate change by transforming the global food system

responsAbility launches climate-smart food systems investment solution with KfW as anchor investor and in partnership with the CGIAR

February 20226 min readSustainable Food, Climate Finance

Zurich, 3 February 2022 — With the initial support of GIZ and with KfW as anchor investor, responsAbility and CGIAR have partnered to launch the first science-based impact investing solution targeting food systems transformation. The aim is to provide long-term expansion debt to innovative businesses operating in the food value chain in Asia Pacific, Latin America and Africa with the goal of mitigating climate change, reducing food loss and promoting climate change resilience of smallholder farmers.

Today’s food systems contribute to about one third of human-caused greenhouse gases (GHG) and accounts for up to 80% of global habitat destruction. Approximately 40% of food produced is either lost or wasted, while almost 700 million people are undernourished. As the global population is estimated to hit 10 billion by 2050 – approximately 2 billion more, these hidden costs of food are only expected to increase. Simply put, the status quo is no longer affordable.

The good news is that unlike other carbon-intensive industries, the solution is found in the food system itself. The global business community agrees that the potential market for this endeavour is large, profitable, and grossly underfunded. According to estimates, USD 350 billion per year of investment is needed to transform the global food system and unlock USD 4.5 trillion in new business opportunities per year. responsAbility is thrilled to contribute to close this gap by launching the first science-based impact investing strategy targeting food system transformation.

A pioneer in the sector, responsAbility has been financing agriculture and food SMEs in developing countries for the past 15 years and has identified subsectors via which investors can gain exposure and participate in the transformation of food systems. The strategy is to finance agribusinesses experiencing growth opportunities to meet the increasing demand for healthier, more equitable and more sustainable food, but lacking access to adequate long-term financing and strategic support to mainstream climate change in their growth plans.

To apply scientific rigour in the climate impact rationale, responsAbility collaborated closely with CGIAR experts from the Alliance of Bioversity International and CIAT in the concept design, which was commissioned by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH– on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ). As a leader in applied research in climate resilience and mitigation in agriculture, the strategic partnership with the CGIAR aims to support in climate /biodiversity loss risk and impact assessment of transactions, as well as post-investment capacity building of SMEs and smallholder farmers linked to climate-smart practices.

The anchor investor to spearhead this strategy is the German Development Bank - KfW, acting on behalf of BMZ. The seed investment from BMZ will be instrumental to scaling up this initiative. It is estimated that the strategy could potentially transform 300,000 hectares to climate-smart practices and reduce about 8 million tonnes of GHG emissions, which is the equivalent to reducing the annual emissions of about 1.7 million cars. About responsAbility Investments AG responsAbility is a leading impact asset manager who designs investment products that make the world more sustainable. Since our inception in 2003, we have been investing in growth markets, directing capital where it is scarce, and targeting both measurable positive impact and attractive financial returns. As of December 2021, responsAbility manages more than USD 3.7 billion in assets invested in over 300 ESG-vetted high-impact companies in 76 countries. Since inception, funds managed by responsAbility have provided over USD 11 billion in debt and equity financing to companies active in the areas of climate finance, financial inclusion, and sustainable food whose business models directly contribute to the United Nations Sustainable Development Goals (SDGs).

responsAbility is headquartered in Zurich, Switzerland, with offices in Bangkok, Lima, Mumbai, Nairobi, Paris and Tbilisi. The company's shareholders include its own employees as well as various renowned Swiss and international financial institutions. responsAbility is authorized by the Swiss Financial Market Supervisory Authority FINMA.

On January 27, 2022, M&G plc, the international savings and investments business announced that it has agreed to acquire a majority stake in responsAbility Investments AG. M&G has agreed to acquire approximately 90% of the issued share capital of responsAbility and expects to acquire the remaining 10% in due course. The acquisition is subject to regulatory approval. About BMZ Within the federal government, the BMZ is responsible for German development policy. The Sustainable Development Goals (SDGs) of the United Nations and the Paris Climate Agreement form the framework for our actions. Our focus is on fighting poverty and hunger, and a commitment to healthy people in a healthy environment. The BMZ sees itself as a transformative ministry working to support the worldwide transformation to a sustainable, climate-friendly and nature-friendly way of doing business whilst at the same time strengthening peace, freedom and human rights. To this end, we coordinate our bilateral cooperation with our partner countries worldwide and promote strong multilateralism based on the SDGs. In respectful cooperation with one another, we want to change structures in those partner countries and globally in ways that make a better life possible for everyone. About KfW KfW is Germany’s public promotional bank. As part of KfW Group, KfW Development Bank has been helping the German Federal Government to achieve its goals in development policy and international development cooperation for more than 50 years. We are both an experienced bank and a development institution with financing expertise, with expert knowledge of development policy and many years of national and international experience. On behalf of the German Federal Government, and primarily the Federal Ministry for Economic Cooperation and Development (BMZ), we finance and support programmes and projects in developing countries and emerging economies – from their conception and execution to monitoring their success. Our goal is to help our partner countries fight poverty, maintain peace, protect both the environment and the climate and shape globalisation in an appropriate way About CGIAR and the Alliance of Bioversity International and CIAT The CGIAR is a global research partnership for a food secure future dedicated to reducing poverty, enhancing food and nutrition security, and improving natural resources. CGIAR has experience and knowledge spanning 50 years, built on a track-record of continuous innovation and world class research. The Alliance of Bioversity and CIAT, a member of the CGIAR, delivers research-based solutions that harness agricultural biodiversity and sustainably transform food systems to improve people’s lives. The Alliance’s solutions address the global crises of malnutrition, climate change, biodiversity loss, and environmental degradation. About GIZ The Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH is a federal enterprise with worldwide operations. GIZ supports the German Government in the field of international cooperation for sustainable development and is also engaged in international education activities around the globe. Through its work GIZ assists people and societies in shaping their own future and improving living conditions.

Contacts

Stephanie Bilo
responsAbility Investments
+41 44 403 0553
stephanie.bilo@responsAbility.com

Nicolai Tust
KfW
+49 69 7431 4498
Nicolai.Tust@kfw.de

Sean Mattson
Alliance of Bioversity International and CIAT
+57 311 784 7652
s.mattson@cgiar.org

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This information was produced by responsAbility Investments AG together with its partners to the best of its knowledge and belief. However, responsAbility Investments AG provides no guarantee with regards to its content and completeness and does not accept any liability for losses which might arise from making use of this information. The opinions expressed in this information material are those of responsAbility Investments AG at the time of writing and are subject to change at any time without notice. If nothing is indicated to the contrary, all figures are unaudited. This material is provided for information purposes only. It does not constitute an offer or a recommendation to buy or sell financial instruments or services and does not release the recipient from exercising his/her own judgment. It is expressly not intended for persons who, due to their nationality or place of residence, are not permitted access to such information under local law.

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