‘High risk’ meat and fish sector failing to combat climate-related business risks

The inaugural Coller FAIRR Protein Producer Index from the Farm Animal Investment Risk & Return (FAIRR) network rates the world’s 60 largest intensive farming companies on their governance around environmental issues, as well as social and health problems.

The index found that 72% of the companies listed, with a combined worth of $175bn, are failing to manage climate risk, with no major livestock company setting an internal carbon price. It noted that this lack of climate action could place the sector, which accounts for an estimated 14.5% of global greenhouse gas emissions, at risk of failing to align with the Paris Agreement’s flagship goal of limiting the world’s temperature increase to 1.5C.

University of California – which manages over $120 billion of assets – investment fellow Imogen Rose-Smith hailed the index launch as a “major breakthrough for investors”, enabling them to identify which intensive farming businesses are managing climate risks, but added that the findings indicated there is much to be done within the industry.

“It’s clear that the intensive farming sector must address its sustainability challenges with great urgency,” she said. “On climate change alone, almost three quarters of the sector is failing to put in place the policies and processes required to respond to the issue’s serious regulatory and operational risks. That presents serious concerns for most investors.”

Six of the top ten supplier leaders are based in Europe, with Norwegian fish firms Marine Harvest and Leroy Seafood Group claiming first and second place respectively and Portuguese company Bakkafrost ranking third. Cranswick, the only UK-based firm included in the ranking, took sixth place and was rated as “low risk” overall.

But worryingly, 60% of the companies in the index, with a combined value of $152bn, were given the lowest rating of “high risk” across sustainability factors, with American and Asian firms among the lowest scorers.

The global picture

The report ranked Norwegian aquaculture companies as the most sustainable, praising fifth-place SalMar for having a comprehensive target to reduce its greenhouse gas emissions by 10% by 2020 and index leader Marine Harvest for minimising its antibiotics use.

On the other hand, the report found that Asian suppliers were among the worst stallers on climate challenges, with 14 out of 16 of the China-based firms assessed being dubbed “high risk”. Major suppliers to McDonalds and KFC, including Chinese firm Fujian Sunner and Indian firm Venky’s, were among the lowest scorers.

European companies also outranked US-based firms, with no Europe-based companies being ranked as “high-risk” compared to three American suppliers. However, the report praised Chicago-based Tyson Foods for launching Tyson Ventures, a $150m venture capital fund to invest in companies like Beyond Meat, which are developing plant-based meat alternatives and other sustainable food innovations.

The index notes that only four more of the 60 companies have joined Tyson Foods in investing in the alternative protein sector, which it estimates will be worth $5.2bn by 2020.

The report arrives after an investigation by Mighty Earth, Rainforest Foundation Norway, and Fern linked large-scale deforestation, fires, and human rights abuses in Argentina and Paraguay’s Gran Chaco region to meat producers across the globe.

Sarah George