As a response to the climate and social emergency, the United Nations has established a set of sustainable development challenges to be met by 2030. These challenges are structured around 17 concrete goals for a sustainable and peaceful future for all people around the world. These goals, dubbed the Sustainable Development Goals (SDGs), are a universal call to governments, businesses, and individuals to address the global challenges we face, from poverty and environmental degradation to hunger and injustice.
The causes of hunger are diverse: poor harvesting practices, food waste, wars and environmental destruction. In 2015, famine killed 9.1 million people, a total of 25,000 per day. This extreme hunger and lack of healthy food supply is an obstacle to sustainable development and a trap that is, for lack of money, particularly difficult to get out of. It is time to rethink our systems of agriculture, sharing and consumption. The United Nations assures us that if these systems are managed effectively, agriculture, forestry and fishing can produce food for all while generating decent incomes for producers. But the rapid degradation of our soils, forests, freshwater and oceans is putting traditional food systems at risk, driving farmers to migrate to cities in search of new opportunities.
Key figures
Sooner or later, we will be confronted with this problem of famine, since demographic estimates announce that we will be 8.5 billion in 2030 and 9.7 billion in 2050 against 7.5 billion today. If we don’t find a solution, there will be more deaths due to the food crisis.
Unfortunately, it is children who are at the greatest risk of malnutrition. In fact, 45% of all deaths of children under the age of 5 are caused by malnutrition or 3.1 million children per year. When malnutrition does not kill, it can cause children to become ill, so much so that 1 in 3 children in developing countries suffers from stunted growth. Last but not least, 66 million primary school-aged children in developing countries are hungry while in class, the United Nations reports.
A study conducted by the French National Agency for Food Safety (ANSES) has established a correlation between the eating habits of French people and their level of education. Indeed, it appears that the more the French are educated and occupy higher positions such as an executive, the more they consume vegetables or organic products. The French eat better thanks to a higher income. This better diet is beneficial to them, as French people with lower incomes are more prone to food-related diseases and obesity. According to the Ministry of Agriculture in 2014, 3.9 million people, or 6% of the population, used food assistance services such as “restaurants du cœur” or food banks.
Geographically, Southern Asia faces the greatest burden of hunger according to the United Nations, accounting for more than 280 million undernourished people.
What investment solutions can contribute to this goal?
It is now possible to demand more from your investments than a risk-adjusted return. Impact investing means putting the third dimension at the heart of your investment strategy, that of having a positive impact on the world.
With regard to the elimination of hunger, the investment themes are as follows, as well as examples of a number of startups with innovative approaches to dealing with this.
- Food security
- Food waste
- Healthy food
- Small-scale farming
- Sustainable agriculture
Food security
Logically, the first vector of action is to allow food security for all populations around the world. Moreover, this food must be as healthy as possible to avoid diseases such as obesity. According to the Food and Agriculture Organization of the United Nations, food security is defined as physical, social and economic access to sufficient, safe and nutritious food that meets the dietary needs and preferences for an active and healthy life.
In Denmark, the RockStart Agrifood fund invests, supports and empowers early-stage companies that enable the improvement of the food supply system. Having already invested in more than 152 start-ups, the impact fund uses cutting-edge technologies to enable better agricultural harvests and food supply, addressing the entire food value chain.
Food wastage
Every year, it’s estimated French people throw away the equivalent of 20kg of consumable food in the trash. On a global scale, one-third of the food produced will never be consumed, a pure loss from a food point of view but also economically. This scourge manifests itself at different stages of the supply chain, from agricultural production to final household consumption. Indeed, it is unbelievable that millions of people cannot feed themselves while the world produces more than enough food, proof of the social inequalities within our populations. In addition to these food and economic losses, food waste destroys our environment, since production requires land, water, energy and inputs, which ultimately increases green gas emissions.
One company attempting to tackle this is Toast Ale, a small British company that brews a beer made from surplus fresh bread. Advocating a truly circular economy system, the company avoids wasting one of the key elements of our diet. What’s more, profits are donated to support the wider food system. It is therefore essential to encourage, possibly through incentives, our companies to rethink their raw materials, which are often inexpensive.
Healthy food
As mentioned above, while food security is a crucial first step for the less fortunate, it is important that this food is healthy and of good quality. “Consumption of a healthy diet throughout life helps prevent malnutrition in all its forms as well as a range of diseases and non-communicable conditions,” explains the FAO. On the other hand, the consumption of processed foods that our shelves are filled with, as well as urbanisation and changing lifestyles, have changed eating habits. Unfortunately, this translates into the consumption of foods high in energy, saturated fats, trans fats, sugars and salt or sodium. Obviously, the more these foods are consumed, the more fruits, vegetables and dietary fibre are neglected.
With this goal in mind, the Venture Capital fund Lever VC invests in the production of “clean” meat and alternative sources of vegetable protein. The fund invested in Beyond Meat before its media explosion, showing its pioneering position in alternative protein solutions. Lever VC’s portfolio is valued at over $20 million, and its internal rate of return before fees is over 90%.
Small-scale farming
According to the Conservation Finance Network, smallholder farmers produce the majority of food in developing countries, but their productivity is affected by low yields and inefficient farming practices. In addition, soil erosion and deforestation degrade soil and air quality, further reducing farmers’ productivity. Smallholder farmers often lack access to the value chain, including product processing and the cold chain, perpetuating a poverty situation that the World Bank estimates to affect 500 million people.
Among the investment solutions addressing these problems, one track is farms that take advantage of technology to produce better, sustainably and at a lower cost. One example of private equity is Neofarm, which promotes smart farming via planet-friendly technology farms to feed humanity. In terms of funds, the Pomonal Impact Fund II invests in early-growth and innovative companies in the agriculture sector in Central America. The investment in this fund operates in mezzanine financing (75% debt) and its maturity is between 5 and 7 years.
Sustainable agriculture
This goal of sustainable agriculture is closely linked to the circular economy concept that you will find in the 12th SDG (sustainable consumption and production). Indeed, sustainable agriculture advocates for a situation where food is nutritious and accessible to all, and where natural resources allow the maintenance of ecosystems to meet current and future human needs. In other words, sustainable agriculture implies that farmers, pastoralists, fishermen, foresters and rural residents have the opportunity to actively participate in economic development while benefiting from it. In addition to providing food security, sustainable agriculture aims to ensure decent employment conditions and to work in an environment where prices are fair. In short, the goal is to achieve a world where people live in security, and have control over their livelihoods and equitable access to the resources they use efficiently.
One promising avenue is the Dutch start-up reNature, which is taking regenerative agroforestry mainstream by empowering farmers and communities around the world to change their farming practices. In other words, reNature promotes, designs and implements a generative system that puts nature back at the heart of agriculture, restores landscapes, ensures economic resilience for farmers and combats climate change.
If the point of impact is to make meaningful change for a better future, focusing on specific challenges can be a good way to get started. It’s clear that there are a number of issues where your investment can help make a difference. Not only that but there are also exciting startups moving to address these challenges.