IPE, 13 February 2018. By Susanna Rust.
Nearly 60 investors have backed an engagement project to push global food companies to use more non-meat-based proteins.
Since kicking into action in September 2016 the investor group has grown from 40 investors to 57, with combined assets under management doubling, from $1.25trn to $2.4trn (€1.9trn).
Recent new backers include Dutch insurance and pension group Aegon and pan-European asset manager Candriam.
The collaborative engagement is coordinated by FAIRR (Farm Animal Investment Risk & Return), an initiative founded by private equity investor Jeremy Coller. Large European pension funds such as Swedish buffer funds AP2, AP3 and AP4 were involved from the beginning, as was Swedish pensions and insurance provider Folksam .
In a report published today, FAIRR explained that “it is increasingly likely that governments could use some form of taxation to combat meat’s negative contributions to climate change and health epidemics such as obesity and cancer”.
Investors were concerned that overreliance on animal proteins to drive revenue growth was a risk for global food producers, given the prospect of external effects linked to livestock production being priced into stocks.
The engagement initiative is also driven by the view that there are opportunities for investors in the plant-based foods and ‘alternative proteins’ market. The investors participating in FAIRR’s campaign were keen to know that companies were on top of this trend and positioning themselves appropriately.
Nordic financial services group Nordea has been part of the engagement project since 2016, and its head of group sustainable finance Sasja Beslik said sustainable protein was a fast-emerging issue for the food industry.
“It is important for long-term investors to know if the companies they invest in understand the related risks and opportunities,” he added. “For us as investors, this engagement also helps us to be on top of the developments in this space as well as to identify food companies that proactively invest in innovative solutions.”
The campaign’s engagement process involved contacting 16 global food manufacturers and companies by post and email, with follow-up calls held as needed. Secondly, meetings were held with half of the targeted companies. Only one, health foods supermarket chain Whole Foods, did not respond to the investor request.
According to today’s report, of the 16 multinationals that were analysed as part of the engagement programme, Nestlé and Tesco were best positioned to benefit from projected growth in the market for alternative proteins. Both companies gave detailed answers to the investors’ questions and held “candid” discussions with investors, FAIRR said.
Costco was singled out for its inadequate response to investor requests for information or further meetings, and for failing to recognise protein diversification as a material issue.
Asked about the next steps for the engagement, a spokeswoman for FAIRR said: ”We will continue to engage with the existing list of companies to encourage them to build an evidence based, measurable protein diversification strategy, which can be tracked over time.
“Given growing interest from investors on adopting protein diversification as a thematic screen, we will also look to add other high profile global retailers and manufacturers for engagement.”