Root Capital
Partnering with rural agricultural businesses to power community resilience
The Trafigura Foundation is supporting an initiative that provides catalytic finance and tailored advisory services to strengthen agricultural enterprises and bring climate-resilient development to rural communities around the world.
The challenge
The climate crisis disproportionately affects vulnerable communities: the people that are least responsible for climate change. This injustice affects many of the 2.5 billion people who rely on small-scale agriculture for their livelihoods. Yet the world has been slow to support smallholder farmers. Of the USD 660 billion in global climate finance deployed in 2019/2020, for instance, less than 1 percent was directed towards small-scale agrifood systems.
The solution
Small and growing agricultural businesses are well positioned to be hubs for climate adaptation and the development of sustainable livelihoods, and are key to ensuring that farming communities thrive in the long run. In 2020, Root Capital launched an initiative to accelerate the development of sustainable and climate-smart agricultural practices in agri-businesses, and spur the global community to recognise the power of rural agriculture to spark and sustain climate action at scale. With the support of partners including the Trafigura Foundation, Root Capital has already made considerable progress on these fronts, for example, through work with cocoa cooperatives in Peru.
Root Capital now aims to further advance global climate resilience by:
- Expanding lending to businesses that are “Climate Action Leaders” to support their activities in rural communities, such as promoting natural climate solutions like agroforestry or training farmers on adapting their practices.
- Building the capacity of businesses and farmers to adapt effectively to climate change by expanding its suite of advisory services, including new services on sustainable supply chains.
- Designing and testing new financial products, including loans and grants, to help enterprises invest in climate adaptation or mitigation, including in soil regeneration, tree nurseries and renewable energy.
- Amplifying successful approaches to encourage adaptation and replication by other financiers and social impact organisations.
Partnership impact
With support from the Trafigura Foundation, Root Capital aims to reach more than 200 agri-businesses with climate resilience advisory and financing and benefit more than 500,000 smallholder farmers. In particular, the Foundation’s support (2024-2027) will allow Root Capital to develop and launch the next phase of its climate strategy, with an initial vision to:
- Disburse loans to 125 agri-businesses that are ‘Climate Action Leaders’
- Deliver advisory services to 150 agri-businesses
- Disburse 100 climate action loans to unlock investments in climate adaptation solutions
