Investing: Investing in sustainable livestock to combat climate change


Tan Zhai Yun, The Edge Malaysia Weekly

October 08, 2019


The livestock sector is a huge contributor to climate change. Yet, it is one of the most vulnerable to the impact of global warming. Still, few companies in this sector have made sufficient commitments to mitigate this impact, according to a new report by FAIRR, a US$16 trillion-backed global investor network.


The organisation recently released its Coller FAIRR Protein Producer Index, which analyses 60 of the world’s largest meat, fish and dairy producers on environmental and social issues. It found that 77% of these major producers do not measure greenhouse gas (GHG) emissions and do not have meaningful targets to reduce them.


Thirty-nine out of the 60 companies, or 65%, are considered “high risk” in their overall performance, including Bursa Malaysia-listed QL Resources Bhd. None of the 50 meat and dairy companies have a comprehensive policy to address or mitigate deforestation in the regions where they source soy and cattle.


This lack of scrutiny on the sector can present risks for investors as climate change is already having a material impact on some of the companies’ bottom lines. The risks will only increase, as highlighted by the Intergovernmental Panel on Climate Change (IPCC) last month.


“As last month’s landmark report by the IPCC demonstrated, the world’s meat, fish and dairy industries are under serious threat from the impact of climate change. The weight of evidence highlighted by the Coller FAIRR Index has left investors concerned that the sector is failing to act,” says Jeremy Coller, founder of FAIRR and chief investment officer at Coller Capital, a UK-based investor in the private equity secondary market, in a press release.


According to some calculations, the livestock industry releases more GHG emissions than the transport sector when land use change and other factors are considered. The livestock sector is also one of the largest drivers of habitat loss when forests are cleared for livestock pasture or feed crops.


“In stark contrast to the transport sector, only one in four meat, fish and dairy producers even measure their GHG emissions, let alone act to reduce them. The Paris Agreement is impossible to achieve without tackling factory farm emissions. Coal is a stranded asset and cows are the new coal,” says Coller.


A stranded asset is one that has become obsolete or non-performing but must be recorded on the balance sheet as a loss of profit.


Why should investors care? ...


The company is part of the investment network ...


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Investing in alternative proteins ...