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Corporations move into plant-based proteins to hedge against the climate risks of meat

January 26, 2022

The Brief - Daily Insights into Impact Investing

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Features: Alt-Protein

Corporations move into plant-based proteins to hedge against the climate risks of meat. You’ve heard about stranded fossil-fuel assets. Get ready for stranded meat assets. The global food system is responsible for as much as one-third of greenhouse emissions; 14% comes from livestock-based agriculture alone. "The Protein Transformation," a new report from MSCI and impact investor Blue Horizon, found that global food companies face significant climate-transition risks from shifts in consumer preferences and public policy. One hedge: an accelerated shift to plant-based and alternative proteins. In a sample of 485 publicly-listed companies, the researchers found that companies that generate more than half of their revenues from plant-based and alternative proteins had 95% lower climate-transition risk across their value chains than those with smaller shares of alt-protein revenues. If all the companies in the sample generated most of their revenues from animal-free foods, the report estimates that at least $295 billion in market-cap losses could be avoided in a scenario of limiting global warming to 1.5 degrees Celsius.

Dealflow: Energy Access

Commercial bank loan helps Bboxx expand off-grid solar in Kenya. U.K.-based Bboxx launched in 2010 to provide pay-as-you-go solar products to low-income African households without electricity. A $15 million loan from SBM Bank Kenya will help Bboxx expand its solar products and services to 470,000 rural Kenyans. The U.K. government-backed intermediary GuarantCo provided a guarantee of $11.3 million, covering 75% of the loan. The goal: bring more commercial banks into off-grid solar lending to make loans in local currency and reduce companies’ currency exchange risks.

Signals: Systemic Risk

The advanced techniques investors are using to address income inequality. Today’s extreme levels of income inequality affect investments across asset classes, as well as economic and social stability more broadly. Some investors are tackling such systemic risks with what The Investment Integration Project, in "Systemic Stewardship: Investing to Address Income Inequality," calls “advanced techniques,” including collective action, standards-setting, and the strengthening of local systems. Some examples:

Agents of Impact: Follow the Talent

Eugenia Unanyants-Jackson becomes global head of ESG at PGIM, the investment management business of Prudential Financial… Tanya Barnes, ex- of Blackstone, joins J.P. Morgan Asset Management’s new sustainability-focused growth private equity team… James Manyika, ex- of McKinsey Global Institute, joins Google as senior VP of technology and society… Sarah Fortt, formerly with Vinson & Elkins, and Betty Moy Huber, formerly with Davis Polk, join Latham & Watkins to head the firm’s ESG practice with partner Paul Davies. 

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