Investor Coalition Worth $1trn Faces Future of Food

40 institutional investors resulting in a $1.25 trillion coalition have engaged with 16 multinational food companies demonstrating the material risks posed by industrial animal production.

Investors include Swedish state pension funds AP2, AP3 and AP4, Aviva Investors, Boston Common, Coller Capital, Folksam, Nordea and Robeco,

The coalition is urging companies to identify their plans to respond to this risk, in particular by encouraging them to set strategies to diversify into plant-based sources of protein.

Backed by a new briefing entitled ‘The future of food – the investment case for a protein shake up’, produced by the FAIRR Initiative and ShareAction, the investors warn of the risks associated with the growing global demand for protein and an over reliance on the unsustainable factory farming of livestock for its supply. The briefing highlights the environmental, social and public health risks inherent in this model, which financial markets are not currently valuing appropriately.

The companies targeted include Kraft Heinz, Nestle, Unilever, Tesco, Walmart and General Mills, which holds its AGM in Minneapolis tomorrow. The coalition has been brought together by the FAIRR (Farm Animal Investment Risk & Return) Initiative, in partnership with responsible investment organisation ShareAction. US food giant General Mills – makers of Häagen Dazs and Yoplait – is highlighted as an example of good practice for supporting start-up companies such as Beyond Meat, which is developing foods to substitute meat products with more sustainable plant-based alternatives.

Jeremy Coller, Founder of the FAIRR Initiative and CIO of Coller Capital, said:
“The world’s over reliance on factory farmed livestock to feed the growing global demand for protein is a recipe for a financial, social and environmental crisis. Intensive livestock production already has levels of emissions and pollution that are too high, and standards of safety and welfare that are too low. It simply can’t cope with the projected increase in global protein demand. Investors want to know if major food companies have a strategy to avoid this protein bubble and to profit from a plant-based protein market set to grow by 8.4% annually over the next five years.”

The investors are responding to a recent Oxford University study which calculated that if global diets reduced their reliance on meat it could lead to healthcare-related savings and avoided climate damages of $1.5 trillion by 2050. The analysis report also points to regulatory trends as a driver for corporate action – such as Denmark’s consultation on the introduction of red meat tax and the Chinese government’s plan to reduce its citizens’ meat consumption by 50%.

Clare Richards, Campaigns Manager at ShareAction said:

The trend for ‘less but better meat’ is creating new opportunities on plates and in portfolios.

“Evidence suggests that plant-based protein sources are better for your health, your wallet, and the planet. Consumers increasingly recognise these benefits; and now this coalition of forward-thinking investors are doing the same. As a result of this engagement we hope more companies will embrace the opportunities presented by this growing consumer trend.”

Peter van der Werf, Engagement Specialist at Robeco said:
“The growing demand for meat will put large pressure on natural resources in the coming decades. Robeco identified this as a financial material topic and engages to improve sustainability in the meat supply chain. Protein diversification is an important instrument to that end. Companies at the end of the meat supply chain have an important role to play towards customers and we will encourage them to make protein diversification an integral part of their strategy.”

Ella McKinley, Ethics Analyst at Australian Ethical Investment said:
“The development of sustainable models of food production is essential if we are to limit climate change to less than two degrees. Forward-looking companies can move now to encourage more sustainable diets by reducing reliance on meat and growing the market for plant-based protein alternatives. In the process, companies make their own protein supply chains more resilient to future shocks.”