Pension savers and policyholders of Swedish ICMIF member Folksam are investing approximately SEK 1 billion (USD 100 million) in the UN agency International Fund for Agricultural Development (IFAD) first-ever bond. The investment, where the Folksam Group is the only financier, will help reduce food shortages and increase growth in the world’s poorer countries; whilst also helping small-scale farmers adapt to climate change.
“There is a great need for investment in agriculture. The war in Ukraine, in addition to the suffering of the Ukrainian population, has also meant record-high prices for energy, food and fertilisers. In addition to this, there is also climate change, which is already affecting farmers in many parts of the world. There is, therefore, imminent risk of a famine in the world’s poorer countries,” says Ylva Wessén, President and CEO of Folksam.
The money from IFAD’s first bond issue increases the ability of small-scale farmers to adapt to climate change; access supply chains and markets; and produce more diversified food. It will stimulate rural economies and contribute directly to several of the UN Sustainable Development Goals; in particular, eradicating hunger and poverty.
“The fact that Folksam is now investing SEK 1 billion in agricultural initiatives increases the opportunity for receiving countries to reduce their dependence on imports by increasing the degree of self-sufficiency. In this way, we contribute to reducing poverty while creating returns for our customers,” says Michael Kjeller, Vice President and Head of Asset Management and Sustainability.
Folksam believes investments to improve agriculture in poor areas are necessary. Whereas a large proportion of small-scale agriculture in developing countries is under severe pressure due to land degradation, water scarcity, deforestation and overgrazing; countries in the Middle East and North Africa are also very dependent on imports. For example, 85% of Egypt’s wheat imports come from the Black Sea region.
“We urgently need to scale up investment to ensure that rural populations who produce a third of the world’s food can continue to do so. This initial transaction is an opportunity for IFAD to increase funding to build the resilience of the rural population,” said Katherine Meighan, IFAD’s General Counsel and Acting CFO.
The investment is being shared across the Folksam Group with SEK 440 million from KPA Pension, SEK 420 million from Folksam Liv and SEK 140 million from Folksam Sak.