Investors are starting to give meat suppliers a warning that has already sent ripples through the coal industry: make better progress in tackling climate change or risk being shunned.
The threat of divestments in the livestock sector — one of the top contributors to global emissions — is rising as asset managers increase scrutiny on the sustainability and carbon footprint of their holdings. Investors including Legal & General Investment Management have already started to divest from some food companies and said they may offload others that don’t meet certain environmental requirements.
“It’s possible that we’ll see this type of banning or investors deciding not to invest in livestock companies or meat processors,” said Stephane Soussan, a portfolio manager at Amundi Group’s CPR Asset Management, which manages more than $55 billion. “If you are invested in livestock companies, your CO2 footprint will be too high.”
Agriculture-related industries are second only to energy in terms of emissions. Raising animals accounts for about 15% of the global total as cows belch out methane, while grazing and growing soy for animal feed contributes to deforestation. Investors say major issues like animal welfare, the popularity of vegan diets and less meat consumption in the U.S. and Europe will reshape the food industry for years to come. And it’s an opportunity to make money from betting on the winners and losers…