Stockholm (NodSIP) – The FAIRR Initiative published a new report discussing the shifts taking place in the food industry driven by global environmental and social risks and technological advancements. It also provides industry-specific information on whether leading food retailers and manufacturers are keeping pace with the enormous disruptions in the sector
The FAIRR Initiative is a collaborative investor network that raises awareness of material ESG risks and opportunities in global animal protein supply chains. FAIRR helps investors identify, prioritise and act on these factors through cutting-edge research and collaborative investor engagements with global food companies. Among its research resources, its proprietary Coller FAIRR Protein Producer Index is the world’s first comprehensive assessment of the largest global animal protein companies on critical environmental, social and governance issues.
From Animal to Vegetable-based Food
According to the report, the increasingly unsustainable emissions record of animal-based agriculture, water scarcity, deforestation and climate change all conspire to make some animal-based food sourcing regions economically unfeasible due to extreme weather events and drought. “According to the recent Intergovernmental Panel on Climate Change (IPCC) report, 2°C of warming will result in a decline in livestock of 7–10%, with associated economic losses between US$9.7 and US$12.6 billion”, the report argues. The economic case for an industry-wide change is evident.
This impetus has been characterised by the rise and success of companies such as Beyond Meat, whose innovative products seek to give a meat-like meatless eating experience. The company’s stock has risen since its IPO and its revenues are forecast to almost treble this year. This has led companies such as Greggs, Danone, Tesco, Burger King, Conagra, Kraft Heinz and Kelloggs to join this emerging market trend.
Many food companies appear to have started on the path of diversification of protein products towards low carbon and less resource-intensive plant-based and away from being predominantly animal-based. 64% of the companies engaged by FAIRR used terms like “plantbased” and “vegan” in their annual reports or quarterly earnings calls in 2019. FAIRR also saw an expansion of alternative protein product portfolios of all 16 major retailers in the last 12 months.
However, change seems to be moving ahead of big food. According to the report, “only two of the 25 firms have set a goal to increase their exposure to plant-based and alternative protein; and only four have undertaken a risk assessment to stress test the resilience of their protein supply chain.”
According to the report, now is the time for action. With a market value of US$19.5 billion globally, analysis from Barclays and J.P. Morgan suggests that the plant-based market will explode in the coming 15 years and end up capturing 10% of the global meat market within 15 years.
“For the first time since the green revolution 60 years ago, which created factory farming, food technology presents a viable path forward to meet global demand for proteins sustainably,” commented Jeremy Coller Founder of the FAIRR Initiative and CIO at Coller Capital. “Food companies should ensure they are part of the change or risk being left behind.”
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