CDC Group, the development finance institution of the UK, wants to make a positive impact with its investments in Africa and South Asia.
Wageningen University & Research reviewed CDC’s impact framework for the food & agriculture sector, adding a wider systems approach and identifying new opportunities and trade-offs to consider when making their investments. It helped to articulate CDC’s impact more clearly and consistently to assess their investment propositions, for example to support their investment in a new $143 million food fund.
To assess the impact of their investments, CDC developed impact frameworks for each of the seven priority sectors it invests in. The impact framework guides the decisions on investment, next to financial considerations. CDC asked Wageningen University & Research (WUR) to review the impact framework for the food and agriculture sector.
‘When we invest in food and agriculture we want to make sure that any impact claim we make is grounded in the latest evidence’, says Nabeela Khan, one of the senior managers in the Development Impact - Investment team at CDC. ‘That is why we not only developed an impact framework for food and agriculture but also had it reviewed by an institution like WUR.’
Independent and recognised
CDC was looking for independent advice from an institution that is recognised for its expertise in the field of food and agriculture. ‘So obviously Wageningen came up quickly’, says Gieltje Adriaans, who is part of the Development Impact - Investments team at CDC as well.
‘We liked the multi-disciplinary perspective that the WUR-team brought us. They were able to draw from researchers in different fields within WUR, like nutrition, food security, climate change or agricultural economics. And being able to synthesise all these views was important to us. We also liked that WUR has a strong focus on collaborating with people outside academia, such as businesses, governments and NGOs. They could advise us on how we can incorporate the findings in our day-to-day decision making.’
Nuance and system thinking
The impact framework was adapted after the review and discussions with experts of WUR, says Gieltje Adriaans. ‘The review poured nuance into our earlier work, and brought us a more holistic view. We moved towards a more system level thinking rather than a linear impact model. The investments we make have an impact in different fields – nutrition, economic opportunity and environmental sustainability – and we better learned how these are linked and connected.’
Often in investment, impact evidence tends to focus on one area, adds Nabeela Khan. ‘Whereas in our market, you have to be careful how for example nutrition outcomes balances with economic opportunity. WUR’s experts did a good job, to help us think through some of the nuances and considerations, that otherwise we would not be able to do. The framework has helped us to articulate impact more clearly and consistently. They took us to the next step and challenged us to talk about opportunities as well as trade-offs. It was a refreshing process.’ The review also brought particular topics to the fore which CDC hadn’t focussed a lot on before, such as food loss and waste and climate smart agricultural practices.
Food loss and waste to the fore
The new impact framework is in operation for about a year now and did inform new investments. A good example is the Phatisa Food Fund 2, tells Antia Portillo, who is also part of the Development Impact – Investments team at CDC.
The fund recently got a second investment of $143million from a group of leading development finance institutions and impact investors, among others CDC Group. ‘The impact of the fund is assessed more holistically now, and viewed from a system perspective’, Portillo says. The fund makes investments along the whole value chain, from mechanisation and inputs for farmers, to food processing and manufacturing, logistics, aggregation and distribution. ‘Food loss and waste and smarter agricultural practices get specific attention now’, Portillo says. ‘Another thing that the impact framework brought us, is the importance to look at trade-offs, for example between economic opportunities and nutritional impact.’
Next to the practical changes to investments, the impact framework also brought cultural changes, Nabeela Khan says. ‘The framework has helped us to create a common language around impact internally.’ The investment committee of CDC decides on investments after being informed about the possible impact of investment by the impact teams of CDC. ‘Expressing impact in a clear and simple way, helps communication and collaboration between the impact teams and the investment colleagues at CDC’, Khan concludes.