Tikehau Capital is advancing the transition to regenerative agriculture through innovative financing strategies and collaborative efforts. In 2022, the global asset manager launched a private equity impact strategy focused on regenerative agriculture, initially capitalized at €300 million and targeting €750 million. This initiative underscores the company’s commitment to transforming agriculture into a net-positive contributor to soil health, biodiversity, and climate resilience.
Regenerative agriculture is a holistic, outcome-based farming approach that generates positive impacts on soil health, water resources, biodiversity, and farming livelihoods. Beyond food production, agriculture supports industries like fashion and fuel, emphasizing its interconnectedness with global challenges. With 40% of soils degraded, regenerative practices offer a pathway to restore essential functions like carbon storage and water filtration.
Agriculture is both a significant contributor to greenhouse gas emissions and a vital carbon sink. While agriculture, land use, and deforestation account for over 20% of global emissions, land and vegetation also represent the second-largest carbon sink after oceans. This dual role highlights agriculture’s strategic importance in addressing climate change.
Despite its critical role, agriculture receives less than 4% of climate financing, according to the World Economic Forum. To bridge this gap, Tikehau Capital has developed an investment model that balances financial returns with environmental impact. Their approach allocates 50% of performance outcomes to environmental impact and 50% to financial returns. This alignment of interests supports the expectations of a new generation of investors.
Collaboration across the value chain is a cornerstone of Tikehau Capital’s strategy. Investments are designed to positively impact water, climate, and biodiversity without harming health or farmer incomes. An independent impact committee evaluates these investments using a framework validated by experts and industry partners. This ensures the effectiveness of their investments in driving meaningful change.
Tikehau Capital has identified four drivers for scaling regenerative agriculture. First, the urgent need to address environmental challenges creates opportunities for businesses to innovate. Second, evolving legislation in regions like the U.S. and Europe links subsidies to sustainable practices, accelerating change. Third, regenerative agriculture strengthens value chain resilience by ensuring stable and sustainable raw material supplies amid climate disruptions. Finally, growing consumer demand for ESG-related benefits supports market growth, as evidenced by the 28% growth of products with such claims over the past five years.
Participation in collaborative initiatives, such as the OP2B coalition, amplifies Tikehau Capital’s impact. OP2B fosters alignment across stakeholders, from farmers to multinationals, by developing consistent metrics and frameworks for regenerative agriculture. This collective approach facilitates the transition to more sustainable practices and enhances the resilience of the global food system.
In the coming years, the focus will be on scaling regenerative agriculture through harmonized measurement, collaborative farmer support, and advocacy for enabling policies. By working with like-minded partners, Tikehau Capital aims to refine strategies and drive significant progress in creating a sustainable food system.
