Definitions and assumptions
The model projects outcomes for three pathways that a company can take in 2050:
- Baseline (market pathway) The company invests in minimal climate mitigation efforts and makes limited shifts in protein mix.
- Climate progressive pathway The company invests in higher-impact climate mitigation efforts and strategically shifts its protein mix compared to the baseline.
- Climate regressive pathway The company does not invest in climate mitigation efforts and sticks to its 2020 protein mix.
How to interpret results
- Tyson Foods's relatively high EBITDA margin enables it to better absorb any increase in production costs linked to climate risk.
- Tyson Foods's exposure to alternative protein benefits from a growth in the market and avoids the negative impacts of climate change on its animal protein business. Tyson Foods has invested in a plant protein brand and has a dedicated executive-level position responsible for alternative proteins.
- Tyson Foods's animal protein portfolio is hit by an anticipated carbon tax, lowering baseline profitability. Tyson Foods's majority beef exposure incurs the effect of increasing cattle mortality due to heat stress. The company's poultry production is exposed to increased energy costs (including a potential carbon tax on electricity). With feed and veterinary care representing a higher share of the costs in pig and poultry farming than beef, Tyson Foods is vulnerable to increased costs in both its operations.
- In the progressive pathway, Tyson benefits from shifting its protein portfolio away from beef, but its remaining exposure restricts its ability to significantly offset the effects of climate change.
Disclaimer
The model is designed as a first step to enhance forward-looking analysis of the meat sector.
It aims to give an indication of the trend in a company's financial performance and does not proclaim to predict accurate and precise performance forecasts since forward-looking scenarios are inherently highly uncertain.
Scenario analysis is, by definition, not a sensitivity analysis or a forecast. It is based on a consistent cluster of assumptions that describe a certain world (in this case, an increase in global temperature by 2°C compared to pre-industrial levels). As such, the assumptions made are not attached to any likelihood or probability and are based on a high level of uncertainty.
This analysis should be considered as a conceptual tool to inform discussions and engagement with protein-producing companies about their strategical positioning and adaptation to the consequences of climate change.
The contents of the model and online tool have been created and tested with the greatest possible care. However, FAIRR does not guarantee the accuracy, completeness and timeliness of the content provided. FAIRR is not liable for lost profits, missed savings, damages from third party claims and other direct damages. The pure use of this tool does not constitute a contractual relationship between the user and FAIRR. The model and report do not constitute the provision of advice on legal, economic, investment or other professional issues and services.
Definitions and assumptions
The model projects outcomes for three pathways that a company can take in 2050:
- Baseline (market pathway) The company invests in minimal climate mitigation efforts and makes limited shifts in protein mix.
- Climate progressive pathway The company invests in higher-impact climate mitigation efforts and strategically shifts its protein mix compared to the baseline.
- Climate regressive pathway The company does not invest in climate mitigation efforts and sticks to its 2020 protein mix.
How to interpret results
- Minerva's relatively low EBITDA margin reduces its capacity to absorb any increase in production costs linked to climate risk.
- Minerva does not currently have alternative protein exposure, nor is it planning to enter this space. The company is unable to offset the negative impacts of climate change from its animal protein business.
- Minerva's animal protein portfolio is hit by an anticipated carbon tax, lowering baseline profitability. The company's full exposure to beef incurs the effect of increasing cattle mortality due to heat stress. Costs in relation to energy, feed and veterinary care will remain relatively stable in beef production and therefore, Minerva is less exposed.
- In the progressive pathway, Minerva might shift its protein portfolio away from beef. Without this being done with scale, however, its ability to offset the effects of climate change and its associated risks is low and upside is, therefore, limited.
Disclaimer
The model is designed as a first step to enhance forward-looking analysis of the meat sector.
It aims to give an indication of the trend in a company's financial performance and does not proclaim to predict accurate and precise performance forecasts since forward-looking scenarios are inherently highly uncertain.
Scenario analysis is, by definition, not a sensitivity analysis or a forecast. It is based on a consistent cluster of assumptions that describe a certain world (in this case, an increase in global temperature by 2°C compared to pre-industrial levels). As such, the assumptions made are not attached to any likelihood or probability and are based on a high level of uncertainty.
This analysis should be considered as a conceptual tool to inform discussions and engagement with protein-producing companies about their strategical positioning and adaptation to the consequences of climate change.
The contents of the model and online tool have been created and tested with the greatest possible care. However, FAIRR does not guarantee the accuracy, completeness and timeliness of the content provided. FAIRR is not liable for lost profits, missed savings, damages from third party claims and other direct damages. The pure use of this tool does not constitute a contractual relationship between the user and FAIRR. The model and report do not constitute the provision of advice on legal, economic, investment or other professional issues and services.
Definitions and assumptions
The model projects outcomes for three pathways that a company can take in 2050:
- Baseline (market pathway) The company invests in minimal climate mitigation efforts and makes limited shifts in protein mix.
- Climate progressive pathway The company invests in higher-impact climate mitigation efforts and strategically shifts its protein mix compared to the baseline.
- Climate regressive pathway The company does not invest in climate mitigation efforts and sticks to its 2020 protein mix.
How to interpret results
- Maple Leaf's relatively high EBITDA margin enables it to better absorb any increase in production costs linked to climate risk.
- Maple Leaf's exposure to alternative protein, currently representing 4% of sales, benefits from the growth in this market and avoids the negative impacts of climate change on its animal protein business.
