Intensive animal agriculture is a major contributor to greenhouse gas (GHG) emissions and is also vulnerable to climate change. This article outlines how the sector creates GHG emissions, how climate change is impacting intensive animal agriculture, and how protein producers and investors are responding to these risks.
How does animal agriculture contribute to greenhouse gases?
The forest, land and agriculture (FLAG) sector is responsible for roughly 25% of net GHG emissions. Overall, animal agriculture is responsible for up to 19.6% of global GHG emissions. If the sector continues to intensify in future to compensate for reduced production - caused in part by climate change - alongside rising demand for animal products, GHG emissions could increase further.
Livestock are responsible for 44% of methane emissions and 53% of nitrous oxide emissions globally. Although short-lived in the atmosphere, methane and nitrous oxide emissions have 27 and 273 times, respectively, the global warming potential of CO2 emissions over a hundred years.
Emissions arising from animal agriculture vary widely depending on the species farmed. Beef production emits over 300kg CO2-equivalent per kilo of protein produced and is the most emissions-intensive meat product. In comparison, the average emissions intensity of chicken production is below 50kg CO2-equivalent per kilo of protein produced.
The largest proportion of farm-related GHG emissions from terrestrial animal protein production comes from feed production (45%) and enteric fermentation - the digestion process of animals such as cattle and sheep (39%). Meat production, particularly of beef and lamb, has disproportionately high emissions intensity compared to other foodstuffs.
While most emissions occur at the feed farming stage for poultry and pork production, cattle-related emissions largely occur during the animal farming stage. The average cow releases between 70kg and 120kg of methane per year. In addition, ammonia and particulate matter emitted from farms can cause respiratory health problems in farm workers and local communities.
Why does climate change pose risks to animal agriculture?
Several regulatory initiatives, laws and policies specifically target emissions from the livestock sector, particularly methane
The FAO’s Achieving SDG2 without breaching the 1.5°C threshold roadmap was published in 2023, outlining 10 measurable and time-bound targets covering issues related to crops, soil, and forests.
The Global Methane Pledge, announced in 2021 at COP26, and led by the US and the EU, targets a 30% reduction in methane by 2030 compared to 2020 levels.
The Republic of Ireland’s Food Vision 2030 strategy includes a reduction target of 10% for biogenic methane by 2030 from a 2018 baseline.
The UK’s National Food Strategy Report, released in July 2021, does not explicitly mention a carbon tax but recommends a 30% reduction in meat consumption to meet health, climate, and nature commitments.
The Taskforce on Nature-related Financial Disclosures framework, which builds on the Task Force for Climate-Related Financial Disclosure, aims to help organisations report on risks from biodiversity loss and ecosystem degradation.
In Denmark, farmers will have to pay DKK 120 Danish krone (US$18.9) per ton of emitted CO2 equivalent, starting in 2030, rising to DKK 300 krone (US$47.2) from 2035 onwards.
Climate-related regulation has also increased in recent years. Since 2019, the number of governments that have set net-zero targets has risen from just two to 107 as of June 2024, with some – including New Zealand and the Republic of Ireland – outlining a focus on decarbonising animal agriculture.
The Science-Based Targets initiative (SBTi) standards used by companies have also evolved. In 2021, the SBTi released its net-zero target-setting guidance, and an updated version will be released following industry consultations taking place in 2025. In 2022, it released its guidance for the FLAG sector. These targets require alignment with a 1.5°C warming trajectory – unlike in 2019, when targets in line with a 2°C warming trajectory were approved – and include emissions associated with land-use changes.
Why are GHG emissions a material financial risk for investors?
Measuring farm emissions requires various data inputs, making it difficult for farmers and protein producers to determine how to make and quantify reductions. As countries look to implement their Paris Agreement commitments to keep global temperature rises below 2°C, industries and companies that do not meet decarbonisation targets will be increasingly exposed to transition risks with significant regulatory, operational and financial impacts.
Most institutional investors have some exposure to the animal agriculture industry and need to understand the GHG emissions associated with their portfolios.
For investors to accurately assess and manage this exposure, it is important that companies disclose their emissions inventories, including Scope 3 (indirect) emissions that occur in supply chains, for example from animal and feed farming. Historical emissions data can also support investors to understand whether emissions have reduced in number and intensity.
Companies in the Coller FAIRR Protein Producer Index are assessed on these disclosures, and on whether they conduct and disclose the results of their climate-related scenario analysis, and set short-, medium- and long-term reduction targets for Scope 1 and 2, and Scope 3 emissions; ideally validated by the SBTi and in line with a 1.5°C warming trajectory.
Summary
Intensive animal agriculture has a substantial impact on global GHG emissions, across farming and feed production. As a sector, it is also vulnerable to the effects of climate change, which has the potential to reduce yields and increase feed costs. With GHG emissions regulation evolving, protein producers that do not act to measure and mitigate their emissions are exposed to physical and transition risks, with significant operational, financial and regulatory impacts.
Reference
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