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Coller FAIRR Climate Risk Tool

Using seven direct risk factors, the Coller FAIRR Climate Risk Tool analyses the upside/downside capture of 40 of the world’s largest animal protein companies in a 2°C warming scenario. Profitability is calculated based on the climate impacts that the company faces and its ability to mitigate those risks (i.e., by taking a progressive or regressive pathway). 

This first-of-its-kind tool enables investors to conduct in-depth scenario analysis, which is something that the oil, gas and utility sectors have long used to help manage the risks posed by a changing climate. Despite having serious ramifications for the profitability of the meat sector, research by the FAIRR Initiative shows that only 2 (5%) of the 43 leading meat companies have undertaken climate scenario analysis (compared to 23% of companies in the oil, gas and utility sectors).

In the last 20 years alone, the effects of climate change have reduced the average annual profitability of Australian farms by 22%. A potential carbon tax on meat, higher feed costs due to volatile crop yields and an increase in livestock mortality due to heat stress all present costly and complex challenges for meat producers and hence, forward-looking analysis becomes paramount.

Explore the Climate Risk Tool  Download the Summary Report  

Assessing Climate Risk

The Coller FAIRR Climate Risk Tool identifies seven direct risks that impact the profitability of the meat sector. These are: (i) the growth of meat substitutions; (ii) a CO2 price on meat; (iii) increased veterinary costs; (iv) a CO2 price on electricity; (v) increased feed costs; (vi) increased electricity costs; and (vii) increased mortality rates in livestock. These risk factors drive the resultant upside/downside capture caused by the company’s response to climate impacts.

Users can also enter their own company data and select an assessment scenario according to two relevant risk parameters: the extent to which carbon pricing will affect the meat sector and the extent to which the alternative protein market will towards 2050.

If you would like to learn more about this tool or book a meeting, please contact us!

Introducing...

The Coller FAIRR Climate Risk Model 2.0 was launched in July as a first step to enhance forward-looking analysis of the meat sector. As a particularly carbon-exposed sector, the protein industry is a top candidate for substantial devaluation and investors failing to account for these risks will misallocate capital and investment.

As part of London Climate Action Week, we also held a digital event to introduce the Coller FAIRR Climate Risk Tool 2.0. As well as demonstrating its new functionalities, we discussed how investors can price climate risks into their portfolio analysis. Watch the video here!

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The FAIRR Initiative publishes a wide range of research to help investors understand and manage risks and opportunities in protein supply chains.

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