The index, compieled by investor network FAIRR, concluded that 60% of meat and fish companies examined – 36 large corporations worth $152bn – are categorised as “high risk” across all sustainability factors. As well as antibiotic use and GHG, the index looked at deforestation and biodiversity loss, water scarcity and use, waste and pollution, animal welfare, and working conditions and food safety.
The research aims to provide investors with a higher level of “data and transparency” to facilitate “better investment decisions”.
“From an investment point of view, it is not only this $300bn group of companies at risk but the wider multi-trillion dollar global food supply chain which they supply. Investors need to protect shareholder value in this sector and part of that is encouraging these companies to better manage critical sustainability risks,” Maria Lettini, Director of FAIRR, told FoodNavigator.
Lettini explained that investors are increasingly factoring in issues like sustainability. “Central to the aims of the Index is the need to improve corporate disclosure on all sustainability issues…. The main aim is to improve the overall sustainability of the sector over time. Competition will drive companies to improve and create a race to the top for sustainability in this sector. These issues are increasingly informing investment decisions - in fact the growth of FAIRR itself is a good example of this with investors managing $5.9trn of assets participating in its activities on sustainable food since it launched in 2015.”
FAIRR was founded by Jeremy Coller, who is also CIO of Coller Capital. The initiative counts 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.
Climate change and antibiotic resistance need most progress
The areas where protein companies have the most progess to make are centred the development of climate change mitigation strategies and the spread of antibiotic resistant ‘super bugs’. FAIRR concluded.
The sector is “creating a health risk” by not responding to antibiotics crisis, the investment network suggested. In total, 77% of the sector sector - 46 companies worth $239bn - rank ‘high risk’ on antibiotics stewardship, with little or no measures in place to reduce excessive use of antibiotics - despite emerging regulation on issue.
The index also found 72% of the sector is “failing to manage climate risk”, despite being a significant contributor to greenhouse gas emissions. The livestock sector is responsible for 14.5% of global greenhouse gas emissions but the Index reveals that no major livestock company uses an internal price on carbon.
“To improve companies need to set in place and report on clear policies and processes for managing these issues. In the case of antibiotics, for example, Norwegian aquaculture firm Marine Harvest score well because they have a policy of 'minimal' use of antibiotics by 2022, tracks antibiotics usage on a gram of active substance per ton of product basis, and only uses antibiotics when fish are at risk,” Lettini observed.
Source: FAIRR