Animals. Farmers. Truck drivers. Grocers. Soil degradation. Biodiversity loss. Poverty. Hunger—and obesity.
Each of these stakeholders and problems play off one another in the vast global food and agriculture system, intertwined with everything from climate change to armed conflict. Billions of people work in these industries, billions of animals are raised for food, and over half of Earth’s fully habitable area is used for food production. And every single person on the planet interacts with this system daily at market stalls, grocery stores, restaurants, warehouses, and around the dinner table. The expansive, interconnected nature of food and agriculture can feel overwhelming at first. With so many avenues for impact, how can advisors work with their clients to determine the best approach?
They can help their clients to define their impact priorities and align those priorities with their clients’ impact risk tolerance.
Defining impact priorities
Positive impact in the food and agriculture space tends to center around three types of beneficiaries: planet, people, and animals.
Guiding a discussion with your clients about these three beneficiaries can help families and investors prioritize the type of impact they want to make. For example – clients focused on animal welfare could look to organizations which improve the living conditions of the animals currently in the food and agriculture system or even organizations which remove animals from the system entirely by advancing the development of plant-based and cultivated protein. For clients alarmed by the destruction of ecosystems through inefficient, outmoded farming practices – you could focus the discussion on funds and organizations facilitating the transition to regenerative agriculture. For clients who want to improve the lives and livelihoods of the people who put food on our plates – you could discuss investments into organizations which sponsor training programs that prioritize women and other marginalized demographics within the food and agriculture workforce. And if health crises like starvation and obesity drive your clients’ impact, look to organizations aiming to curb food waste, eradicate food deserts, and ensure everyone has access to the building blocks of a healthy diet.
Because the food and agriculture system is so vast, these types of conversations are vital to helping your clients determine where they’d like to prioritize their impact. This can help narrow the focus and allow you to prioritize opportunities aligned with your clients’ unique impact goals.
Evaluating your client’s risk tolerance
Once you understand the impact your clients are seeking to make – you can align that with a discussion about risk tolerance in order to introduce your clients to the right types of opportunities. Most discussions about risk center around the financial risk of a particular investment. That’s a critical component of impact investments as well, yet, an often-underappreciated risk is impact risk – or the risk that the investment won’t achieve its stated impact goals.
Across the food and agriculture industry, there are a spectrum of opportunities ranging from innovative, new technologies, which if successful could dramatically change the food and agriculture sector for the better, to proven techniques and products which are already yielding positive benefits for the planet, people, and animals.
For example, lab-grown meat is an innovative solution to help meet the world’s protein needs – but must overcome regulatory barriers and break through affordability obstacles. Yet successfully growing meat in a lab can drastically reduce the water consumption and greenhouse gas emissions associated with raising livestock while taking animals out of the equation altogether. Innovative projects that involve genetic engineering are commercially and politically fraught, but scientific advancements that could increase yields of critical crops like rice can help smallholder farmers keep up with the pace of urbanization and shrinking land availability, securing the livelihoods of billions of people. These types of approaches are well suited for clients with a higher appetite for impact risk or clients interested in allocating charitable assets from a foundation or donor advised fund to riskier, but potentially higher impact, opportunities.
Alternatively, you may have a client who is more interested in supporting proven techniques and products. These investments are likely to yield positive benefits for the planet, people, or animals—and come with the added benefit of a track record of success. Investments in things like transitioning farms from traditional to organic farming, higher quality feed for animals, or training and support programs to help subsistence farmers increase their crop yields and help them find a wider base of consumers for their products are ways your clients can help drive change while balancing impact risk.
Understanding your client’s risk tolerance can help determine what investments are most aligned with their goals. High impact risk opportunities can shine a spotlight on exciting new trends in the global food and agriculture systems. Lower risk opportunities present outlets for more assured impact at a smaller scale.
Conclusion
Given how far-reaching the food and agriculture system is, impact investment in this space might seem daunting. But by considering opportunities on two axes—impact priorities and risk tolerance—advisors can help their clients identify the funds and organizations that align most closely with their impact objectives.
Interested in learning more?
CapShift’s new Food and Agriculture Primer presents a comprehensive framework which helps families and their financial advisors build private and charitable investment portfolios aligned with their impact objectives. Download a copy here.
