Soil Wealth: Investing in Regenerative Agriculture across Asset Classes
As the investment community in the United States, particularly within the fields of sustainable, responsible, and impact (SRI) investing, shows an increasing appetite for investing in sustainable agriculture and food systems across asset classes, a subset of investors is demonstrating growing interest in financing not simply “sustainable” agriculture but agriculture that is deemed explicitly “regenerative.”
What "regenerative" means for farmers and investors remains highly in flux, but broadly it refers to holistic approaches to agricultural systems that work with natural systems to restore, improve, and enhance the biological vitality, carrying capacity, and “ecosystem services” of farming landscapes. Regenerative farming operations also aim to support the resilience of the rural communities and broader value chains in which they are situated.
In order to advance the potential that regenerative agriculture presents in mitigating climate change, improving soil health, and building community resilience, significant capital needs to be deployed on farms, as well as across value chains. This report aims to quantify the current investment landscape surrounding regenerative agriculture and cultivate understanding of how investors can allocate investments across asset classes to further these efforts.
The increasing urgency of addressing climate change has added to this mounting interest in regenerative agriculture and “carbon farming.” To realize the carbon sequestration and climate mitigation potential associated with implementation of regenerative agricultural practices, more than $700 billion in estimated net capital expenditure over the next 30 years will be needed. Based on our analysis of Project Drawdown’s published data, projected out to 2050, implementing climate-friendly agricultural practices could mitigate nearly 170 GtCO2 e, while generating a nearly $10 trillion net financial return. The outcomes from regenerative agriculture can also enhance the biodiversity of farming landscapes, improve the water cycle, and strengthen the broader resilience of both ecosystems and food systems, while bolstering the economies of rural communities. Additionally, these various outcomes and impacts of regenerative agriculture align with several U.N. Sustainable Development Goals, which growing numbers of investors are beginning to integrate into investment decision-making frameworks. This constellation of benefits associated with building both soil health and community wealth through regenerative agriculture is what we call “Soil Wealth.”