Transforming Agri-Food Sectors to Mitigate Climate Change: The Role of Green Finance

Abstract

Summary: Globally, food systems have become heavily industrialized and are currently threatening both environmental sustainability and human health. Feeding a growing world while remaining within safe social-ecological planetary boundaries, as dictated by the UN Social Development Goals and the Paris Climate Agreement, is feasible but requires a paradigmatic shift in agricultural value chains and their financing: a “Great Food Transformation.” Tracing today’s agri-food main global developmental and financial trends, this paper proposes a set of financially-oriented public policies to accelerate this transition with a focus on advanced and large emerging market economies. Suggested measures include public lending, insurance and guarantee schemes to aid the transition; financial training schemes; changes to prudential regulation to account for financial risks of non-sustainable farming; alongside a bolder approach to ESG investment of public funds and steps to expand green and sustainable bond markets.