Coller FAIRR Climate Risk Tool

The material risks created by a changing climate are severe, and the global animal protein industry is increasingly vulnerable.

Studies show that climate change has reduced Australian farms’ average annual profitability by 22% over the last 20 years, and supply chain risks are harming the profitability of Brazilian beef.

A future of potential carbon pricing on meat, higher feed costs due to volatile crop yields, and higher livestock mortality due to heat stress and weather events all present costly and complex challenges for meat producers in the next thirty years.

To help manage the risks posed by a changing climate to business, sectors such as oil and gas, mining and utilities have undertaken climate scenario analysis. However, FAIRR’s research shows that only 2 of 43 (5%) leading meat companies have undertaken a climate scenario analysis (compared to 23% of oil and gas, mining and utility companies).

That’s why FAIRR has developed a first-of-its-kind tool to enable investors to conduct in-depth climate scenario analysis: the Coller FAIRR Climate Risk Tool.

Download the Summary Report  Explore the Coller FAIRR Climate Risk Tool

Coller FAIRR Climate Risk 2.0

The Coller FAIRR Climate Risk Tool takes a scenario of 2°C of warming by 2050 and analyses impacts on profitability depending on whether a company takes a regressive, market neutral or progressive approach to managing climate risk. 

Using these three potential pathways, it analyses the potential upside or downside to the company’s profitability. These pathways can be adjusted according to relevant risk parameters such as increased carbon pricing affecting the meat sector and the rate of growth, innovation and adoption in the alternative protein market.

Launch Webinar

The Coller FAIRR Climate Risk Model is designed as a first step to enhance forward-looking analysis on 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, FAIRR held a digital event to launch the Coller FAIRR Climate Risk Tool 2.0, including a demonstration of its new functionalities and a discussion of how investors can price climate risks into their portfolio analysis. Watch the video here:

How Does the Tool Work?

The Coller FAIRR Climate Risk Tool enables investors to assess the potential downside risks and upside opportunities related to animal protein companies in a 2-degree world. FAIRR members have the option to assess and compare 40 leading animal protein producers, or input their own company data to analyse the impact of climate risk on holdings within their portfolios.

The tool then assesses profitability according to two elements: the climate impacts the company faces and the company’s ability to mitigate those impacts. It generates outcomes depending on whether a company takes a regressive, progressive, or market aligned response to mitigating climate risk impacts.

Assessing Climate Risk

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

In the Coller FAIRR Climate Risk Tool 2.0, users can also select their own assessment scenario according to two relevant risk parameters: the extent of carbon pricing affecting the meat sector and the extent that the alternative protein market grows towards 2050.

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