The investors are part of the FAIRR Initiative, which targeted 16 food companies, asking them to diversify into plant-based sources of protein as a key strategy.
The group, which published the report ‘The future of food - The investment case for a protein shake up,’ did make note of General Mills’ dairy brands Häagen Dazs and Yoplait, as an example of good practice for supporting sustainable start-up companies such as Beyond Meat.
But does that call for a ‘protein shake up’ also extend to the dairy industry?
Concerns over sustainability
Clare Richards is campaigns manager at ShareAction, a UK charity that aims to improve corporate behavior on environmental, social and governance issues through responsible investment by pension funds and other institutional investors.
She told DairyReporter that several of the companies that the investor coalition is targeting with this engagement have extensive exposures to dairy in their range, and the concerns are not exclusive to meat.
“From a public health point of view there are clearly more concerns focused on meat consumption, and in particular red and processed meats, than there are regarding modest consumption of lower-fat dairy products,” Richards said.
“However, there is no escaping the fact that dairy is subject to the same social and environmental pressure points as meat, for example in terms of concerns over welfare and antibiotic usage, methane outputs and polluting byproducts.”
Richards said that often it seems that this high cost comes at low reward for farmers – overproduction of milk contributes to suppressed prices, and a situation where the elusive real money is to be made in value-added products such as cheese.
“Producing high yields of milk through intensive production methods, just to powder it and struggle to find ways to dispose of the surplus is not sustainable,” she said.
The 16 companies written to by investors:
The Co-operative Group
Costco Wholesale Corporation
Marks & Spencer
Wm Morrison Supermarkets
Whole Foods Market
Trends in products
The rise of dairy alternatives also means there have been changes to the way people approach their diet.
“Much has been said of the rise of people choosing ‘flexitarian’ or part-time vegetarian diets: consciously limiting rather than entirely ruling out animal products,” Richards said.
“This is reflected in the range of high-street stores that now offer, for example, not one but a handful of alternatives to dairy for hot drinks: that would have been largely unheard of even just a few years ago.
“Both as a push and pull effect of changing consumer tastes, the non-dairy aisle increasingly rivals flavored and standard milks on both range and price.”
Richards said that increasingly this trend is mainstream rather than a niche choice, and food companies and retailers that choose to ignore it are doing their potential customers and their own investors a disservice.
“For companies that recognize and embrace this as an opportunity, diversification into non-dairy options does not need to be a threat.”
True costs involved
Richards admits that there is a knowledge gap when it comes to understanding the impacts involved in the food that reaches our shopping baskets.
“In a world of spin, the common marketing motif of a ‘happy cow’ and expansive green pastures is particularly misleading,” Richards said.
“The true costs of meat and dairy are massaged by subsidies, overproduction and suppressed prices that do neither small scale farmers nor our health and environment any favors.
“That’s not to say that there are no issues with some plant-based alternatives: obviously any ingredients need to be grown and sourced sustainably, and in a way that is respectful both of human labor and the environment.”
Reaction to letter
Richards said that through ShareAction’s work in raising this issue at company AGMs, there has already been a handful of constructive conversations with food manufacturers and retailers regarding sustainable protein supply chains.
Investors signing the letter:
Active Earth Investment Management
Australian Ethical Investment
Barrow Cadbury Trust
Boston Common Asset Management
Clean Yield Asset Management
Congregation of Sisters of St. Agnes
Dana Investment Advisors
Franciscan Sisters of Perpetual Adoration
Impax Asset Management
Jeremy Coller Foundation
Joseph Rowntree Charitable Trust
Lankelly Chase Foundation
New Crop Capital
Nordea Asset Management
Robeco Asset Management
The Sustainability Group at Loring
Wolcott & Coolidge Trust
Trillium Asset Management
Unitarian Universalist Congregation at Shelter Rock
Walden Asset Management
Zevin Asset Management
Healthy nutrition and sustainable diets are already topics under consideration by several leading companies and a specific focus on protein sources forms a logical part of that thinking, she added.
“The initiative is in its early days and we haven’t yet seen a response from the dairy industry, however from within the meat industry there has been an acknowledgement that this type of diversification is essential,” Richards said.
“Forward-looking companies who take a broad view of their business opportunities can recognize that dairy-alternatives and a move away from meat reflect a distinct shift in consumer tastes – it is in their financial interests to capitalize on that before their competitors do.”
She added that this was especially the case when it is a concern backed by the FAIRR initiative and a coalition of more than 40 investors, collectively managing assets of more than $1.25 trillion.
Richards said that pressure to change comes from several quarters: From consumers demanding alternatives, from concerned investors, from policymakers faced with health and environmental crises, and from the limitations of the unsustainable production models that have been pursued over the past 50 years.
“Big food companies have helped to shape the tastes and purchasing habits that have brought us to this point, and they also have the product expertise and marketing insight to help drive diets in a more sustainable direction,” she said.
Addressing one of the key factors in any change, jobs, Richards said that the initiative is about encouraging a transition to more sustainable protein production and consumption patterns, ones which put an honest value on the welfare of laborers, animals and the environment.
“Modern and centralized meat and dairy production techniques do few favors to smaller independent farmers,” she said.
“I know of many livestock farmers – including within my family – who have struggled to carve out a living in the industry, despite investing heavily in their business both through finance and personal effort.
“This initiative is not ‘anti’ meat or dairy, but it is about recalibrating supply chains in a planned way, so that alternative production techniques and livelihoods can be nurtured while transitioning to a lower-carbon food system.”