New Food Index Reveals ‘High Risk’ Meat & Fish Stocks Worth $152bn inc McDonalds, KFC Suppliers

A new food index has labeled 36 meat and fish suppliers as “high risk” for public market investors because they fail to manage critical business risks such as greenhouse gas emissions and antibiotics risk.

The high-risk companies, worth a combined $152 billion, include major suppliers to McDonalds and KFC, as well as the US’s third-largest poultry producer Sanderson Farms. Brazil’s JBS, which was recently embroiled in a food safety scandal, was also classified as high risk.

The Coller FAIRR Protein Producer Index, which tracks 60 of the world’s largest food companies worth a combined $300 billion, assesses how these companies are managing critical sustainability risks ranging from pollution to the Paris Agreement, and food safety to worker safety.

The FAIRR (Farm Animal Investment Risk & Return) initiative is a collaborative investor network worth $5.9 trillion aiming to educate on the investment risks behind factory farming that was founded by private equity group Coller Capital’s chief investment officer Jeremy Coller.

The food index also reveals the food companies following best practices including “medium risk” US meat producer Tyson Foods, which FAIRR’s accompanying report highlights for the launch of its $150 million venture fund to invest in alternative meat startups and other sustainability-focused technologies. Norwegian aquaculture group Marine Harvest is the top-ranked company, in large part due to its approach to tracking and using antibiotics.

Antibiotic use in the production of meat and fish is a major risk to human health, according to the report, with 77% of companies failing to adequately manage or disclose antibiotic use, despite growing levels of regulation and international action to combat antibiotic-resistant superbugs.

FAIRR also discovered a lack of disclosure when it came to manure management, Aarti Ramachandran, head of research and corporate engagement at the group, told AgFunderNews. Just a quarter of land-based protein companies referenced the management of animal waste at all in their materials, which was surprising considering the increasing scrutiny of manure management and potential for fines in various countries globally, she added.

“Investors need ESG data and transparency to make better investment decisions, yet this information is lacking in the meat, fish and dairy sector. This is the first index to help investors bridge that knowledge gap,” said Coller in a statement. “As megatrends like climate change, antibiotic resistance and food technology radically reshape the way we produce and consume meat, fish and dairy, the Coller FAIRR index will help institutional capital identify both best in class companies and potential stranded assets in the food sector.”

Chinese companies faired the worst with 14 out of 16 in the index classified as high risk although Ramachandran said she was expecting to see low disclosure on ESG from the region.

“One of the key issues we have with some of largest dairy and pork producers in a country like China is that while they are disclosing on some issues, such as pollution, their statistics do not go deep enough to provide the full picture of their impact. For instance with pollution, they might disclose greenhouse gas emissions, but don’t include emissions from enteric fermentation or feed production in beef and dairy,” she said.

The companies in the food index are assessed on eight risk factors, each with underlying KPIs. The risk factors are greenhouse gas emissions, deforestation and biodiversity loss, water scarcity and use, waste and pollution, antibiotics, animal welfare, working conditions, and food safety. More on the methodology can be found the report.

While both Ramachandran and Coller are vegetarians, not everyone in the FAIRR team is. “It’s a real mix but I think it’s fair to say that everyone is interested in sustainable food systems,” said Ramachandran.

Some large asset managers welcomed the index.

“From fast food to fine dining, much of the food on our plates leads back to the livestock and fisheries sector assessed by this Index,” said Abigail Herron, global head of responsible investment at Aviva Investors. “That is why it is of deep concern to investors that a majority of these global food suppliers are failing to manage such significant business risks. On antibiotics alone, FAIRR’s research shows that three in four of these companies are ignoring the calls from regulators, health professionals and the financial community to manage and reduce their use of antibiotics. That failure puts both global public health and their business models at risk.”

Overall Coller FAIRR Protein Producer Index ranking