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The investment landscape is undergoing a transformation as institutional and philanthropic investors increasingly turn their attention to food systems. Historically overshadowed by sectors like renewable energy and technology, food systems are now being recognized as both a major contributor to climate change and a critical area for financial growth. As discussed in the latest episode of Upside & Impact: Investing for Change, hosted by Elysabeth Alfano, CEO of VegTech Invest, the food industry is not only an essential component of human health and food security but also a significant factor in global economic resilience and sustainability.
Food Systems as an Investment Priority
At the heart of this shift is the growing realization that food systems account for nearly 30% of global greenhouse gas emissions, yet receive only 4% of climate finance. This misalignment presents a compelling opportunity for investors seeking impact-driven and financially viable investments. During the podcast, Holly Freishtat, Senior Director of Feeding Change at the Milken Institute, emphasized that food systems are integral to health, finance, and philanthropy. Without a sustainable and resilient food infrastructure, societal health and economic stability remain at risk.
The Role of Capital in Food Transformation
Institutional investors are increasingly seeking diversified sustainability portfolios that go beyond traditional renewable energy investments. Caitlin MacLean, Senior Director of Innovative Finance at the Milken Institute, highlighted the importance of blended capital—integrating philanthropy, government funding, venture capital, and Wall Street investment—to accelerate food system transformation. While some aspects of the transition will require innovative financial structures, others can integrate directly into existing equity and bond markets, making them attractive for traditional investors.
One note of a market indicator is that the Department of Defense is investing 35% of its bioindustrial awards into food innovation.
Catalyzing Investment In Volatile Times
As Freishtat noted, a watershed moment occurred when 160 nations signed a declaration recognizing food systems as a crucial climate issue. During a recent United Nations Climate Summit, COP28, where Alfano spoke about food system shift. Furthermore, leading financial institutions and governments, such as the World Bank, are acknowledging the need for at least $450-$650 billion per year in investment to drive necessary changes. The Bezos Earth Fund’s commitment of $1 billion toward food systems transformation is a prime example of how large-scale investors are stepping into the space.
The Market Opportunity in Sustainable Food Systems
Investors are increasingly drawn to the financial upside of food systems transformation. Alfano pointed out that shifting away from resource-intensive animal agriculture toward diversified proteins presents one of the biggest opportunities for reducing environmental impact while improving food security. The inefficiencies of the current food supply chain—high energy use, significant water consumption, and long production cycles—make it a prime candidate for disruption. Publicly traded companies involved in agricultural technology (AgTech), supply chain improvements, and alternative proteins, such as those in the VegTech™ ETF, are poised for high growth.
Overcoming Investment Barriers
Despite the clear opportunity, traditional investors have been slow to recognize the potential of food systems as a sustainable investment. One major hurdle is the complexity of food infrastructure, which spans everything from crop science and precision agriculture to supply chain logistics and waste reduction. The industry requires broad-scale adaptation, but as MacLean noted, aligning investment opportunities with investor expectations can facilitate participation.
Additionally, regulatory incentives and climate disclosure mandates are creating new pressures. The Securities and Exchange Commission (SEC) now requires companies to disclose Scope 1 and Scope 2 emissions, with Scope 3 likely to follow. California and the European Union are leading the way in demanding comprehensive climate reporting. These regulations are increasing corporate awareness and driving investment toward sustainable solutions in the food sector and are part of the reason why the sector is emerging so quickly as an investment opportunity.
A Rapidly Approaching Tipping Point
Historically, major industry transitions—such as renewable energy adoption—have taken decades. However, Freishtat argued that food systems transformation must and can happen faster. Learning from the trajectories of solar energy and electric vehicles, stakeholders must accelerate adoption through policy incentives, investment vehicles, and scalable innovations. These promote consumer adoption and are good for investors.
Synthesis Capital, a UK-based venture capital firm, projects that food systems will undergo a major shift within the next decade, mirroring the S-curve of electric vehicle adoption. Bloomberg Intelligence and Boston Consulting Group agree that significant changes could take place by 2030–2035, with plant-based and cultivated proteins playing a pivotal role.
Freishtat and MacLean discuss this further in a clip from the interview here: https://www.youtube.com/watch?v=vXll0zlZ9DA
The Path Forward for Investors
Both Freishtat and MacLean emphasized that while philanthropy and government support play a role, institutional investors will be stepping in with large-scale capital to drive systemic change and to capitalize on the growth opportunity.
For asset managers and institutional investors seeking growth opportunities with sustainability benefits, food systems offer a compelling case: investing in food transformation aligns financial returns with long-term global stability.
Wall Street has been slow to recognize the upside in food systems, but with mounting food insecurity pressures, shifting regulations, Make America Healthy Again and both the Department of Defense and the Department of Energy investing in food innovation, the tide is turning. The key to success lies in aligning financial mechanisms with scalable solutions, creating a resilient, profitable, and sustainable food system with returns and impact for future generations.
Listen to the full audio podcast here. Watch the full video here.
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