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New investor research warns Paris Agreement likely to subject meat to similar taxes as sugar
Negative environmental and health impacts of high meat consumption put meat on the same pathway to taxation as goods such as sugar, carbon and tobacco.
Implementing the Paris Agreement likely to lead to a climate-related levy on food as shift to plant-based protein consumption is necessary to stay within the 2__°__C limit
Food companies encouraged to use an internal ‘shadow price’ of meat to account for future costs.
Report highlights research showing that if animal proteins were cut completely from global diets more than $1 trillion could be saved in health and environmental costs by 2050.
(London, 12 Dec 2017). It is becoming “increasingly probable” that the implementation of the Paris Agreement will lead some governments to tax meat in the same way many now tax sugar, carbon and tobacco. That is the stark warning of a private report to investors produced by investor network FAIRR – an initiative supported by investors managing over $4 trillion of assets.
The policy White Paper, entitled The Livestock Levy, warns that the growing evidence of the meat industry’s harmful impacts on both human health and the environment make the imposition of a ‘behavioural (or sin) tax’ on meat products increasingly likely if countries are to fulfil their commitments to the Paris Agreement. Countries including Denmark and Sweden have already debated a meat tax.
The report examines the increasing use of ‘behavioural taxes’ by governments on products such as sugar, carbon and tobacco. It finds that meat is on the same path that led these goods to become the target of stand-alone taxes. The pathway is driven by a global consensus around meat’s negative contributions to climate change and global health epidemics such as obesity, cancer and antibiotic resistance. For example, research by the Food and Agriculture Organization (FAO) has found that the livestock industry is responsible for 14.5% of global greenhouse gas emissions, and the World Health Organization (WHO) has ranked processed meats as a cause of cancer.
Jeremy Coller, CIO of Coller Capital and Founder of the FAIRR Initiative said,
“Behavioural taxes are increasingly common. That’s why we’ve seen 16 countries adopt a sugar tax in recent years. The damage the meat industry causes to our health and environment make it very exposed to similar levies, and it is increasingly probable we’ll see meat taxes become a reality. Countries such as Sweden and Denmark have already looked at meat tax proposals. The continued subsidisation of meat is the antithesis of what’s needed as policymakers and countries gear up to deliver on Paris. Far-sighted investors should plan ahead for this day.”
Coller adds, “If policymakers are to cover the true cost of livestock epidemics like avian flu and human epidemics like obesity, diabetes and cancer, while also tackling the twin challenges of climate change and antibiotic resistance, then a shift from subsidisation to taxation of the meat industry looks inevitable.”
One of the key implications of the report is the call for companies to consider adopting an internal ‘shadow price’ of meat to account for future costs, in the same way many use internal carbon pricing. The scope of the report does not cover what the likely cost of a meat tax might be, but does point to proposals in Denmark that suggested a figure of approximately $2.7 per kilogram of meat.
Although FAIRR will not make its White Paper publicly available till next year it has released the infographic below providing a snapshot of the research that suggests meat products are following the same pathway that led tobacco, carbon and sugar to be subjected to behaviour taxes. Over 180 jurisdictions currently tax tobacco, over 60 tax carbon and at least 25 tax sugar.
The report highlights research from the University of Oxford estimating that if animal proteins were cut completely from global diets around $1.6 trillion would be saved in health and environmental costs by 2050. In particular, the research found that such a shift towards nutritionally balanced plant-based diets by 2050 would avoid $600 billion in climate damages and $1 trillion in healthcare expenses associated with treating diet-related chronic diseases.
Dr Marco Springmann, Senior Researcher on Environmental Sustainability and Public Health at the Oxford Martin Programme on the Future of Food at the University of Oxford, said:
“Current levels of meat consumption are not healthy or sustainable. They lead to high emissions of greenhouse gases that threaten to jeopardise existing climate commitments, as well as to large numbers of avoidable deaths from chronic diseases, such as colorectal cancer and type-2 diabetes. The costs associated with each of those impacts could approach the trillions in the future. Taxing meat for environmental or health purposes could be a first and important step in addressing these twin challenges, and it would send a strong signal that dietary change towards more healthy and sustainable plant-based diets is urgently needed to preserve both our health and the environment.”
Notes to editor
For more information or for exclusive interviews with Maria Lettini, Director of FAIRR, please contact:
Elliot Frankal, ESG Communications,<br />t: + 44 (0)7989 524780 | e: [email protected]
Full copies of the report ‘The Livestock Levy’ are available to the media on request
The FAIRR (Farm Animal Investment Risk & Return) investor network is a Coller Initiative. It is a collaborative forum for investors that aims to raise awareness of the material impacts factory farming and poor animal welfare can have on investment portfolios, and works to help investors share knowledge and form collaborative engagements on these issues. www.fairr.org