Investors urge food companies to shift to plant-based proteins

A coalition of investors has urged global food companies to shift away from animal proteins amid a worldwide spike in demand for alternative plant-based products.

In a report published by the FAIRR (Farm Animal Investment, Risk & Return) initiative, the coalition – which represents $2.4trn in combined assets – says it expects the alternative protein market to expand by more than 8% a year to reach $5.2bn by 2020.

The report describes conventional livestock production systems as “increasingly ripe for disruption”, and argues that protein diversification will be key to managing the risks of climate-affected supply chains.

It states that deforestation, unregulated antibiotic use, poor animal welfare, and low scrutiny of air and water pollution on surrounding communities have allowed old systems to thrive.

“These externalities and impacts are incompatible with the [UN’s] Sustainable Development Goals – thus it is increasingly likely governments could use taxation to combat meat’s negative contributions to climate change,” it says.

“Livestock production presents reputational and market risks for companies that are over-reliant on animal proteins to drive revenue growth.”

The coalition has grown from representing $1.25trn in assets when it was launched in 2016 to $2.4trn today – an almost doubling in support for a shift to plant-based proteins.

FAIRR argues that the burgeoning alternative protein market offers a more sustainable food production model, and that a growing trend of millennials adopting meat-free diets signals a significant change in purchasing habits.

Key drivers that will shift global food systems from a dependence on animal proteins, according to the report, are: increasing awareness of environmental, social and governance impacts, regulation, accelerated innovation in food technology, and growing market opportunity.

The best-prepared companies for capitalising on this shift are Tesco and Nestlé, says the coalition.

Nestlé’s assistant vice-president for stakeholder engagement in sustainability, Duncan Pollard, said: “The development of the protein supply chain is an issue with the potential to radically reshape the supermarket shelf of the future.”Image credit: iStock