Giving Compass’ Take:
• Root Capital invests in agricultural enterprises to help rural communities thrive and enhance the practice of climate-smart agriculture.
• How else can philanthropy support the farming community?
The agriculture sector is highly dependent on consistent climatic conditions to produce food. The roughly 475 million smallholder farmers in developing countries, who rely largely on rain-fed rather than irrigated agriculture, will play a critical role in providing food security to a growing population. These farmers though are most vulnerable to climate effects.
As an impact investor, we must think about how we can fairly distribute the costs of adaptation across the farmer, the business, the lender, or the broader investing community.
Extreme heat and drought stress, flooding, and new pests and diseases associated with climate change will exacerbate the risks long familiar to smallholder farmers: low yields, low incomes, and poor water availability. “Climate-smart agriculture” will simultaneously enhance smallholder productivity and food security, improve farmers’ ability to adapt to a changing climate, and reduce their greenhouse gas emissions.
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Root Capital, a 2005 Skoll Awardee, invests in the growth of agricultural enterprises so they can transform rural communities. These businesses purchase crops such as coffee, cocoa, or quinoa from smallholder farmers. With growth, they become engines of impact that can raise incomes, create jobs, empower women and young people, sustain peace, and preserve vulnerable ecosystems.
Root Capital’s approach to building resilience is multi-faceted. By working with agricultural businesses that each source from many smallholders, it can reach hundreds or thousands of farmers at a time. As a lender and trainer, it identifies climate risks for its client businesses, and works to build their clients’ financial capacity, management capacity, and offers agronomic training to manage those risks.
“We’re working both to adapt existing tools (loans, financial advisory) to address climate risks, and to develop entirely new tools with our clients,” said Teague. “Zooming out a bit, we recognize that financing climate adaptation is risky by definition, and thus requires blended capital from a variety of sources to appropriately manage that risk. As an impact investor, we must think about how we can fairly distribute the costs of adaptation across the farmer, the business, the lender, or the broader investing community.”
Read the full article on climate smart agriculture by Anna Zimmermann Jin at Skoll.
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