FAIRR Initiative is a US$68 trillion investor network focusing on ESG risks in the global supply chain. The Good Food Institute is a non-profit working to accelerate innovation in alternative proteins. Both believe that a transition away from animal proteins is needed to secure a sustainable future for food and claim that a shift towards alternative proteins is needed to decarbonise the food chain.
The organisations have now teamed up to develop frameworks to allow companies and investors to measure the impact of alternative protein portfolios. FAIRR and GFI co-developed the new frameworks with input from a ‘diverse’ array of investors, companies and NGOs, including Unilever, EAT Just, Newton Investment Management, PIMCO, Blue Horizon and the WWF-UK as well as ESG and life cycle assessment (LCA) experts. The new models take into account factors such as carbon emissions, land, water and nutrition impacts.
“We look at metrics covering a broad range of themes, including climate, land conversion & deforestation, water management, soil management and a theme called Nature positive practices – which touches on biodiversity,” FAIRR ESG analyst Abby Herd told FoodNavigator. Quantitative metrics include: GHG emissions intensity, land-use intensity, water intensity; scope 1, 2 and 3 emissions; and direct & indirect water withdrawal.
“The frameworks provide companies with best practice guidance as to how to calculate the carbon/water/land-use of their alternative proteins,” Herd noted. While it does not assess the performance of companies, it does provide a summary comparison between the intensity of alt proteins and animal derived proteins, we were told.
A standardised framework to assess alt proteins
Pointing to research suggesting ‘many’ plant-based meat products have ‘a fifth to less than a tenth’ of the environmental impact of meat-based equivalents, FAIRR noted there is currently no comprehensive standards for companies manufacturing and selling alternative proteins to assess and disclose the kind of ESG data that investors and companies, and consumers need to ‘make informed decisions’.
“To date there have been no official reporting standards for companies in the food sector to record, understand and disclose the ESG credentials of their alternative proteins businesses. The new frameworks provide a first-of-their-kind standardised formula for assessing and disclosing the climate, water and land use, biodiversity, labour, and food security impacts of alternative proteins,” Herd explained.
The aim? To “empower companies to measure and communicate positive impact and enable investors to fully assess, understand and make comparisons between companies.”
The frameworks assess four different types of alt proteins (cultivated, plant-based, fermentation-enabled and hybrid). “It also includes a few metrics that compare the GHG, land-use and water intensity compared to animal-based proteins. The social questions on nutrition also draw comparisons between strategy for alt protein products compared to the rest of the products sold,” we heard.
Catalysing investment in alt proteins
Over the past few years, investment in alternative proteins has increased by an average 5-year growth rate of 91% through 2021, according to GFI analysis of PitchBook data. FAIRR and GFI believe that the ESG clarity the frameworks will bring can help to accelerate this rate further still.
“The launch of both frameworks has met with significant support from companies across the food sector, and from leading investors keen to access the data,” Herd said.
MycoTechnology described the impact the new frameworks will have: “Laying the groundwork to standardize this information can be a guide for us all, and lift the industry up as a whole.”
“Investors such as Boston Trust Walden say the frameworks enable investors to better understand company action to manage ESG risks, and Synthesis Capital say they will be integrating the framework into existing ESG policies and processes,” Herd added.
She suggested a diverse range of companies, from specialised businesses to ‘incumbent’ food brands, are expected to use the frameworks. A ‘deeper and more robust’ understanding of alternative proteins is expected to highlight their ‘reduced impacts’ and the ‘multiple risks’ of conventional meat, eggs, seafood and dairy. “This will help to incentivize growth,” the FAIRR analyst predicted.
“By providing comparable ESG data, the new frameworks will enable companies to measure and understand the reduced impacts and wider benefits of their alternative proteins’ businesses, providing a firmer foundation on which to base growth and business development strategies. In particular, diversified industry incumbents will be able to leverage the frameworks to transition their protein portfolios and production practices to meet decarbonization and other corporate social responsibility goals.
“The frameworks will also equip investors with a toolkit of disclosures and metrics to gain transparent and actionable insights into a company’s actions and key ESG risks and opportunities prior to investing, providing superior data to feed into investment analysis and decision making. For example, they will enable investors to see whether a diversified food producer is seriously and strategically expanding its alternative proteins business segment and utilizing it to mitigate material risks to its business stemming from animal agriculture.”
FAIRR and GFI’s Alternative Proteins ESG Reporting Framework for Specialized Companies and the Alternative Proteins ESG Reporting Framework for Diversified Companies are open source resources that the organisations hope will be used by governments and consumers alongside industry and investors.
“Alternative proteins offer meaningfully lower greenhouse gas emissions as compared to conventional animal protein as well as considerable food safety and nutritional advantages,” claimed Sharyn Murray, Good Food Institute Investor Engagement Manager. “As the alternative protein industry continues to partner with the private sector to build responsible and sustainable businesses of the future, these frameworks will enable companies to claim their natural leadership role on ESG. This will lift up and guide all alternative protein companies toward best practices and the use of one common language to reveal the huge planetary rewards the industry offers.”