Systemic Investing for Regenerative Agriculture

This is the first article in a series to present insights from our Regenerative Food & Agriculture Prototype in the Midwest region, USA.


By Andre Ticoulat

Place: Midwest, United States
System Type: Food System
Challenge: Transforming a key real-economy system in the United States
Partners: New Capitalism Project Lab

Intro:

If you have reached this article you likely don’t need a detailed explanation of the negative externalities of the industrial food system, so here is a quick baseline refresher of the problem.

It is clear that the industrial food system is playing a significant role in exceeding the established safe planetary boundaries. The safe limits of global nitrogen and phosphorus cycles have been surpassed, and 62% of undisturbed forests have been converted for human use, primarily for agriculture. In the U.S., the agricultural system is responsible for over 11% of total greenhouse gas emissions and for accelerating the extinction of biodiversity and ecosystem functions.

Regenerative agriculture has long been hailed as a remedy to these issues as it has the ability to improve soil health, increase plant and vegetation diversity, and preserve living root systems in soil. Regenerative practices can minimise or even eliminate reliance on synthetic inputs. Restoring land use using regenerative principles can also support biodiversity and carbon sequestration.

This is why we are excited to explore how to catalyse the uptake of regenerative agriculture by reimagining how to finance the transition.

TransCap Initiative is primarily involved in designing a systemic finance strategy and funding vehicle for the agricultural transition in the Midwest region, USA. TCI will also work across a spectrum of other “non-investable” levers that represent public goods and, therefore, still require “investment”, such as policy and technical assistance. The purpose of such “nesting” is to ensure that the portfolio of real-economy assets is well aligned with a broader set of system interventions, all designed for their collective, synergistic ability to generate transformative dynamics.

Why the Midwest?

The Midwest region of the United States offers an exciting opportunity to pilot systemic investing for regenerative transitions. It is the world's largest soy and corn belt (representing over 75% of the region’s arable land), making a large-scale transition impactful for both climate and social outcomes.

In addition, there is a constellation of organisations in the region supporting ecological agricultural practices providing potential collaboration opportunities. The region also offers substantial agricultural data (Indiana is a good example, more on that here), which matters because having consistent and accurate agricultural data is crucial in demonstrating the potential of regenerative agriculture and paving the way for better financing options.

Finally, a significant number of farmers already practice no-till farming and cover cropping, both of which are integral regenerative agriculture practices.

What is Regenerative Agriculture?

“Regeneration means putting life at the centre of every action and decision.”
- Paul Hawken on Regeneration: Ending the Climate Crisis in One Generation, 2021

Our work is focused on deep transformational change - not simply ‘do less harm’ but actively regenerate so that landscapes can restore their ecological functions. A regenerative food production system nurtures and restores soil health, protects water resources and biodiversity, and can also enhance a farm’s resilience to climate change.

Regenerative agricultural systems operate on a changing set of principles that are applied uniquely depending on the land and production contexts in which it is situated. Some of these principles are:

  • Fostering diversity of plants and animals
  • Renewing soil health, eliminating bare soil and avoiding tillage
  • Planting cover crops and perennials
  • Encouraging water percolation into the soil
  • Integrating livestock

What will happen in our prototype?

Over the next 12 months, we will conduct a systems diagnosis through desk research and stakeholder interviews. Specifically, the learning questions for this prototype might include the following:

  • What are the key enablers and barriers to the adoption of regenerative practices?
  • What are the ways in which capital needs to flow to support the transition to regenerative agriculture (and how is that different from today)?
  • How might we create a financing ‘blueprint’ for regenerative agriculture at the regional level?
  • How might we create a systemic financing vehicle in a context where multiple stakeholders have diverse interests and often divergent political views and agendas?
  • The goal is to create a joined-up approach across the system to accelerate action on the ground by determining where and how capital needs to flow to tip a system towards a desired state.

This project is a part of the New Capitalism Project Lab, a field-building effort that supports communities of leaders in the development of nascent, transformative, and collaborative ideas that put a shared vision for a better economic system into action. The New Capitalism Project is hosted by the Global Impact Investing Network (GIIN), which has played a key role in conceptualising and launching this endeavour.

If you want to learn more, reach out to Ivana Gazibar and Andre Ticoulat.

Do you want to collaborate with us?

There is an urgent need to rethink the way we deploy financial capital for transformative impact in human and natural systems. The field of systemic investing has garnered significant momentum, and now is the time to scale deep and scale out. So we invite challenge owners, systems thinkers, innovation practitioners, investment professionals, ecosystem shapers, and creative voices to join us in figuring out how to redeploy financial capital in service of a prosperous and sustainable future for all.

How is systemic investing relevant to

Foundations

...because the pots of capital operating under a philanthropic logic are orders of magnitude smaller than those operating under an investment logic, so systemic investing is a way for foundations to leverage their capital in the systems they care about.

Corporations

...because their supply chains are becoming increasingly fragile and societal expectations of business are growing. This requires companies to deploy all the tools in their finance toolbox (incl. direct investments, advanced purchase agreements, and supply-chain financing) and partner more strategically with governments, foundations, and NGOs.

Impact Investors

...because single technologies, start-ups, or social enterprises—no matter how ingenious their solutions and how brilliant their teams—are unlikely to change systems by themselves. So what matters is that these single-point solutions are synergistically nested within a broader systems change effort.

Institutional Investors

...because mainstream ESG investing doesn’t benefit places and communities at the pace, scale, and quality required, so institutional investors must channel more capital into real-economy assets in a strategic and collaborative manner.

MDBs and DFIs

...because sustainable development in a VUCA world requires portfolio approaches to systems innovation, and those need to be funded with a different investment paradigm than those dominant in development finance institutions today. And because the public sector cannot finance sustainability transitions alone, so systemic investing is a way to crowd-in private-sector capital in a smart way.

Engage with us

Which option best describes your interest in systemic investing?

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About

Who We Are

The TransCap Initiative is a think-and-do-tank operating at the nexus of real-economy systems change, sustainability, and finance. We operate as a multi-stakeholder alliance coordinated by a backbone team and comprised of wealth owners, innovation leaders, system thinkers, research institutes, and financial intermediaries. Our community is open to anyone committed to our cause and values.

Why We Exist

We exist to improve the way sustainable finance is purposed, designed, and managed so that money can become a transformative force in building a low-carbon, climate-resilient, just, and inclusive society. We believe that the key to accomplishing this vision is to inspire and enable investors to leverage the insights and tools of systems thinking and complex systems science for addressing the most pressing societal challenges of the 21st century.

What We Do

Our mission is to build the field of systemic investing. This means developing, testing, and scaling an investment logic at the intersection of systems thinking and finance. We do that by convening a multi-stakeholder alliance to develop a knowledge and innovation base, test novel concepts and approaches, and build a community of practice.

Our core ideas borrow from the disciplines of systems thinking and complex systems science, challenge-led innovation, human-centred design, new economic frameworks, and financial innovation. Our experiments are contextualised in those place-based systems that matter most for human prosperity—such as cities, landscapes, and coastal zones—as well as in value chains and other real-economy systems. We hope that our work produces knowledge and insights, methods and tools, and a self-organising community of inspired and enabled change makers.

The places and value chains we intend to transform act as centres of gravity for our work. In each of these systems, we will work with challenge owners, communities, innovators, investors, and other stakeholders to design, structure, and finance strategic investment portfolios nested within a broader systems intervention approach.

Learn More

Contact Us

TransCap Core Team
community@transformation.capital