The involvement of the private sector in building climate-resilient food systems

Assessing progress towards the Paris Agreement, the State of Climate Action report from last year highlighted that “global efforts to limit warming to 1.5°C are failing across the board.” The report starkly indicated that 41 out of 42 indicators, covering areas such as power, buildings, industry, transport, forests and land, food, and agriculture, are completely off track, and six are heading in the wrong direction.

This report is alarming, emphasizing the urgent need to transform industries, particularly agriculture and land use, which contribute to approximately one third of global greenhouse gas emissions.

The essential role of the private sector is highlighted in addressing the immense costs associated with transitioning to a low-carbon, climate-resilient future. Governments alone cannot bear these costs, estimated to be 26 times more than current levels of funding for the agriculture and land use sectors.

Until now, the private sector has not been fully engaged in climate action, especially in climate adaptation, for four key reasons:

1. A disconnect between the objectives of the public and private sectors, with the former prioritizing long-term societal benefits and environmental sustainability, while the latter focuses on short-term returns and shareholder value.
2. Businesses are often unaware of how they can contribute to government plans, leading to uncertainty about government needs, investments, and the private sector’s role.
3. The private sector perceives the return on investment in climate adaptation as unclear or too low, partly due to the inability to capture the full environmental and social benefits of adaptation efforts and the lack of regulatory frameworks.
4. The private sector requires more robust climate data for investment decision-making concerning current and future projections and vulnerabilities.

Despite these challenges, there is a compelling economic rationale for investing in climate action. Reports indicate that every US$1 allocated to key adaptation areas could yield substantial net benefits ranging from $2 to $10. The potential adaptation market could be as high as $2 trillion by 2026.

To stimulate private sector investment in climate-resilient agriculture, leveraging public finance to mitigate risks and costs is suggested. This includes the strategic use of grants, credit enhancement, and blended finance. Governments can also enact tax breaks and subsidies, supported by conducive regulation, certification schemes, training, and performance standards. Improving climate and agricultural production data is crucial, with the private sector playing a role in financing upgrades of agricultural value chains and investing in market analysis and weather forecasting.

Encouragingly, UNDP and the Food and Agriculture Organization (FAO) are leading a multi-country program, ‘Scaling up Climate Ambition in Land Use and Agriculture through NDCs and National Adaptation Plans’ (SCALA), which prioritizes private sector engagement. The program offers strategic guidance on private sector mapping, risk assessment, and business opportunities, fostering collaborations with the private sector to generate potential investment.

Governments are taking advantage of SCALA, with Senegal as an example where the program has identified business opportunities for environmentally and socially sustainable farming practices. Other countries, particularly Least Developed Countries (LDCs) and Small Island Developing States (SIDS), are also receiving support for public-private collaboration through the SCALA Private Sector Engagement Facility.

The recent UAE Declaration on Sustainable Agriculture and the global call-to-action for the transformation of food systems offer hope. Governments and businesses worldwide acknowledge the immense power of the private sector in addressing the climate crisis and are committed to transformative change.

UNDP, in collaboration with partners like FAO, plays a crucial role in fostering public-private conversations and partnerships to secure a safer, more sustainable future.

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