There’s an assumption that alternative protein food products — those that aim to replace animal-based products — have virtuous carbon footprints, particularly when compared to their traditional animal-based counterparts. But often investors and consumers have had to take the product producers’ words for it. Now, food industry incumbents and specialized startups alike have a new tool at their disposal to disclose the sustainability of their alternative protein products.
The FAIRR investor network and the Good Food Institute (GFI) have launched two new reporting frameworks for alternative meat, seafood, dairy, and egg companies to use when revealing their environmental, social and governance (ESG) impacts to would-be investors and others.
Investor network FAIRR helps institutional investors define material ESG issues linked to intensive livestock and fish farming systems and incorporate this information into investment decisions.
- Think tank nonprofit GFI is a key leader in accelerating alt-protein adoption, and an important source of expertise and information for the industry.
- To develop the frameworks, the two organizations gained input from 38 companies and investors along with 14 NGOs.
- Unilever, Eat Just, Newton Investment Management, PIMCO, Blue Horizon and the WWF-UK are among the companies and nonprofits that provided expertise for the development of the frameworks.
How it works:
Alt-protein brands wanting to report on carbon emissions, land and water use, nutritional content, and other ESG factors can work with FAIRR and GFI to use the two frameworks for their business. These frameworks will provide a common language and set of standards for measuring and disclosing ESG impacts.
- The specialized framework is for manufacturers and ingredient suppliers whose main focus is alternative protein. Many of the alt-meat and alt-dairy startups that have emerged in the last several years would rely on this framework.
- This framework addresses things like sourcing, certification, soil health, and water consumption, amongst other areas.
- Big Food companies as well as retailers, manufacturers, and those producing both animal and alternative proteins can access the Diversified framework. This guides companies on ESG data reporting ‘related to the alternative proteins portion of the companies’ businesses’ including lobbying, affordability, and accessibility.
- No regulatory body is requiring companies to report to these frameworks. However, FAIRR urges those in the alt-protein space to consider doing so, as the frameworks “provide companies and investors with a better understanding of the ESG risks and opportunities associated with alternative proteins and can guide best practice actions for companies.”
- At present, neither FAIRR nor GFI will publish reporting submitted by companies.
Why it matters:
GFI says global meat consumption will double by 2050, and the livestock industry already accounts for 14.5% of all anthropogenic GHG emissions. Animal agriculture is also heavily linked to deforestation, soil degradation from mono-cropping and zoonotic disease like coronaviruses.
Strong debate remains over how effective alternative proteins — plant-based, cultivated and fermented — are in the fight against climate change. Advocates argue they yield major results compared to other climate tech like EVs and energy. Others say alt-proteins like plant-based meats are resource intensive and rely on the same monoculture systems used by animal ag, and that no cultivated or fermented products exist that mimic their animal-based counterparts.
One of the reasons for this debate is that data on alt-protein’s impact is still limited, and what does exist is fairly fragmented. FAIRR and GFI are hoping to develop a comprehensive set of standards companies can use to disclose their data more easily. This could impact how such companies, and alternative protein in general, are viewed by investors and consumers.
It could also clarify just how impactful alt-protein is when it comes to decarbonization, and where climate tech investors should be directing their capital in future.
What they’re saying:
Lisa Wetstone, senior director of marketing, innovation and growth strategy at alt-protein company MycoTechnology, highlighted the many ways in which ESG data an be gathered and interpreted. ‘This is especially true given the nuances of our industry,’ she said. ‘We are lacking a common language! Laying the groundwork to standardize this information can be a guide for us all, and lift the industry up as a whole.’
‘We expect that FAIRR’s members, representing $68 trillion AuM, will welcome the frameworks as a further tool in their investment process,’ FAIRR founder and chair Jeremy Coller added. ‘We hope to see both large protein producers in the Coller FAIRR Protein Producer Index and smaller specialised alternative protein companies adopt it, which will benefit the market as a whole.’