Meat, a not so palatable investment?

Recently, I have noticed warnings by the finance industry about investing in meat. While many of us have known for some time that meat is bad news for human health, the environment and of course the animals whose flesh is eaten, it’s good news that the finance industry starts pointing out the unsustainability of the meat industry.

The meat industry is powerful, and proclaiming the obvious can lead to a backlash. For example, in June this year the Bayer Crop Science Twitter account reportedly suggested that going vegetarian can cut a person’s carbon footprint in half. The tweet has since been deleted and Bayer has apologised to the industry. Bayer apologised for expressing a view based on evidence, but unwelcome to Bayer’s business partners:

Source: Twitter/ @Bayer4Crops

Source: Twitter/ @Bayer4Crops

Last month, a coalition of 40 institutional investors launched an engagement with 16 multinational food companies highlighting the risks of investing in industrial animal production. The coalition represents investments of US $1.25 trillion and includes investors such as Swedish state pension funds AP2, AP3 and AP4, Aviva Investors, Boston Common, Coller Capital, Folksam, Nordea and Robeco. Australian Ethical Investment is also part of the coalition. The investors are urging food companies to transition to plant-based sources of protein.

The investors are responding to a recent Oxford University study which calculated that if global diets reduced their reliance on meat it could lead to healthcare – related savings and avoided climate damages of $1.5 trillion by 2050. The analysis report also points to regulatory trends as a driver for corporate action – such as Denmark’s consultation on the introduction of red meat tax and the Chinese government’s plan to reduce its citizens’ meat consumption by 50%.

The company Nestle’s response is reported in an article on the Fortune.com website:

A Nestle spokeswoman said the company did not use much meat, “so our main strategy is not to focus on replacing the meat that we do use as its impact would be minimal. Our main opportunities lie in innovating new products using alternate proteins”.

Meanwhile, Forbes.com reports that “Tech Companies Join Fight Against America’s Top Killers”. The article provides examples of tech companies that give health care providers and patients tools to help them with the transition to a plant-based diet, thus preventing and fighting chronic diseases.

If the pharmaceutical industry produced a pill that provided the healing power of a plant-based diet, it would be a blockbuster.’ – Dr. Rob Ostfeld.

Tyson Foods is one of the worlds largest meat processors. So it might be surprising that Tyson is investing in Beyond Meat, a company that produces plant-based alternatives to meat. Taking a 5% stake in Beyond Meat is considered a shrewd move. It probably is, given that people in the US are eating more plant-based foods and this is reflected in (plant-based) industry growth.

In Germany, large meat processors are now in competition with smaller companies that produce meat alternatives, and some of the latter fear they may be pushed out of the market. Two years ago, Rügenwalder Mühle started with a side-line of plant-based sausage and meat products, and many other meat processors have since followed.

Research conducted jointly last year by the NPD Group, Midan Marketing and Meatingplace, an industry publication, found that 70 percent of meat eaters said they used a meat substitute in place of meat protein at least once a week. And 22 percent said they were using such substitutes more frequently than a year earlier.

The trend away from meat towards plant-based foods is evident not just in the US, but also in other countries, such as Australia, Germany, the UK, Denmark and the Netherlands. The finance industry does well to take note.

 

Further reading

Alan Briefel (2016) Why factory farming is becoming a major risk to portfolios.

FAIRR and Share Action (2016) The future of food: The investment case for a protein shake up.

Kirschner’s Korner (2016) Beyond meat CEO responds to concerns about Tyson Foods investment

Neal Barnard (2016) FDA: don’t label meat ‘healthy’

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