Wanted: business partners to build climate resilience

Sunday, 12 November 2017 13:28 GMT

An Indian Muslim farmer dries corn on the rooftop of his house in Doda district, about 200km (124 miles) northwest of the northern Indian city of Jammu, October 3, 2005. REUTERS/Amit Gupta

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How to enlist the private sector in protecting poor farmers and their communities from climate change?

When Diane Holdorf, chief sustainability officer at the Kellogg Company, visited maize growers near one of the food giant's supplier mills in India recently, she found they were suffering badly from crop losses. Their main concerns were wild pigs ravaging their fields and a lack of insurance for when their fields were hit by extreme weather, she discovered.

The U.S.-based cereal company knows farmers in different places face different challenges - but some of the common problems it is working on include helping farmers access markets, making pricing more transparent in the supply chain, and finding better places to store harvests to stop them spoiling.

"Without healthy food sources, we don't have a business," Holdorf told a discussion on strengthening communities at the root of supply chains on the sidelines of the U.N. climate talks in Bonn.

For Kellogg's, securing those food sources has meant collaborating with governments, including in Thailand where the company promoted the cultivation of medium-grain rice (apparently the best for Rice Krispies) after a drought decimated Australian harvests.

Once Bangkok approved the crop, the women farmers who grow three quarters of it saw their yields jump 30 percent compared with the variety they were growing before, said Holdorf.

But finding finance and insurance mechanisms that fit the needs of small-scale farmers is a big challenge, she told the Development and Climate Days event.

Companies need outside expertise - whether from the local communities where they source produce, development workers or social scientists - to understand how the people they rely on to be able to make their goods - and profits - are vulnerable to climate change, experts said. 

Makhegu Mabunda, a sustainability specialist with Woolworths South Africa, said the retailer partners with grassroots communities, the government and green groups like WWF to help farmers - many of them black women - manage water catchment areas and get information on how climate fluctuations may affect their crops.

Its business relies on a steady supply of textiles, and climate change can disrupt that, she said. "People on the ground know what the challenges are, but they often don't have the resources to address that," she added.

POWERFUL ALLIES

There is a need to "improve the diagnosis" and turn businesses into "powerful allies", said Edward Cameron, a senior advisor with sustainable business consultancy BSR. Agencies working to fight poverty and climate change, and the communities they aim to help, "don't always have access to goods and service … that build resilience - a lot sits in the private sector", he explained. 

The challenge is how to match up needs with the finance that is out there - and that is the trillion-dollar question.

"We need to think more about the full spectrum of the economy, and get away from matching projects to pipelines," said Cameron.

Governments going to the private sector cap in hand, and trying to convince them to "fill" the gap in climate finance in order to meet the annual $100 billion promised to developing countries by 2020 won't wash, he said.

Instead "we need to persuade (companies) that this is a vital budget line they should have been managing already" in order to keep their employees, producers and their families safe and in a position to provide the steady labour and materials they rely on, he said.

Another key way to unleash significant amounts of private-sector cash to build climate resilience at local level is to enlist the financial services sector in providing loans to smallholder farmers on the same terms as the large companies they supply, with the corporations acting as guarantor, experts said.

One major issue facing both producers and small traders when extreme weather hits crops - as is expected to happen more often with climate change - is cash flow shortages. Farmers cannot buy the inputs they need, such as fertilisers and seeds, while traders do not have enough of the commodity to sell.

Insurance can help make the supply chain more resilient to weather shocks, and everyone can win - from local banks that provide it, to animal herders or crop farmers who can restock and replant, said Yvan Biot, director of research and development with UK-based charity Farm Africa.

More innovative solutions can work well too. For example, when drought hit Ethiopia in 2015-216, Farm Africa proposed to a local sugar cane company that they manufacture animal feed from waste, which proved a success.

DIFFERENT LANGUAGES

The experience development agencies have working with communities on the ground can be helpful for companies - but the two groups often they are not comfortable working together and don't speak the same language, the event heard.

Stephen Nicholls, head of environment and finance at South Africa's National Business Initiative, said those looking for finance need to understand better how the banking sector works - including different kinds of debt and equity and who can access them.

The financial services sector, for its part, often overestimates risk - but when it actually starts working with a company "you can get that risk right down" because of the firm's deeper knowledge of its suppliers and the market in which it operates.

Start-ups and small companies trying to tackle climate change need help to get up and running from investment incubators and governments that can give grants and cover risks, so they reach the point where they can access capital on commercial terms, he said.

This has begun to happen with some providers of off-grid renewable energy in East Africa which offer hire-to-purchase solar home systems or pay-as-you-go power from mini-grids.

But big companies are also increasingly interested in playing a role in mentoring smaller suppliers "that can deliver results on the ground" such as land restoration, said María Paz Cigarán, co-founder of Sistema B Peru. The imperative now is to facilitate and speed up those connections, as her network aims to do, she added.

This summer, IT giant Microsoft launched its AI for Earth initiative which awards cloud computing resources to organisations carrying out cutting-edge research on using data and connectivity to solve environmental problems.

This scheme sits alongside flagship company projects that aim to harness data to aid small-scale farmers in unconnected regions and high-resolution satellite imagery to map land faster and more cheaply to better target conservation. 

"We want to partner with you and understand where the challenges are - and get tools into the hands of the people who need it most," Michelle Patron, Microsoft's director of sustainability policy, told the gathering of development and climate change specialists.

The Thomson Reuters Foundation is reporting on resilience as part of its work on zilient.org, an online platform building a global network of people interested in resilience, in partnership with the Rockefeller Foundation.

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