Across Acumen’s global portfolio, climate change is an urgent and existential threat. Whether a farmer in East Africa or an entrepreneur in India, the impacts of climate change dictate a person’s ability to make a living and build a business. That’s why our commitment to tackling poverty includes helping the communities we serve adapt — that is, change their practices and systems to adjust to the effects of climate change.
Poverty and Climate Change
The people we work with have done little to contribute to the global climate crisis but disproportionately bear its consequences. This is particularly true for smallholder farmers who often live and work in the most fragile environments and lack the financial resources and savings to effectively weather climate shocks.
While the United States, European Union, China, and other top emitters are responsible for more than 68% of worldwide emissions, the world’s 500 million small farms account for just 5%. Still, it is smallholder farmers who are hit first and hardest by climate change, from more prevalent pests and diseases to lower livestock productivity and higher-rates of post-harvest losses.
Globally there are 2.4 billion smallholder farmers, which account for more than half of the world’s poor. These farmers may tend to small portions of land, but their impact is large: Smallholder farmers produce a third of the world’s food. A combination of rising temperatures, soil degradation, increased storms, and severe droughts and floods have changed the nature of farming. As a result, farmers experience an increase in crop failures and a reduction in agricultural yields and incomes, leading to weakened food security for low-income communities worldwide.
There is global consensus on the need to increase adaptation for smallholder farmers; however, only 5% of global climate investment is directed toward adaptation. On our current trajectory, climate change will push more than 125 million people into extreme poverty by 2030. In sub-Saharan Africa specifically, reduced agricultural yields and subsequent rising prices are expected to be the greatest drivers of increased poverty. This is why Acumen is doubling down on our investments in adaptation and our commitment to build climate resilience — the ability to anticipate, weather, and bounce-back from climate events — among the smallholder farmers and agribusinesses in our portfolio.
Acumen’s Commitment to Climate Resilience
Acumen believes the pathway out of poverty for smallholder farmers begins with adapting to climate change, increasing resilience, and improving incomes, which is one of the most effective ways to manage the effects of climate change. To this end, we invest in companies in India, Latin America, sub-Saharan Africa, and Pakistan that provide farmers with climate-friendly solutions to improve their productivity, increase their access to markets, and receive a greater share of the final retail price.
Cacao de Colombia — the first Colombian company to locally source and produce premium chocolate — delivers technical assistance and environmental training to cacao farmers, helping them to improve their crops, increase their yields, and maximize their incomes. In Pakistan, the NRSP Microfinance Bank provides smallholder farmers previously inaccessible services such as crop and livestock loans, savings and insurance products, and working capital to enable farmers to invest in their livelihoods and build savings that can protect against an unexpected crisis. And in Kenya, Juhudi Kilimo provides microfinance loans for crop farming, animal farming, and farm equipment that offer smallholder farmers access to high-quality agricultural assets to consistently increase their incomes and generate wealth. To date, Acumen has invested $36 million in 30 companies across the agricultural sector. These companies operate in 14 countries, and have collectively strengthened 36 million livelihoods and generated $114 million in follow-on investment to scale their impact.
We complement our investment portfolio through Acumen Academy — the world’s school for social change — which trains and supports emerging entrepreneurs and Fellows in their efforts to build climate resilience and increase smallholder farmers’ ability to adapt to their changing environments. In April 2021, Acumen Academy launched the Climate Resilient Agriculture Accelerator in India to direct resources to inclusive, climate-focused agribusinesses that can help adapt to climate change and develop innovative, affordable, and scalable solutions.
Building a Resilient Ecosystem for Farmer Prosperity
Despite the significant impact of our portfolio companies, Fellows, and Academy course-takers, we recognize that much more is needed to ensure smallholder farmers can survive and thrive. It takes more than one company or one investor to build climate resilience. It takes an entire ecosystem and the power of the full capital continuum. At Acumen, we’re drawing on our experience scaling the off-grid energy sector to build a network of agribusinesses that serve smallholder farmers and enable them to build prosperous futures. We work in partnership with the Green Climate Fund (GCF) to drive climate financing and have catalyzed over $80 million from GCF, resulting in more than $185 million in returnable capital to adapt to and tackle climate change. Through these efforts, we seek to drive increased investment in adaptation and maximize the impact of the most promising solutions to the dual crisis of poverty and climate change.
Photo: Peter Irungu