Investor network calls for more protein diversification targets from food companies

By Oliver Morrison contact

- Last updated on GMT

Image: Getty/Tinnakorn Jorruang
Image: Getty/Tinnakorn Jorruang

Related tags: plant based, alternative protein

An investor network whose members have around $40tn of assets under management claims more investors than ever are interested in the theme of protein diversification are and looking to encourage food firms to adopt sustainable proteins as both a grown driver and climate risk mitigation tool.

A new report from FAIRR, which launched a protein producer index in 2018 ranking 60 of the world’s top meat, fish and dairy companies, based on their environmental, social and governance commitments, criticises many leading supermarkets and food makers for still failing to respond to sales and investment in meat alternatives such as plant-based milks and burgers. It claims companies such as Morrisons, Sainsbury’s, Mondelez and Amazon are among 72% of food giants who have failed to set any concrete targets to put more meat alternatives on supermarket shelves.

FAIRR’s five-year investor engagement with 25 leading global food retailers and manufacturers shows Tesco, Unilever and Nestle leading a ranking for alternative protein performance, while other retailers such as Amazon (Whole Foods), Costco and Kraft Heinz are poorest performers.

It reports that the number of firms adopting formal targets to grow their alternative protein offerings is on the rise – growing from zero in 2018 to 28% of companies in 2021.

In addition, 48% of companies now track and publicly disclose their emissions from animal agriculture (Scope 3), up from just 21% in 2019; and 52% of the companies in the engagement now have a net-zero ambition (up from just 8% in 2019).

Further, 7 of 25 (28%) global food retailers and manufacturers now have targets to expand their alternative protein portfolio, up from zero in 2018. For example, Unilever has committed to reaching $1.2 billion in sales of meat and dairy alternatives between 2025-27.

However, FAIRR also warns that the majority (72%) of food companies are yet to adopt protein diversification targets as part of their decarbonization efforts. Many companies are still behind the curve, the group claimed, and are failing to protect themselves from costly climate risks from meat and dairy production, reputational damage and looming regulation on protein transition.

FAIRR claims consumer interest in alternative proteins is ‘booming’. Citing data from the Good Food Institute, it says we’ve seen a 43% growth in dollar sales of plant-based foods in two years. But other reports have warned the plant-based market could be nearing saturation point​ as it grows from a small base. Kantar put the category’s value at just under £600 million in 2020 in the UK – double where it was four years earlier. ING Economics predicts the European market will be worth €7.5 billion (£6.6 billion) by 2025. That still dwarfs the market value of the global meat industry which is expected to rise from US$838 billion 2020 to over one trillion dollars by 2025, according to Statistica.

FAIRR also claims rising investor interest in the sector. It says engagement asking for protein diversification from meat firms has grown by 1300% in five years from 40 institutional investors representing $1.25 trillion in assets to 104 investors in 2021, managing $17.7 trillion in assets. This, it said, shows more investors than ever are interested in this theme and looking to encourage food firms to adopt sustainable proteins as both a grown driver and climate risk mitigation tool.

FAIRR also hailed 2021 as “the year of cultivated meat” as private investment in technology hit $506 million in the first six months of the year, with growing investment and interest from major food companies, but again from a small base.   

Jeremy Coller, Chair of the FAIRR Initiative and Chief Investment Officer, Coller Capital said: “As we approach COP26, the impact of agriculture and the largest food companies must be centre stage. 23% of emissions come from agriculture, forestry and associated land use - but plans to address this footprint are notably absent from most national emission reduction plans. 

“Food retailers and manufacturers have a vital role to play in the transition to a low-carbon economy, but FAIRR’s report shows that the majority of leading food companies still lack concrete targets to address climate risks in their protein supply chains or to meet booming consumer demand for alternative meat and dairy products.  

“Whilst many companies are lagging, we are pleased that FAIRR has seen visible leadership from 28% of the largest food retailers and manufacturers, including leading UK supermarkets, as well as remarkable innovation in sustainable protein. This has been the year of cultivated meat with a record $506 million invested in lab-grown meat alternatives, which is now taking its place alongside plant-based protein on investment agendas.”

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