As stewards of our clients’ assets, we believe feeding a growing global population in the midst of climate change, geopolitical shocks, and uncertainty over the coming decades requires innovation in food and agricultural technologies; re-thinking old paradigms; and, investing in solutions that not only boost agriculture productivity and food’s nutritional value but also reduce negative impacts on the planet—for which agriculture is a significant contributor—and improve the health of our global community. The investment needs are tremendous, which is where the deployment of new, smart capital can be so important.
The food system as it currently stands is exposed to three significant gaps—the food gap, the land gap and the greenhouse gas (GHG) mitigation gap and addressing these gaps simultaneously is particularly challenging. The financing of the food and agriculture industries and the role banks play will be key to building a more sustainable food system. The main barriers to success to date centre on the lack of frameworks to effectively value natural capital and the paucity of meaningful and consistent biodiversity metrics that are currently available to measure risk and monitor success.
However, we believe that the finance sector is waking up to this. We have seen that some of the leading banks are recognizing their impact in the way they are now approaching agricultural lending activities and the support and education that they provide alongside this. The development of reporting frameworks is the other key step—in particular the Principles of Responsible Banking (PRB) and the Task Force on Nature-related Financial Disclosure (TNFD). These frameworks will facilitate lenders and investors to make more informed assessments on the risks and opportunities associated with the food supply chain overall. Ultimately, we are encouraged by the progress we are seeing but recognize that there is a huge task ahead—if we are to build a more sustainable food system the financing of it needs to play a key role.
As part of a wider Franklin Templeton piece called Feed Our Future: Investing to feed our future, Martin Currie's Head of Stewardship and ESG, David Sheasby, contributes to this chapter and discusses the support needed from the finance industry to manage the impact of the food supply chain on biodiversity and climate change.
To read the full piece and explore views from across Franklin Templeton's specialist investment managers, visit here.
Finance, particularly the banking sector, has a key role to play in managing and mitigating the impact of the food supply chain on biodiversity and climate change.
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