WIPO GREEN hosts webinar on financing solutions for climate-smart agriculture in Latin America

December 14, 2023

On 24 August 2023, WIPO GREEN organized a webinar titled “Financing Impact Solutions for Climate Smart Agriculture in Latin America.” The event brought together early-stage fund agricultural technology (agritech) investors, venture capital firms, impact investors, impact measurement companies to identify areas of cooperation with technology providers and need owners from WIPO GREEN’s network in Latin America (LATAM). The goal of the webinar was to explore the ecosystem of impact investors in the region and inform participants about funding opportunities.

Experts in impact finance in agritech sectors led the discussion, including representatives from leading venture capital funds on agritech active in the region: SP Ventures, an early-stage fund investing in technology powered solutions for agriculture and food across LATAM; KPTL, a venture capital fund based in Brazil; and Village Capital, a global firm focusing on impact startups. Third Way Partners, a leading consulting firm on impact investment, 60 Decibel, an impact measurement firm also presented.

Distinguishing ESG and impact investing

Third Way Partners delineated the difference between ESG (Environmental, Social, and Governance) investing from Impact Investing. While both reside under the umbrella of sustainable finance, they serve distinct objectives. ESG investing, a US $41 trillion market globally, evaluates investments based on companies’ adherence to certain criteria, integrating the sustainability and risk profile into the financial decision. Impact Investing, estimated at US $1.2 trillion globally, transcends compliance to generate tangible and measurable positive societal, environmental, and financial impacts.

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Current impact investment trends in LATAM

According to the panelists, recent trends depict a vibrant impact investment landscape in the LATAM region, including a rise in investment in agritech due to vast resources, growing population, and emphasis on sustainability. In 2022, private equity fund managers deployed US $28.2 billion in 1,352 deals, marking a surge in investment in infrastructure, transportation, and energy assets. Telecommunications and renewable energy sectors witnessed significant capital influx, marking a 3-times and 5-times increase respectively, compared to 2021. Demand for alternative debt financing saw a rise, driven by tightening lending standards from traditional banks, with private credit investment growing six-fold in the past five years. Panelists also noted that fund managers and investors have been showing more interest in climate strategies.

A key question raised was how to ensure food security, particularly in the face of challenges such as climate change and ever-growing population. For example, how can Brazil, a leading global exporter of agricultural products, reduce carbon emissions while still meeting the needs of its growing population and the population of its consumer countries? The panelists noted that this would require a radical transformation of the industry, with systemic investments in entrepreneurship, innovation, and technology, particularly digital and life science technologies.

Agribusiness performance and technological adoption

Panelists spotlighted the evolution of agribusiness in LATAM, emphasizing technology adoption as a catalyst for cost reduction and increased efficiency. Despite lower governmental support like subsidies, the sector saw heightened interest from financial investors, multilaterals, and corporates. Due to the distinctive tropical agriculture conditions in some countries in the region, localized solutions were needed, limiting the applicability of global technologies. Categories such as agfintech and biological inputs attracted nearly 74% of the innovation capital invested in the region. Overall, the trend indicates that financial investors, multilaterals, and corporate entities are showing a keen interest in LATAM agribusiness sector.

Building climate resilient food systems in the region

Speakers highlighted that to build low-carbon, climate-resilient food systems, focus needs to be channeled towards net-zero technologies, climate adaptation intelligence, carbon negatives, and green financiers. Importance of measuring tangible impact of initiatives on communities was underscored, including the possibility of utilizing the United Nations’ Sustainable Development Goals (SDGs) as progress Key Performance Indicators (KPI). Establishing measurable indicators with transparency and governance could support in creating a meaningful narrative of the impact.

Next steps

The webinar catalyzed conversation on sustainable finance and equipping stakeholders to navigate the evolving landscape of impact investing in Latin America. Key takeaways from the event can help shape the trajectory of sustainable agriculture in Latin America, with a harmonized focus on tangible impact, innovation, and localized solutions.

This event, funded by the Funds-In-Trust Japan IP Global in the context of the WIPO GREEN Finance Phase II project, was organized in connection with the WIPO GREEN Acceleration Project in Latin America. The aim of the Finance project is to support green technology companies and adopters to have more knowledge on climate financing opportunities and support connections between climate finance actors and entrepreneurs. The Latin America Acceleration Project has been actively working on climate smart agricultural solutions in Argentina, Brazil, and Chile since 2019 and in Peru since 2022.