Will COVID-19 Make Big Meat Look Like a Bad Investment?
FAIRR wants investors to consider environmental and social risks associated with industrial animal agriculture—and it’s using the pandemic to bolster its case.
By Lisa Held, Civil Eats
July 29, 2020
Jeremy Coller would like to be remembered as a man who saved “a few cows from a factory farm.” But unlike animal rights activists who break into barns to document abusive practices or environmentalists who lobby for legislation to curb pollution associated with animal agriculture, the British financier’s approach is all about capital.
“By making factory farming about materiality and not morality, I changed the conversation and brought the risk of it becoming a stranded asset to Wall Street,” he wrote in an essay explaining the inspiration behind Farm Animal Investment Risk and Return (FAIRR), the flagship initiative of his foundation.
Now, that conversation is getting louder.
Since 2015, FAIRR has been developing resources for investors and engaging with the world’s biggest food companies to highlight and reduce what it sees as risks to investing in industrial animal agriculture. It was one of several groups that helped push McDonald’s towards sourcing chicken produced without the use of medically important antibiotics.
The COVID-19 pandemic has brought the risks associated with large-scale animal ag—such as the ways deforestation and the concentration of animals contribute to the spread of zoonotic diseases and the ways factory conditions harm workers—into the national spotlight.
“It’s been a convergence of almost every single risk we’ve been talking about for the past four years,” said Maria Lettini, FAIRR’s executive director. “COVID-19 brought it to the fore.”
In June, the London-based FAIRR released a report that ranked the biggest global meat companies on “pandemic risk,” looking at both their vulnerability to another pandemic and their likelihood of contributing to one. It found that more than 70 percent were “high risk.” Just weeks before, the head of commodities research at Goldman Sachs told reporters that the only commodity market “looking as precarious as oil” was livestock.
However, despite increased attention to risks, most meat companies are already rebounding from COVID-related disruptions, and the pandemic has also exposed the limitations of FAIRR’s approach, which raises questions about whether it will provide real momentum to shift investors’ dollars in a way that alters the future of the food system.
Leveraging Environmental and Social Considerations
The conventional view in investment, explains Dan Miller, founder of Steward, an investment platform for small and mid-size sustainable farms, is that there is always a trade-off between returns and responsibility, but returns have often been seen as the only real metric that matters. Over the past decade, that has started to change, especially in the face of the climate crisis, and companies have developed a range of approaches to investing in food and agriculture with global impact in mind.
Companies like Steward and RSF Social Finance, a financing platform for social entrepreneurs, are at the far end of that spectrum, attempting to funnel capital to businesses such as small organic farms and local food hubs that don’t generate returns high enough to attract traditional investors. Their work is often referred to as impact investing. More traditional investment firms, meanwhile, have been incorporating environmental, social, and governance (ESG) considerations. “It’s now a normal, common part of the conversation when you’re speaking to investors,” Lettini said.
FAIRR’s strategy is to leverage those ESG considerations. And it makes the case that some standard practices among meat companies, such as widespread antibiotic use and deforestation, do not just present risks to public health or the environment, but also threaten the stability of and return on the investment itself.
Coller is a prominent figure in private equity, especially in Europe, and Lettini said his vision for FAIRR was prompted by an interest in evaluating ESG risks at his own firm. As a longtime advocate for animal welfare and safer food systems, he saw a gap where risks were not being identified.
Coller eventually realized that “If [you] want to fast-track these issues, it’s the investor community that’s going to have to engage on them,” Lettini said. “Because if you’re denying capital to companies, that’s a very quick way to see change or at least to have them engage with you.”
Lena Brook, director of food campaigns at the Natural Resources Defense Council (NRDC), who works to reduce antibiotics in meat, said that she sees FAIRR’s approach as a complement to consumer-facing advocacy.
“The consumer groups speak directly to the public . . . whereas the investor advocacy groups are speaking directly to shareholders,” she said. “What really struck me about FAIRR when they emerged was that they were able to get this significant mass of investors to say to the world, ‘We’re speaking in one voice, and we control a lot of money.’”
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