New index highlights sustainability risks of meat, fish and dairy industries
A new index analysing 60 global intensive farming companies on health, environmental and social issues has found that the large majority of meat, fish and dairy suppliers are failing to manage critical business risks such as greenhouse gas emissions and antibiotics risk.
The Coller FAIRR Protein Producer Index is the world’s first comprehensive assessment of how some of the world’s biggest, listed suppliers of meat and fish are managing critical sustainability risks from pollution to the Paris Agreement, food safety to worker safety.
The Index is produced by the $5.9 trillion investor network FAIRR which has large investors such as Aviva Investors, Schroders and US fund University of California Office of the Chief Investment Officer of the Regents among its members. The Index aims to improve corporate disclosure on sustainability issues by all major livestock and fisheries companies and bridge the knowledge gap for investors on this sector.
It assessed nine risk factors: greenhouse gas emissions, deforestation and biodiversity loss, water scarcity and use, antibiotics use, waste and pollution, and working conditions. Each company was categorised as low, medium or high risk based on its disclosure in each area.
Key findings include:
Shareholder value at risk: 36 companies with a combined market capitalisation of $152bn are given the worst grade (‘high-risk’) across all sustainability factors. These include Cal-Maine Foods (US), Guangdong Wens (China), and suppliers to large fast food chains such as Venky’s (India) and Fujian Sunner (China).
Human health at risk: 77% of sector is failing to adequately manage or disclose antibiotic use, despite growing levels of regulation and international action to combat antibiotic resistant superbugs. Major suppliers to McDonalds and the fast food industry such as Fujian Sunner and Venky’s are among those ranked ‘high risk’ on antibiotics. One in five firms (22%) also fail to show full traceability of their food supply chain – a key part of food safety.
Paris at risk: The livestock sector is responsible for 14.5% of global greenhouse gas emissions, roughly equivalent to the emissions of the entire US, but 72% of the sector (worth $175 billion) is failing to manage climate risk, the Index finds. The Index reveals that no major livestock company uses an internal price on carbon.
The Index also highlights corporate best practice including:
Norwegian firm SalMar, praised for having a comprehensive target to reduce its greenhouse gas emissions by 10% by 2020.
US meat producer Tyson Foods, which is highlighted for launching Tyson Ventures, a $150 million venture capital fund to invest in companies such as ‘Beyond Meat’ developing plant based meats and other sustainable food products and technologies.
Norwegian aquaculture Marine Harvest – which is the top ranked company – is highlighted for its approach to antibiotics. The company tracks antibiotics usage on a gram of active substance per ton of product basis, and only uses antibiotics when fish are at risk. It aims to have “minimal” use of antibiotics by 2022.
Other findings include:
Chinese companies score poorly on sustainability metrics. 14 out of 16 of the China-based firms assessed (87.5%) are categorized as ‘high risk’. Norwegian aquaculture companies rank as the most sustainable, and European companies score more highly than those of the US or Asia.
Only five of the 60 companies accounted for the emergence and growth of the ‘alternative proteins’ sector – a rapidly growing segment of the protein sector expected to reach $5.2 billion by 2020.
Jeremy Coller, Founder of the FAIRR Initiative and Chief Investment Officer of Coller Capital said ESG data and transparency was lacking in the meat, fish and dairy sectors.
“As megatrends like climate change, antibiotic resistance and food technology radically reshape the way we produce and consume meat, fish and dairy, the Coller FAIRR index will help institutional capital identify both best in class companies and potential stranded assets in the food sector.”
The Coller FAIRR Protein Producer Index is available at https://index.fairr.org/