Investor group calls for more nature-based solutions in livestock production

FAIRR, an agri-food-focused investor network with collective assets of $75trn, has found that nature-based rather than tech-based solutions offer greater emissions-reduction potential and biodiversity benefits in livestock production.

FAIRR's members include asset manager giants such as Blackrock and pension giants such as CDPQ, CalPERS and CalSTRS.

Its report assesses the mitigation potential and viability of 22 interventions frequently cited by the agri-food sector as a way of addressing climate and nature risks from intensive livestock production – scoring each against the Stockholm Resilience Centre’s planetary boundaries framework and tracking how much private and public capital they receive.

Of the 22 on-farm interventions assessed, 12 are nature-based and 10 are tech-based. Overall, nature-based solutions had a greater positive impact on greenhouse gas reductions and removals, biodiversity, freshwater use, chemical inputs and the flow of nutrients across ecosystems than tech-based solutions, the network concluded.

Despite these findings, the researchers found that only 45% ($127m) of climate-focused annual public funding for these 22 interventions globally ($284m) flows towards nature-based solutions. The lion’s share went to tech-based interventions.

Hiro Mizuno, former chief investment officer of the Japan Government Pension Investment Fund (GPIF), which is the largest asset owner in the world, argued that “more capital from both public and private sectors must flow towards nature-based climate solutions”.

“These solutions remain underfunded and underutilised, despite their potential to deliver substantial environmental and economic benefits,” he said. “It is critical that we align our financial systems and investment priorities to drive these initiatives forward and make them central to the global effort against climate change and nature loss.”

In 2022, investments in nature-based solutions totalled approximately $200bn, but finance flows to activities directly harming nature were more than 30 times larger, according to the UN.

Although the nature finance market is growing, the Dutch Investment Bank FMO warns that the vast majority of investment still comes from public sources.

The bank claims that one of the challenges in growing the market for forestry and sustainable land use (FSLU) and other nature-based solutions continues to be identifying and developing bankable projects and connecting them with the right financiers and investors.

As FSLU is still a nascent investment area, there is not yet an off-the-shelf pipeline for investors entering the space, the bank continues. There are no standardised business models or asset classes with which investors are familiar, meaning that fund managers must do the hard work of identifying early-stage opportunities for investment, screening them and developing them into investible propositions. This process is hugely time and resource-intensive and remains a significant barrier to capital deployment.

The private capital flows for nature-based interventions mentioned in the FAIRR report were limited to venture and philanthropic capital allocated to on-farm interventions addressing climate and nature impacts of the livestock sector in the US.

Jeremy Coller, chair and founder of FAIRR, said: “We are feeding 80 billion animals a year for 8 billion humans. The harms of intensive animal agriculture to people, planet and portfolios are too great to be ignored in the net-zero and nature transition … investments in decarbonisation must be taken with an eye on the bigger picture.”