Exploring systems finance for sustainable development at the Milken Institute Global Conference 2024

For over twenty years, the Milken Institute has gathered stakeholders annually to examine critical issues and their impact on global workers, firms, and markets. The 27th annual Milken Institute Global Conference, hosted in Los Angeles from May 6-8, 2024, explored the theme “Shaping a Shared Future” to examine recent disruptions and innovations and translate lessons learned into creating meaningful, healthy, and prosperous lives for all.

CrossBoundary participated in a panel discussion on Systems Finance for Sustainable Development moderated by Simon Winter, Executive Director of the Syngenta Foundation for Sustainable Agriculture. The panel featured Jake Cusack, co-founder and Managing Partner of the CrossBoundary Group, alongside Rini Greenfield, founding Managing Partner of Rethink Food, a non-profit firm investing in technologies for sustainable agriculture; Madhur Jain, co-founder and CEO of Varaha, a climate tech company dedicated to transitioning farmers to more sustainable practices; Daniela Kandel, founder and CEO of Evergreen Innovation Platform, a platform that sources and deploys innovations for smallholder farmers; and Jake Levine, Chief Climate Officer of the US Development Finance Corporation, a key player in mobilizing finance for climate-smart agriculture.

You can watch the full recording of the session on Milken Institute’s website.

The discussion underscored the urgent need for collaborative efforts in finance to encourage inclusive and regenerative economic growth. One key point raised was the importance of identifying and deploying innovations to help farmers address climate challenges.

Madhur Jain highlighted Varaha’s focus on transitioning farmers to more sustainable and climate-smart practices, emphasizing that agriculture contributes to 24% of global emissions.

“India alone burns 116 million metric tons of residue each year after harvest, which is a health hazard, aside from hurting the soil in the process. We have started to turn that residue into biochar, which goes back into the ground as a biofertilizer, locking carbon for hundreds and thousands of years in the process,” Jain added, “…we are already looking at a scale of close to 600,000 acres in the countries that we work in.”

The panelists discussed the challenges and opportunities in deploying finance to support smallholder farmers in developing countries facing extreme weather volatility, reductions in water accessibility, and soil degradation.

“We invest a lot of effort in working with our farmers to understand their needs and sourcing innovations from all over the world. We have innovations [deployed] today from the UK, Israel, and the U.S., and of course local innovations from India, and we’re always looking for new partners,” explained Daniela Kandel of the Evergreen Innovation Platform.

“These are tech solutions that are financed by venture capital and may have a completely different risk profile,” she continued, “so we need to help [farmers] develop the right business models, help them do that quickly, and help them scale their sales in this market [for] investors to be willing to continue to support their endeavors in this smallholder market.”

The need for a more integrated approach to deploying finance rather than siloed activity was also emphasized. Jake Cusack presented CrossBoundary’s thinking on financing frameworks that examine deals’ positive and negative externalities:

“One of the critical things that we believe at CrossBoundary is that every deal is actually a blended finance deal, meaning that every deal has positive and negative externalities that affect public goods and are not necessarily captured in the core business and financial returns. Almost every deal already has interactions with public and philanthropic capital now or will in the future,” said Jake.

Fellow panelists built on the call for coordination of financing, including using blended finance to bring together public, private, and philanthropic capital to support the transition to more sustainable and resilient agriculture.

“As venture capitalists, we’re investing in opportunities with strong ROI, and to us, these are the opportunities where we see consumers actively driving change,” said Rini Greenfield, founding Managing Partner of Rethink Food. She expanded on Rethink Food’s investment thesis: “We’re investing in technologies: data, software, automation, robotics, [technologies] that are actually creating incredible efficiencies in this system that didn’t exist before. So, we have fewer inputs and much greater outputs, which ultimately taxes the land much less. It’s a win, win, win.”

Panelists highlighted the importance of being specific about existing barriers that must be overcome and the roles of different actors in the financial system.

“There needs to be more innovation funding, so ideas get out of academia and into Y-Combinator and Rethink Food and over to Daniela, and we’re starting to see that happen now,” said Rini.

Jake Levin, Chief Climate Officer of the US Development Finance Corporation, emphasized two major structural problems in financing sustainable development: the cost of capital and the cost of hedging local currencies. “…I think there’s another institutional set of players that needs to come into this conversation, whether those are [multilateral development banks], central banks, or institutional capital allocators, who can help to bring down those costs.”

“We’re starting to see some really interesting models coming out of the G20 in Brazil in terms of some of the work that the IDB is doing to buy down the cost of hedging for currency exchange,” he continued, adding that this barrier poses a significant hurdle to DFC coming into markets. “We just blow through our budget in a way that’s totally unsustainable, and then we’re just back to square one.”

Despite headwinds, the panelists painted a hopeful picture, emphasizing the potential for positive change through action and collaboration. They underscored the need to drive the transformation of agriculture and food systems, focusing on the needs of smallholder farmers. They called for more investment in innovation, greater transparency, and coordination among actors in the financial system, highlighting the transformative power of these actions.

CrossBoundary Advisory, part of the CrossBoundary Group, works with companies, investors, and philanthropic players to overcome the challenges of investing in climate-smart agriculture to ensure food security while creating financial and ecological resilience. Learn more about our investment advisory work in the agriculture sector.