Despite clear progress, $18 trillion investor engagement warns more must be done by major food firms on sustainable protein transition to combat climate risks in the food system.
- Canadian dairy giant Saputo, Amazon (Whole Foods), Costco and Kraft Heinz are among the poorest performers on the FAIRR list.
- 72% of examined firms have yet to adopt formal protein diversification targets.
- As more companies are acting to enhance their dairy sourcing, Loblaw is the only company among the 25 food retailers and manufacturers analyzed in FAIRR’s most recent report with high exposure to dairy and without a specific sustainable sourcing commitment, policy or program.
- Investor interest in animal protein alternatives soars as support for FAIRR’s sustainable proteins engagement with leading food companies grows by 1,300% since it launched in 2016.
TORONTO–(BUSINESS WIRE)–A five-year investor engagement, with 25 leading global food retailers and manufacturers on protein transition, reports that the number of firms adopting formal targets to grow their alternative protein offerings is on the rise – growing from 0% in 2018 to 28% in 2021.
In its “Appetite for Disruption: A Final Serving” report, FAIRR Initiative identified the majority (72%) of food companies have yet to adopt formal protein diversification targets as part of their decarbonization efforts. Despite the booming consumer demand for meat and dairy alternatives, recent warnings from the Intergovernmental Panel on Climate Change (IPCC) have accelerated the need to achieve goals set out by the Paris Agreement. Atmospheric methane gas hitting an 800,000-year high and sustained reductions in methane emissions (32% of which currently come from livestock) are massive contributors to this push.
“Canada is an attractive destination for the international sustainable investment community. The country’s positive landscape for plant-based meat alternatives, ongoing efforts to reduce agricultural emissions and the impact of the Protein Industries Supercluster on economic growth in the prairies are promising indicators for growth. Merit Functional Food’s newly constructed 94,000-square foot production plant in Winnipeg is a great example of companies making substantial investments into major Canadian plant-based protein projects as it became the first commercial facility to produce food-grade canola protein,” said Jo Raven, Senior Manager, Research & Engagements.
Canada is well positioned to play a strategic role in the global plant protein market, which will be worth more than $182 billion CDN by 2035 and require more than 41 million tons of high-protein crops like peas, canola, lentils and soy to meet demand. Preliminary economic modelling data by Protein Industry Canada, an industry-led, not-for-profit, value-chain consortium created to position Canada as a global source of high-quality plant protein and plant-based co-products, shows that the projects invested in will result in the creation of more than 5,000 jobs and contribute more than $4.5 billion to Canada’s GDP.
“With growing investment in plant-based foods and a ‘protein supercluster’ in the Prairies, Canada is positioning itself as a first-mover in the protein innovation race,” said Dustyn Lanz, CEO of Canada’s Responsible Investment Association. He added, “FAIRR’s report provides a helpful assessment of how food companies are tapping into the sustainable protein trend to drive economic growth, while also delivering returns for the climate and public health. The report shines a light on tremendous opportunities for Canadian companies and investors in the growing market for sustainable protein.”
“Although Saputo and Loblaw are currently slower on the uptake of protein transition than other manufacturers like Unilever and Tesco, it’s encouraging to see these Canadian companies taking steps to seize this opportunity. For instance, Saputo Inc. purchased the UK-based plant-based cheese maker Bute Island Foods this year, which will boost its presence in the dairy alternative segment. However, both firms are currently slower on the uptake of protein transition than other manufacturers like Unilever and Nestle,” added Jo Raven.
“Canada’s recent NDC pledge to reduce greenhouse gas emissions (GHG) by 40-45% by 2030, below 2005 levels, is promising. If successful, Canadian food firms must increase the rate of adoption of sustainable proteins, and further investment will be required to ensure Canada remains at the forefront of healthy and sustainable food within the low-carbon economy.”
Key findings from FAIRR Initiative’s report include:
- Consumer demand for alternative protein products in North America is soaring: plant-based milk is already purchased by 39% of US households and plant-based food sales rose nearly twice as much as overall U.S. retail food sales last year.
- 28% (7/25) of global food retailers and manufacturers now have targets to expand their alternative protein portfolio, up from zero in 2018.
- Five global firms (Unilever, Tesco, Nestle, Sainsbury’s and Conagra) are praised for being “pioneers” on sustainable protein research and innovation.
- 48% of companies now track and publicly disclose their emissions from animal agriculture (Scope 3), up from just 21% in 2019.
- UK retailers Tesco and Sainsbury’s show global leadership on protein diversification and innovation in contrast to their US and European peers. Tesco has committed to a 300% increase in sales of meat alternatives by 2025. Sainsbury’s plans to grow the volume of sales of plant-based protein and dairy – following a staggering 40% increase in plant-based diets in the UK in 2020.
According to investors, companies that are still behind the curve are failing to protect themselves from costly climate risks associated with meat and dairy production, reputational damage and looming regulation on protein transition. North American companies underperform dramatically in comparison to their European peers. Unilever, Conagra, Nestle and UK retailers Tesco and Sainsbury’s amongst best-performing firms. Saputo, Amazon (Whole Foods), Costco and Kraft Heinz are ranked among the poorest performers in FAIRR’s list.
2021: The year of cultivated meat
FAIRR’s research also indicates that 2021 is “the year of cultivated meat.” Cultivated meat is an animal protein produced by culturing animal cells in a lab and then using a bioreactor to replicate the cell tissue structure of the meat. This means these products offer a genuine animal protein source that doesn’t require the slaughter of animals or use of antibiotics in livestock, emits fewer greenhouse gas emissions and uses less water and land.
Investment in cultivated meat technology also grew sixfold to reach $366 million in 2020, a total already exceeded in 2021, which so far has seen investment of $506 million into cultivated meat firms. Until now, the conversation on protein transformation has focused on plant-based protein options, yet the rise of cultivated meat looks set to disrupt the market in the years to come.
FAIRR’s report also highlights how European policymakers are increasingly recognizing reduced meat consumption and protein diversification as effective climate mitigation and health tools. The full “Appetite for Disruption: A Final Serving” report and interactive Sustainable Proteins Hub are available at https://www.fairr.org/ for members.
The FAIRR Initiative is a collaborative investor network, founded by Jeremy Coller, with a membership of $40 trillion assets under management. FAIRR works with institutional investors to define the material ESG issues linked to intensive livestock and fish farming systems and provide them with the tools necessary to integrate this information into their asset stewardship and investment decisions. This includes the Coller FAIRR Index, the world’s first comprehensive assessment of the largest global animal protein companies on environmental, social and governance issues. Visit www.fairr.org and follow @FAIRRInitiative.
Martine Nadeau / firstname.lastname@example.org / T: 514-238-0568