Climate and deforestation goals ‘undermined’ by animal agriculture

Only 18% of global meat and dairy producers are on track to achieve even partial reductions in their methane emissions, according to a report by the $45trn-backed FAIRR network of investors.

The study also highlighted that meat giants with zero-deforestation pledges – such as McDonalds suppliers JBS and Marfrig – do not have full visibility of third-party suppliers that are responsible for up to 90% of deforestation for cattle farming.

Jeremy Coller, chair and founder of FAIRR, and CIO of Coller Capital said: As the largest driver of both methane from human activity and deforestation, the ambitions set at COP26 handed a big slice of responsibility to the food and agriculture sector.

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“Yet failures from methane to manure management underline the growing sense in the market that cows are the new coal.”

He added that the “post-COP26” era leaves large parts of the meat and dairy supply chain looing “outdated and unattractive”.

The fact that less than 20% of meat and dairy industry leaders only partially measure their emissions should be a “red flag” to markets in light of the COP26 commitment to reduce methane emissions by 30% globally over the next ten years.

Annual methane emissions make up 44% of global methane emissions which would require a forest covering around three quarters of South America to capture, according to the report.

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Data from the Food ad Agriculture Organisation of the United Nations shows that there are 70 billion farm animals worldwide creating double the volume of faeces than that of the entire human population.

All this manure releases methane and further threatens biodiversity and human health, FAIRR highlighted.

Despite this, 88% of global meat and dairy producers have no or limited disclosure and commitments on manure pollution.

FAIRR calculated that the animals processed by industry giant Tyson foods alone produce as much excrement as the whole of the US population.

Meanwhile, 42 out of 45 leading meat and dairy firms – including San Miguel and Minerva – which source soy for animal feed from “high-risk” deforestation areas do not have a policy to mitigate deforestation in all sourcing areas.

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There is also the evolving issue of antibiotic resistance within animal agriculture to contend with.

Companies are said to be improving antibiotics use with 62% of those analysed ranked as high risk, down from 75% in 2020.

There was also a slight decline in the number of animal agriculture firms categorised as high risk on the welfare front – falling to 63% from 68% in 2020.

Other areas of concern in the meat and dairy industry include water use and waste and pollution, where 94% and 100% of firms respectively are categorised as high risk.

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Although headway is being made in some areas, the data revealed there is still a long way to go for the animal agriculture industry to align with goals and expectations.

Eugenie Mathieu, senior analyst at Aviva Investors, which is part of FAIRR, said: “The science is clear that to avoid runaway climate change, high-emitting sectors such as agriculture must transform themselves in the next decade.

“Yet FAIRR’s latest research shows how far the food sector has to go. 86% of the world biggest meat and dairy suppliers are still failing to set meaningful reductions targets for emissions, which is enormously unhelpful given that extreme weather events are increasingly hurting the bottom lines of these companies.”

She added: “Investors can play their part by demanding that the animal protein producers they invest in step up to the plate and make change happen more quickly.”

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To carry out the research, FAIRR developed an index – now in its fourth year – that assesses 60 publicly-listed animal protein producers worth a combined $363bn, including suppliers of household names such as McDonalds and KFC.

Firms are analysed against ten ESG-related factors including greenhouse gas emissions, deforestation, antibiotic usage and investment in alternative proteins.

FAIRR’s Coller said: “From class actions to carbon taxes and regulation, investors are using FAIRR’s data to quantify increasing risks in animal agriculture. Carbon taxes for example are expected to cost beef companies up to 55% of current average EBITDA by 2050.”

“We are at an inflection point and if we are to avoid the meat and dairy sector becoming a stranded asset, we must harness the leadership emerging in parts of the industry and transform the way our food, particularly protein, is produced.”

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