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Maria Lettini of FAIRR argues that scientists, and an increasing number of consumers and investors have recognised the climate imperative for the food sector to transition away from meat and dairy products toward alternative proteins
Last week the IPCC released a major new report on the links between land use and climate change.
The relationship between land use and the environment is complex and intermingled and, as a result, presents both positive and negative impacts with respect to global biodiversity, the environmental health and climate mitigation strategies.
The recent IPCC report digs in to the detail by explaining that land and forests play a crucial role in carbon sequestration by absorbing greenhouse gases through the process of photosynthesis.
However, the report also highlights how the areas of “agriculture, forestry and other land use” contribute to climate change through deforestation and peatland degradation, the use of land for animal agriculture and overuse of fertiliser, releasing some of the most harmful greenhouse gases in to the atmosphere.
While land is still a net carbon sequesterer, the balance is changing fast as land use intensifies and deforestation accelerates
They note that while land is still a net carbon sequesterer, the balance is changing fast as land use intensifies and deforestation accelerates. At the current rate, land’s overall ability to mitigate climate change will be overshadowed by its detrimental effects – thereby shifting from a carbon sink to a carbon source.
The IPCC’s deeper analysis on forestry and agriculture is overdue. These two industries contribute to the biggest climate impacts, and as we explore this further, the intensive meat and dairy industries come into clear focus.
The animal protein value chain is responsible for the destruction of some of the Earth’s most important natural biomes and the conversion of some of the most fundamental carbon sinks. Intensive cattle production is the number one cause of Brazilian deforestation by using these lands to produce animal feed such as soy, or for grazing land for cattle.
But that’s just a snapshot; the dynamic trends are even more worrying. Population growth means the world will have another 2 billion mouths to feed in the next 30 years. Economic growth, meanwhile – particularly in developing countries – typically leads to increasing demand for meat and dairy products. China’s GDP has grown at an impressive 9-10% for the past four decades and, with increased disposable income, its annual per capita meat consumption has risen from 4kg to over 60kg.
Put simply, we already have a lot of global meat-eaters and projections suggest there will soon be a lot more, with potentially grave implications for the environment and our climate.
We are seeing global consumer preferences changing. In the US, a Johns Hopkins study found that 66% of consumers are eating less meat
The good news is that awareness is increasing of food’s role in climate change. The IPCC report is a key moment in that trend.
We are seeing global consumer preferences changing. In the US, where per capita meat consumption is among the highest in the world, a Johns Hopkins study found that 66% of consumers are eating less.
This growth in awareness has coincided with a massive food technology revolution within the protein industry. Alternative proteins now provide consumers with options that mimic the taste, texture and flavour of traditional meat and dairy products, with vastly reduced environmental impacts. For example, the production of a plant-based Beyond Burger generates 90% fewer greenhouse gas emissions and uses 93% less land than a typical beef burger. (See Growing fears for climate help fuel rise in plant-based diets)
Sales of these products are growing at an incredible rate: Burger King piloted the Impossible Burger in April this year and saw significant increases in both sales (+28%) and in the number of unique customers (+15%). The global fast-food chain is now planning a national US roll-out to its 7,200 restaurants.
Investors are catching on, too. Beyond Meat’s IPO in May was the most successful for a major US company since 2000, with the share price almost tripling on the first day of trading.
Equally, institutional investor support for FAIRR’s collaborative engagement on protein diversification with 25 of the largest food manufacturers and retailers is growing fast. In 2016, the engagement was backed by 36 investors managing $1.25tn of assets. It is now supported by 74 investors with total combined assets of $5.3trn.
FAIRR’s research on the global producers shows a lack of sufficient disclosure and engagement on climate-related risks
While there are some promising signs, the overall pace of change in the food sector is currently far too slow to meet international climate targets.
Our research shows that 16 of the top 25 consumer-facing food manufacturers and retailers in our engagement use terms like “plant-based” in their public sustainability and financial reporting, but just seven recognise the link between their protein portfolio and environmental impacts. Critically, none can demonstrate board-level support for a transition away from meat and dairy products toward alternative proteins.
FAIRR’s research on the global producers shows a lack of sufficient disclosure and engagement on climate-related risks. Last year, FAIRR’s Index, which benchmarks the 60 largest meat producers against financially material ESG risk factors, found that 72% of companies showed poor or no reporting on their greenhouse gas emissions, while just three companies had committed to ending deforestation in their supply chains.
Consumers and investors are waking up to the fact that the meat and dairy industry is a major driver of damaging climate change. The IPCC report is likely to accelerate that trend and encourage increased regulation and taxation of unsustainable practices.
For big food companies, a failure to analyse and internalise climate risks to ensure more resilient supply chains is, therefore, a major risk to long-term growth.
Time is running out to save the planet – and their profits.
Maria Lettini is director of FAIRR, a global network of investors that addresses ESG issues in protein supply chains.