Australian Ethical Investment has joined a coalition of 40 institutional investors engaging with 16 multinational food companies over concerns of material risks posed by industrial animal production.
The Farm Animal Investment Risk and Return (FAIRR) initiative has sent a letter to General Mills, Kraft Heinz, Mondelez International, Nestlé SA, Unilever, Ahold-Delhaize, The Co-operative Group, Costco Wholesale Corporation, Kroger Company, Marks & Spencer, Wm Morrison Supermarkets, Ocado, Sainsbury’s, Tesco, Walmart, and Whole Foods Market. The letter urges companies to “identify their plans to respond to this risk, in particular by encouraging them to set strategies to diversity into plant-based sources of protein.”
The coalition includes Swedish state pension funds AP2, AP3 and AP4, Aviva Investors, Boston Common, Coller Capital, Folksam, Nordea and Robeco. Australian Ethical is a shareholder in one of the 16 companies – Whole Foods Market – and is participating because the issues raised by the FAIRR initiative coincide with Australian Ethical’s investment beliefs, said Ella McKinley, ethics analyst at Australian Ethical Investment.
“We’ve got some background with FAIRR, and they’ve been able to achieve good results working with companies,” McKinley said. “We’re really interested in the companies selected, the issues raised in terms of sustainable diet, how to achieve a sustainable diet going forward and the intersection between the different issues, including greenhouse gas missions, animal welfare, and impact on human health. It coves a lot of ground with the things we’re covering all the time so it was a good time to get involved.”
The investors involved in the FAIRR initiative are raising concerns about material risks in the growing demand for animal protein and the overreliance on”unsustainable factory farming of livestock” to meet that demand, and cite a briefing, The future of food – the investment case for a protein shake up’, produced by the FAIRR Initiative and ShareAction. The briefing defines environmental, social and public health risks to the model of factory farming, which they believe financial markets are not valuing appropriately.
“We think that the moment, demand for meat is increasing at a rate that is unsustainable,” McKinley said. “When you look at growth projections for meat consumption in India and China, the only way to meet it is with intensive animal agriculture. But that brings increased risk to human health, over reliance on antibiotics, increased pollution and impacts on climate change. We think that with the rate of increase that’s occurring, something needs to change.”
In the letter sent to the 16 companies, investors ask if the companies have a strategy to mitigate the risks of the “protein bubble,” and, additionally, if they have strategies to “profit from a plant-based protein market set to grow by 8.4% annually over the next five years,” said Jeremy Coller, founder of the FAIRR initiative and CIO of Coller Capital.
Australian Ethical does not invest in any ASX-listed animal agriculture companies, McKinley said.
“Within Australia we don’t invest in any of the animal agriculture companies,” she said. “We do invest in Tassal, as we see that they offer an alternative to land-based agriculture that is sustainable. Tassal offers an alternative to red meat which can alleviate some of those concerns that can be raised as part of this engagement. Tassal offers fewer feedstock concerns, their product produces fewer greenhouse gas emissions and it avoids the issue of land clearing.”