Meat and dairy investors say climate inaction threatens their finances: study

Dive Brief:

• About 84% of meat and dairy company investors said a lack of action targeting climate change on behalf of companies risks stranded assets and decreased profits because rising temperatures threaten the companies’ primary businesses, according to a recent study from Changing Markets Foundation.
• Only 33% of investors surveyed said that they are taking specific actions to curb these impacts. More than half (55%) said investors are not taking enough action in order to address climate risks. More than eight in 10 said investors should encourage CPGs to report their emissions of methane.
• Meat and dairy CPGs are faced with the responsibility of combating the impacts of climate change, even more so now that federal legislative action on climate policy is likely effectively dead.

Dive Insight:

While investors feel urgency about lowering greenhouse gas emissions, few companies are actually following through with plans to do it. While most meat companies have goals to cut their overall emissions, methods of eliminating methane have been slow to take hold. The Changing Markets Foundation said in a statement climate scientists expect a 7% to 10% decline in livestock by 2050 if temperatures rise 2 degrees Celsius. This would result in economic losses between $9.7 billion and $12.6 billion.

Investor group FAIRR found in its Protein Producer Index last year that only 18% of 60 major meat and dairy companies track their methane emissions. Yet 72% of investors in Changing Markets Foundation’s survey said companies should report their emissions of methane and carbon.

Methane, a gas that is roughly 25 times more potent than carbon dioxide at trapping heat in the atmosphere, according to the EPA, makes up a large portion of emissions for meat processors with cattle products. Digestion-related emissions from cows represent 39% of the total from livestock, according to the Food and Agriculture Organization of the United Nations.

Publicly traded meat giants could potentially be swayed to take more concrete action if threatened by activist investors. Half of JBS’s emissions come from methane, while roughly 22% of Tyson’s do, FAIRR found. Even though both reported these numbers, both JBS and Tyson received mediocre scores from FAIRR on enacting proper waste and pollution strategies. The investor group found Tyson and JBS don’t assess and manage water quality and waste risks in their supply chain well enough.

Dairy companies are also responsible for tackling methane because of their reliance on cattle. While dairy giant Danone has not provided publicly available information about its methane emissions, it recently led a $7 million funding round for methane-reducing feed additive for cows.

Other sustainability groups have been urging companies to take more concrete action on mitigating the impacts of climate change in recent years.

In a 2021 report, nonprofit Ceres found no major meat processors had water reduction goals. The group stressed that these companies must adopt them because meat and dairy consumption accounts for 27% of the world’s total water footprint.

Changing Markets Foundation’s press release, it urged investors to ensure food companies have science-based climate targets and mitigation strategies, especially regarding methane.