- Maple Leaf's animal protein portfolio is hit by an anticipated carbon tax, lowering baseline profitability. Its focus on poultry leaves the company exposed to increased energy costs (including a potential carbon tax on electricity). With feed and veterinary care representing a higher share of the costs in pig and poultry farming than beef, Maple Leaf is vulnerable to increased costs in both its operations. As Maple Leaf has no beef exposure, it avoids the effect of increasing cattle mortality due to heat stress.
- In the progressive pathway, Maple Leaf's lack of exposure to beef allows it maximum opportunity to offset the effects of climate change on its meat operations, generating upside.
Disclaimer
The model is designed as a first step to enhance forward-looking analysis of the meat sector.
It aims to give an indication of the trend in a company's financial performance and does not proclaim to predict accurate and precise performance forecasts since forward-looking scenarios are inherently highly uncertain.
Scenario analysis is, by definition, not a sensitivity analysis or a forecast. It is based on a consistent cluster of assumptions that describe a certain world (in this case, an increase in global temperature by 2°C compared to pre-industrial levels). As such, the assumptions made are not attached to any likelihood or probability and are based on a high level of uncertainty.
This analysis should be considered as a conceptual tool to inform discussions and engagement with protein-producing companies about their strategical positioning and adaptation to the consequences of climate change.
The contents of the model and online tool have been created and tested with the greatest possible care. However, FAIRR does not guarantee the accuracy, completeness and timeliness of the content provided. FAIRR is not liable for lost profits, missed savings, damages from third party claims and other direct damages. The pure use of this tool does not constitute a contractual relationship between the user and FAIRR. The model and report do not constitute the provision of advice on legal, economic, investment or other professional issues and services.
Definitions and assumptions
The model projects outcomes for three pathways that a company can take in 2050:
- Baseline (market pathway) The company invests in minimal climate mitigation efforts and makes limited shifts in protein mix.
- Climate progressive pathway The company invests in higher-impact climate mitigation efforts and strategically shifts its protein mix compared to the baseline.
- Climate regressive pathway The company does not invest in climate mitigation efforts and sticks to its 2020 protein mix.
How to interpret results
- JBS's mid-ranking EBITDA margin reduces its capacity to absorb any increase in production costs linked to climate risk.
- JBS does not currently have alternative protein exposure, but it has announced plans to introduce a dedicated plant-based protein line by April 2020. Until these are implemented, the company's ability to offset the negative impacts of climate change from its animal protein business remains limited.
- JBS's animal protein portfolio is hit by an anticipated carbon tax, lowering baseline profitability. The company's majority exposure to beef incurs the effect of increasing cattle mortality due to heat stress. JBS's poultry operations leave the company exposed to higher energy costs (including a potential carbon tax on electricity). With feed and veterinary care representing a higher share of the costs in pig and poultry farming than beef, JBS is vulnerable to increased costs in both its operations.
- In the progressive pathway, JBS can shift its protein portfolio away from beef and pork. Continued exposure to beef limits its ability to significantly offset the effects of climate risk.
Disclaimer
The model is designed as a first step to enhance forward-looking analysis of the meat sector.
It aims to give an indication of the trend in a company's financial performance and does not proclaim to predict accurate and precise performance forecasts since forward-looking scenarios are inherently highly uncertain.
Scenario analysis is, by definition, not a sensitivity analysis or a forecast. It is based on a consistent cluster of assumptions that describe a certain world (in this case, an increase in global temperature by 2°C compared to pre-industrial levels). As such, the assumptions made are not attached to any likelihood or probability and are based on a high level of uncertainty.
This analysis should be considered as a conceptual tool to inform discussions and engagement with protein-producing companies about their strategical positioning and adaptation to the consequences of climate change.
The contents of the model and online tool have been created and tested with the greatest possible care. However, FAIRR does not guarantee the accuracy, completeness and timeliness of the content provided. FAIRR is not liable for lost profits, missed savings, damages from third party claims and other direct damages. The pure use of this tool does not constitute a contractual relationship between the user and FAIRR. The model and report do not constitute the provision of advice on legal, economic, investment or other professional issues and services.
Definitions and assumptions
The model projects outcomes for three pathways that a company can take in 2050:
- Baseline (market pathway) The company invests in minimal climate mitigation efforts and makes limited shifts in protein mix.
- Climate progressive pathway The company invests in higher-impact climate mitigation efforts and strategically shifts its protein mix compared to the baseline.
- Climate regressive pathway The company does not invest in climate mitigation efforts and sticks to its 2020 protein mix.
How to interpret results
- BRF's mid-ranking EBITDA margin reduces its capacity to absorb any increase in production costs linked to climate risk.
- BRF does not currently have alternative protein exposure, though it does have plans to launch a plant-based product line. As of now, the company's ability to offset the negative impacts of climate change from its animal protein business remains limited.
- BRF's focus on poultry is exposed to increased energy costs (including a potential carbon tax on electricity). With feed and veterinary care representing a higher share of the costs in pig and poultry farming than beef, BRF is vulnerable to increased costs in both its operations. As BRF has no beef exposure, it avoids the effect of increasing cattle mortality due to heat stress.
- In the progressive pathway, BRF is unable to shift its protein portfolio away from beef, as it does not comprise any part of the company's portfolio. The company does, however, have maximum opportunity to offset the effects of climate change and its associated risks from its pig and poultry operations, generating upside.