Sustainable agriculture: The Value of impact Investment

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Aiding Sustainability in Farming and Communities

An investment is an action or process of investing money in a specific company, funding or organisation in order to gain a profit. In addition to creating financial returns for the investor, investments can have a positive impact as it can create jobs and expand the provision of goods & services.

However, investments can have both positive and negative effects on society & the environment. That’s why more investors, particularly socially conscious millennials, are driving a trend in global investing. Millennials want to put their money into something positive while still getting a return.

This growing trend is called impact investment and it’s gained significant momentum in first world markets. Despite barriers South Africa is a good place for impact investment too, as in recent years SA has reached new levels of awareness in environmental change.

Now South Africa is thinking of innovative ways to invest their capital and it’s making a huge positive impact on farming & the community.

What is Impact Investment?

Impact investment refers to investments made into companies, funds or organisations to aid in making a social and environmental impact while subsequently gaining a return.

Some investors recognise the need to avoid negative effects so they follow principles to address ESG (Environmental Social and Governance) risk.
These investors avoid putting capital into negative industries known to cause social and environmental harm such as gambling or tobacco.

Impact investors put their focus on positive ESG sectors. They aim to harness the power to do good by selecting and managing investments that have a positive impact while also avoiding harm to ESG sectors.

What can Impact Investment Do for Farming?

Sustainable agriculture is relatively new in the impact investment industry. However, even though few companies work or invest in this industry it’s a growing market.

The investment in sustainable agriculture focuses on products and services that ensure the protection of local economic & social developments as well as natural interests. Some companies may adopt certain certifications and practices that align with their standards.

For example, some companies may adopt policies to align sustainable agriculture with organic practices and investors may see this as a positive investment for the environment. These companies ensure that the produce you invest in has been harvested without GMOs or harmful chemicals.

Impact investors can also tailor their investment based on their ethical viewpoints. Since the concept of sustainable agriculture is broad it allows organisations to customise their investments which could help more than one part of the agricultural sector. Some investors will invest their money into the quality of life which focuses on fair trade and the wellbeing of the farmers. Other investors may see a need to invest in clean water and soil.

There are many different types of certifications that the private sector can invest in such as:

  • Crop production
  • Fish farming
  • Animal farming
  • Investments in clean fertilisers
  • Seeds
  • Water management
  • Agriculture supply chains

By investing in these different areas, impact investors could help harvest sustainable produce by also saving on water, lowering massed produced fish farming an even affecting animal farming.

There are some investment groups in South Africa that allow the private sector to invest their money in farming. The investment company ensures that the farms you’re investing in use water wisely and guarantees they have an ethical supply chain. One such group in SA is called FedGroup.

With Fedgroup you can put your money into agricultural sustainability. At the moment assets can go into producing a harvest for blueberries, honey and electricity which can be purchased from the company’s mobile app.

By investing in beehives you could decrease the negative effects of mass-produced honey farming which can be detrimental to the environment. Bees are essential for pollination of wild and cultivated plants. Impact investments help manage bee farming more effectively.

Investing in solar panels for renewable energy for farming can have a bigger return as more sectors are transitioning to sustainable energy. By investing in solar panels you’re able to provide farms with much needed sustainable energy while also getting a return on your investments.

Impact Investment Helps the Community

There are other ways you can help your environment besides investing in sustainable agriculture. You can invest in the social structure of your community by placing capital on infrastructure and programs. South Africa has a growing need for investments in social development.

Investment in Education

Inadequate education produces high costs for society in crime, health and public spending. Economic growth could also suffer if the youth have no proper secondary or tertiary education. Unfortunately, there are many areas that don’t have schools.

Education and personal development are essential to produce youth that can move into the workforce effectively. A way to use impact investment is to put capital into municipal bonds.

Municipal bonds provide funding for projects that maintain school facilities. There are also projects that build more schools around areas that don’t have learning facilities. Investing in the construction of schools, especially in poverty stricken areas, can give those in need a place to learn.

Impact investors can also try out educational bonds which can be used to purchase projectors, textbooks and other utilities youth will need for their education.

Personal Growth

There are some companies or even people in the private sector that invest in the personal development of the community. Most of these facilities are in poverty-stricken areas where there are high rates of violence and drug addiction.

Personal growth programs are there to teach people that there is a better way of living. Programs include:

  • Education in philosophy
  • How to present themselves in a job interview
  • Taking care of the environment

Programs can also include rehabilitation centres for those who have addictions. Rehab centers have personal development programs such as the 12-step plan to help them beat their addictions.

The centres are important for poor communities. Because there is little funding to build these facilities, you can help by investing in them.

Final Thoughts – Make a Difference by Using Impact Investment

It seems more millennials want to place their investments into something more constructive to help their communities and the environment.

However, impact investment is not only for the globally conscious youth because anyone can invest their capital to make a difference. Before you invest your rands into the stock market or Bitcoin, give impact investment a try. It could save the future of your community.

 

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