ImpactAlpha, June 4 – Carbon emissions, deforestation, water, antibiotics, worker and animal welfare, food safety and waste: meet the risk factors facing major meat and fish companies around the world.
Investors in the multi-trillion-dollar food industry have struggled to parse its best-in-class companies from potential stranded assets. The Coller FAIRR Protein Producer Index, a new gauge from $5.9 trillion investor network FAIRR, attempts to shed light on the sector, grading 60 of the largest global animal protein companies—worth $300 billion—on eight social, environmental and governance issues.
- Among the leaders: Tyson Foods has launched a $150 million in-house venture capital fund and backed alternative protein firms Memphis Meats, Future Meat, and Beyond Meat. Norwegian firm SalMar is reducing emissions by 10% by 2020. Marine Harvest, also in Norway, aims to minimize antibiotic use by 2022.
- And the laggards: The index labeled 36 large meat and fish companies “high risk,” including suppliers to McDonalds and KFC, such as Chinese firm Fujian Sunner and Indian firm Venky’s. It also singled out Sanderson Farms, the third largest poultry producer in the U.S. and Cal-Maine Foods.
- Investment risks: Nearly three-quarters of companies tracked are “failing to manage climate risk,” and almost eight in 10 of them, worth $239 billion, were labeled “high risk” due to little or no action on cutting antibiotics use, despite emerging regulation on the issue.
Investors lack tools to understand the food sector’s risks, “especially the environmental and health risks hidden in big food’s labyrinth supply chains,” says Imogen Rose-Smith, an investment fellow at the University of California, which manages over $120 billion of assets.
Rose-Smith, who’s a regular on the ImpactAlpha Returns on Investment podcast, says the new index enables “capital markets to more easily identify which intensive farming companies are adequately managing material business issues such as food safety, working conditions and environmental impacts, and which companies are at risk.”