Investing in food systems involves allocating capital from public stock markets, private equity, venture capital, debt, philanthropy, and/or government finance into businesses, assets, or enablers that make up the food value chain from production to consumption. This includes farms, ranches and other producers of food, fiber, feed, and bio-based fuels, as well as the built infrastructure, equipment, technology, financial and professional services, retail and food services, and policy frameworks that support how food is grown, processed, distributed, consumed, and disposed of.

Natural capital is the world’s collective stock of renewable and non-renewable natural resources including all minerals, the atmosphere, soil, water, and every living organism. While not a new term, natural capital has emerged as a critical issue across the investment and financial sectors because of the realization that an overwhelming portion of the world’s investable assets are dependent on a depleting stock of global nature-based inputs. The failure to account for the value and vulnerability of natural capital has led to underpriced risk, stranded assets, and missed investment opportunities across sectors. Nowhere is this more obvious than in the food sector where agriculture accounts for approximately 70% of global freshwater use and food production is a major driver of deforestation, biodiversity loss, and greenhouse gas emissions.

Globally, investors are taking action to better understand natural capital risk and opportunity across their portfolios. Look no further than the recent disclosure by the world’s largest institutional investor, Norges Bank, that it has placed the majority of its $1.6 trillion portfolio through a natural risk assessment. Like the world’s other large institutional investors, their diversified portfolio includes multiple food systems-related investments. By viewing their investments through a natural capital systems lens, investors now have a new, powerful approach to evaluate risk and discover investable opportunities. 

Since inception, TIFS has focused on systems-based approaches to food systems investing and welcomes the emergence of natural capital as a key concept and tool for advancing sustainable food systems financing. In the coming weeks, TIFS will continue to share our perspective on the key interconnections between food systems investing and natural capital. Subscribe to our newsletter to receive our quarterly updates.

If you missed our previous article on how natural capital continues to guide TIFS innovative work, you can find it here.