232
change. Reputational risks can range from severe to inconsequential, depending on
the expectation by the consumer and/or the added value of a product grown according to climate-smart standards.
The degree to which companies choose to—or find themselves able to—invest in
CSA depends on a range of factors. Among companies interviewed, those with dedicated sustainability staff embedded within procurement and sourcing departments
often reported having an easier time incorporating CSA into their core sourcing
strategies. Companies known for sustainability principles are often better able to
prioritise such investment than their peers. In contrast, companies with shareholders
who demand shorter-term profitability or quality results often have a more difficult
time justifying the need for longer-term investment (Private Sector Consultation
2018). This is in line with recent findings on the determinants of corporate commitments to reduce deforestation as well (Lambin et al. 2017).
For most companies, private investment is a viable choice when contained within
the company’s own supply chain. As a lead firm, they are able to directly provide
incentives to support CSA adoption amongst producers up the chain. However,
when the benefits are less tangible or at risk for “leakage”, blended finance models
are well suited to these types of investment that deliver both public and private
goods. This entails deliberate use of funds from capital providers with a range of
financial and impact return expectation, from philanthropic capital with a negative
rate of return, to those seeking capital preservation and below-market to market-rate
returns (Private Sector Consultation 2018). Blended finance approaches can attract
capital for investments addressing market failures or delivering significant social or
environmental impact in emerging and frontier markets and enable more thoughtful
longer-term investments in resilience by private sector actors.
Although many of the food and beverage companies surveyed already invest in
CSA to some degree, they stressed the need for tangible, short-term business cases
to justify ongoing investments in CSA. Companies must be able to capture the benefits of such investments via gains in volume or quality, increased supplier loyalty
or deferred costs (Private Sector Consultation 2018).
19.5 Implications for Development
Our research highlights the need for the scientific community to provide more
detailed, actionable information to incentivise companies’ investments in
CSA. Understanding the role each company plays in the supply chain—as direct
service providers, collaborators or catalysts—can help define the type of information needed. Insights and approaches that effectively connect long-term climate projections with short-term productivity and weather variability are still needed to
increase alignment between existing productivity focused approaches and effective
CSA investments (Fig. 19.2)
K. Sloan et al.
change. Reputational risks can range from severe to inconsequential, depending on
the expectation by the consumer and/or the added value of a product grown according to climate-smart standards.
The degree to which companies choose to—or find themselves able to—invest in
CSA depends on a range of factors. Among companies interviewed, those with dedicated sustainability staff embedded within procurement and sourcing departments
often reported having an easier time incorporating CSA into their core sourcing
strategies. Companies known for sustainability principles are often better able to
prioritise such investment than their peers. In contrast, companies with shareholders
who demand shorter-term profitability or quality results often have a more difficult
time justifying the need for longer-term investment (Private Sector Consultation
2018). This is in line with recent findings on the determinants of corporate commitments to reduce deforestation as well (Lambin et al. 2017).
For most companies, private investment is a viable choice when contained within
the company’s own supply chain. As a lead firm, they are able to directly provide
incentives to support CSA adoption amongst producers up the chain. However,
when the benefits are less tangible or at risk for “leakage”, blended finance models
are well suited to these types of investment that deliver both public and private
goods. This entails deliberate use of funds from capital providers with a range of
financial and impact return expectation, from philanthropic capital with a negative
rate of return, to those seeking capital preservation and below-market to market-rate
returns (Private Sector Consultation 2018). Blended finance approaches can attract
capital for investments addressing market failures or delivering significant social or
environmental impact in emerging and frontier markets and enable more thoughtful
longer-term investments in resilience by private sector actors.
Although many of the food and beverage companies surveyed already invest in
CSA to some degree, they stressed the need for tangible, short-term business cases
to justify ongoing investments in CSA. Companies must be able to capture the benefits of such investments via gains in volume or quality, increased supplier loyalty
or deferred costs (Private Sector Consultation 2018).
19.5 Implications for Development
Our research highlights the need for the scientific community to provide more
detailed, actionable information to incentivise companies’ investments in
CSA. Understanding the role each company plays in the supply chain—as direct
service providers, collaborators or catalysts—can help define the type of information needed. Insights and approaches that effectively connect long-term climate projections with short-term productivity and weather variability are still needed to
increase alignment between existing productivity focused approaches and effective
CSA investments (Fig. 19.2)
K. Sloan et al.