Investors pressure food companies to set concrete deforestation plans

Food producers are the largest source of deforestation on the planet —  accounting for between 60% and 80% of biodiversity loss.

Meat, dairy and edible oils are the food groups responsible for the largest share of deforestation in the food space, according to researchers from Our World in Data, a partner organization of the University of Oxford.

But groups of influential investors could have enough sway to urge CPGs to eliminate the practice from their supply chains permanently.

FAIRR, a sustainability investor group with members worth $70 trillion in assets, aims to influence food companies to set time-based goals to eliminate deforestation.

In the group’s annual report about the state of sustainability in the industry released this month, it found that roughly 60% of meat and dairy companies source soy, used for animal feed, from areas at high risk of deforestation and have not set a concrete deforestation goal.

FAIRR will lay out its sustainability points at the United Nations COP15 conference in Montreal, which ends Dec. 19. The investor group hopes to develop an agreement between countries to implement goals and drive investments to prevent a further loss of nature by 2030.

Meat and dairy companies responsible for the loss of rainforests and rivers must align their practices going forward with the new UN agreement, FAIRR chair Jeremy Coller said in a statement.

“Investors are focused on material financial risks for companies, and a global agreement on nature at COP15 would see the intensive animal agriculture industry face increased regulatory, legal, tax and reputational risks,” Coller said. “Change is possible. The industry appears to be open to it.”

A new investor group emerges

FAIRR is not the only group using the heft of powerful investors to target biodiversity loss in the food space.

Another newly formed sustainability initiative from a group of 11 different investment firms — Nature Action 100 — aims to tackle the issue of deforestation directly with the companies they oversee. Formed with sustainability nonprofit Ceres and the Institutional Investor Group on Climate Change (IGCC), Nature Action 100 said it will urge food companies to adopt policies that work to lower the risk of deforestation by emphasizing that it is good for business. The group’s launch coincides with COP15, where investor representatives presented their plans of action.

The idea for the initiative was spurred after several investors contacted Ceres about forming a deforestation-focused investor group, said Julie Nash, senior program director for food and forests at Ceres.

“There are organizations and other initiatives that have been in this space longer, but we feel as if our initiative is a unique slice within that,” Nash said. “It’s looking to be able to take a lot of the information and research that is out there and bring it to a group of investors and grow their capacity to engage with companies.”

Andrew Niebler, an investor at Karner Blue Capital, LLC and a member of Nature Action 100, said the group hopes to address science-based concepts with companies to set in motion goals that will reverse nature loss by 2030.

“We thought it was important to get together to identify science based concepts that we wanted to address with companies but as a group, and leverage our power as investors to really get this moving, because we have eight years left until 2030,” Niebler said. “There’s not a lot of time left for individual investment firms to go after these companies and ask them to change.”

Nash of Ceres said the investor group hopes to help food companies find ways to mitigate their deforestation risk that fit their supply chain, similar to how an investor would approach any material risk within their portfolio.

“The food and agricultural companies have been recognizing potential risks of declines in water or pollinators for quite some time,” Nash said. “I think what we can help do is meet the company where they are.”

As companies have embraced weightier sustainability goals, some food and beverage brands have zeroed in on deforestation risks as integral to their platforms.