Generated Summary
This report, commissioned by the Changing Markets Foundation, examines the risks and impacts of climate change on the meat and dairy industry. The study surveyed 201 respondents from the investment community, revealing that a majority (82%) recognize climate change as a material risk to meat and dairy-related investments. The research highlights the industry’s significant contribution to greenhouse gas emissions, particularly methane, and its vulnerability to climate impacts. It underscores the need for rapid and deep cuts in methane emissions, along with a transition to sustainable food production practices to mitigate risks and address climate targets. The report provides insights into investors’ concerns regarding greenwashing and the lack of sufficient action within the sector. The study employed a mixed-methods approach, including a survey and interviews, to gather data from financial institutions and experts. The scope of the research focused on assessing investor perceptions, identifying climate-related risks, and exploring potential solutions for transforming the animal agriculture sector. The analysis aimed to inform financial actors and policymakers about the critical role of investment in driving sustainable change. The research data was collected between January and June 2022.
Key Findings & Statistics
- 82% of respondents agreed that climate change presents a material risk to meat and dairy industry-related investments.
- 84% believe that a lack of mitigation of climate change could lead to stranded assets in this industry.
- 94% think that reducing methane emissions alongside carbon emissions is important.
- 83% think that investors should encourage companies to reduce their methane emissions.
- 55% think that investors are not sufficiently addressing these risks.
- Global food production is responsible for around 37% of GHG emissions, equivalent to 17.3 billion metric tonnes of carbon dioxide per year.
- 57% of these emissions come from the production of animal-based foods.
- Livestock agriculture is the single largest source of methane, responsible for around 32% of anthropogenic methane emissions.
- Methane has 82.5-times more warming potential than CO2 over a 20-year period.
- A reduction of 45% of methane emissions by 2030 would avoid nearly 0.3°C degrees of warming by the 2040s.
- Global meat production is currently projected to expand by 40mt to 366mt by 2029.
- Dairy production is expected to grow by 1.6% per year by 2029.
- EAT-Lancet projects that both red meat and dairy production will increase by over 50% by 2050 compared to the 2010 baseline.
- A decline in livestock of 7-10% is expected if we were to reach 2°C by 2050, with economic losses between $9.7 and $12.6 billion.
- Between 1970 and 2019, weather, climate, or water-related disasters occurred on average every day, taking the lives of 115 people and causing $202 million in losses daily.
- Agricultural losses due to drought between 1983 and 2009 amounted to $166 billion.
- Food systems cost $12 trillion in hidden social, economic, and environmental impacts.
- A recent study in Nature showed that replacing just 20% of global beef consumption with a meat substitute could halve annual deforestation and carbon dioxide emissions by 2050.
- The livestock sector contributes 16.5% of GHG emissions.
- Beef and dairy cattle account for 65% of the total livestock GHG emissions.
- The projected impacts include, from 3.7 to 9.8% of the sector’s value by the end of the century.
- 36% of survey respondents reported moderate investments and 28% said they had small investments into alternatives, only 9% of those surveyed reported significant investments.
Other Important Findings
- The report emphasizes that current global actions to reduce greenhouse gas (GHG) emissions are inadequate to limit warming to 1.5°C.
- The study highlights that the meat and dairy sector is uniquely dependent on stable climate conditions and is already experiencing negative climate impacts.
- Investors are increasingly concerned about climate change, with over three-quarters stating they are concerned about its impact on investment products and opportunities.
- A majority of respondents (55%) believe that investors are not sufficiently addressing climate risks within the meat and dairy industry.
- The report acknowledges that land expansion for livestock is linked to significant emissions from land-use change, including deforestation.
- The study points out that the Global Methane Pledge is reasonably well-known among the investment community, with 67% of survey respondents being somewhat or very knowledgeable about it.
- The report references Upfield, which released a detailed report on their corporate methane emissions.
- The report notes that the majority (77%) believe that investees’ claims about ESG should be independently verified.
- The report highlights that the majority (79%) believe that regulation is needed to address ‘greenwashing’ in the financial sector.
Limitations Noted in the Document
- The research relies on a survey of 201 respondents from the investment community, which may not fully represent the broader views of all stakeholders.
- The study’s focus is primarily on the investment community’s perceptions, which may not directly reflect the operational realities or specific challenges faced by companies within the meat and dairy industry.
- The scope does not include any notifications of changes, information or clarification not drawn to the Changing Markets Foundation’s attention prior to the deadlines.
- The report’s analysis is limited to the data collected between January and June 2022, which may not reflect the most current developments or changes within the industry.
- The report acknowledges that the level of ambition of the ESG policies were beyond the scope of the survey, as well as the details of how the companies intend to implement their mitigation strategies.
Conclusion
The study concludes that the meat and dairy industry faces significant climate-related risks and requires substantial transformation to align with climate goals. The investment community recognizes these risks but is grappling with inertia, hindering effective action. The report highlights the need for financial institutions to engage with the industry, demanding transparency, and disclosure of emissions. A key takeaway is the emphasis on the urgency of reducing methane emissions and supporting the growth of alternative protein sources. The report underscores that current projections of meat and dairy production growth are at odds with climate science, and the sector is already impacted by climate change. The research suggests that financial actors must prioritize actions to mitigate climate impacts, including encouraging companies to report and reduce methane emissions. The findings highlight that the transition to alternative proteins and agro-ecological practices can help address these issues. Further, the report suggests that investments in alternative proteins could transform the industry and reduce negative externalities of meat and dairy production. This transition includes reducing emissions, reducing land use, improving animal welfare, and mitigating the risk of emerging zoonotic diseases. The report underscores the need for science-based targets and mitigation plans, transparent reporting of emissions, and investments in methane and GHG mitigation measures. The report calls for financial institutions to publish and report against science-based climate and methane policies that align with achieving net-zero by 2050. In order to achieve an adequate response to these risks, independent verification of the companies’ ESG strategies and claims are critical, and regulatory oversight is necessary to prevent and address greenwashing practices. The conclusion is that investors have a key role to play in the transformation of the meat and dairy industry by implementing and supporting climate mitigation strategies and by promoting changes to the existing meat and dairy operations to prevent stranded assets.