Steering The Food Sector Toward Sustainable Protein
Farm Animal Investment Risk & Return (FAIRR) is an initiative that aims to inform investors about the risks that factory farming could pose to their portfolios. Its “Managing Environmental Risks in Meat and Dairy Supply Chains” report describes the programs through which investors in food companies can help ensure those businesses are developing strategic approaches to managing the sustainability risks in their meat and dairy supply chains.
The report opens with information on the state of play in the sector. Consumption of meat and dairy is on the rise around the world—it’s expected to increase 79% between 2006 and 2050. Consequently, animal agriculture has grown consistently over the last few decades. But this growth has given rise to intensive farming practices with considerable environmental and social impacts that are likely to limit longer-term growth.
The authors identify three key areas—greenhouse-gas emissions, water use, and land use— in which animal protein has a much larger environmental footprint than alternative protein sources. The intensification of animal agriculture is also having a negative effect on important social issues with economic implications, including health issues (especially those linked to the consumption of red and processed meats), antibiotic resistance, animal welfare, and food security (animal agriculture takes up 83% of global agricultural land but provides only 18% of calories).
These impacts are creating substantial and growing risks to the growth, supply security, reputation, and sustainability credentials of companies that source animal protein or products that contain it. The scale of these risks mean that moving toward sustainable agriculture practices won’t be enough to keep the sector profitable in the long term—companies must also look for alternative protein sources, including plant-based ones, that offer a more sustainable model for food production.
Through the Coller FAIRR Protein Producer Index, launched in May 2018, FAIRR assessed the practices of 60 global meat, dairy, and aquaculture producers and found that they aren’t doing enough to manage sustainability-related risks:
- 60% aren’t managing critical risks or aren’t disclosing basic information.
- The companies typically aren’t adequately managing and reporting on greenhouse-gas emissions.
- 77% were categorized as “high risk” in managing and reporting on antibiotics use.
- Just four out of 50 land-based protein companies have a zero deforestation policy.
- Only a quarter of land-based protein companies refer specifically to animal-waste management.
Sustainable Protein Engagement
FAIRR’s Sustainable Protein Engagement recommends that global food manufacturers and retailers better respond to these risks by diversifying into protein sources linked to lower emissions, less water use, and less waste, helping to maintain adequate food security worldwide. The engagement is currently supported by 74 investors with over $5.3 trillion in combined assets.
In the first two phases of the program, FAIRR assessed 16 companies’ current strategic approaches, finding that most didn’t have concrete programs to reduce agricultural emissions. The corporations involved recognized the need to transition away from animal protein and toward alternative protein sources, but their primary motivation was consumer demand rather than sustainability. So far, most companies haven’t implemented appropriate metrics for their progress in this area, and they’re yet to establish clear and consistent marketing messaging for alternative-protein products.
Phase 3, which is currently underway, expands the program to 25 companies and will enable investors to track how businesses are making protein diversification a part of decisions on risk reduction, growth planning, product development, and investment.
Global Investor Engagement On Meat Sourcing
Fast food, much of which contains meat and dairy, plays a significant—and growing—role in feeding global populations. Another initiative coordinated by FAIRR, Global Investor Engagement on Meat Sourcing, aims to improve the sustainability of the world’s biggest fast-food restaurants in order to guard against the risks mentioned above and help protect their supply security, reputation, and financial growth. The engagement intends to ask companies to establish a clear strategy for minimizing the risk in their meat and dairy supply chains and to report on their progress.
Conclusions For Animal Advocates
Companies across the food sector have a long way to go in making their production or sourcing of protein more sustainable. But it’s clear that a growing number of investors with significant assets—and therefore influence—are putting the need to minimize reliance on animal protein on the agenda. Vegan and animal-protection organizations with corporate outreach programs should therefore consider sustainability issues as key to making a compelling argument for moving away from meat and dairy products, and toward plant-based alternatives. Since FAIRR’s initiatives are ongoing, companies may become more open to such corporate outreach as they become more engaged in establishing sustainability strategies.