Dive Brief:
- The vast majority of large meat and dairy companies "have yet to meaningfully address even the most basic sustainability risks," according to a new assessment from the Coller Farm Animal Investment Risk & Return (FAIRR) Protein Producer Index.
- The company examined 60 major meat and dairy supply companies worldwide for the report. Thirty-nine of them — valued at $175 billion with combined revenues of more than $116 billion — ranked as "high risk" for contribution to climate change.
- In the report, the majority of the companies ranked "high risk" in six out of nine categories. Water scarcity and pollution are the areas where they have the highest risks. They have the lowest risks for food safety. And 88% of the companies showed lack of progress to halt deforestation.
Dive Insight:
As environmentally friendly business practices go from the exception to the rule for companies across the food and beverage industry, many businesses have announced plans to make their brands more sustainable. But this report from FAIRR notes not only are many major meat and dairy companies at high risk to contribute to the climate crisis, but most of the companies in the sector provide little information surrounding emissions associated with raising animals.
For the meat and dairy industry, identifying and reducing emissions is a pressing issue as it produces 13% to 18% of global greenhouse gas emissions from deforestation and animals, according to Bloomberg. Among the companies identified as high risk in the FAIRR index are Sanderson Farms and Cal-Maine Foods.
The lack of transparency around these issues may have once been advantageous for companies looking to put up a screen between what is on a consumer's plate and the environmental production costs for it to get there. Today, consumers are paying more attention and reward companies for their environmental accountability. About 66% of all consumers are willing to pay more for sustainable brands, and that figure is even higher for millennials (73%) and Generation Z (72%), according to Nielsen.
Even though Cal-Maine Foods professes to cultivate a "Culture of Sustainability," FAIRR said it is not providing clear disclosure around how it is working to achieve that goal. But it isn't just Cal-Maine, and this report isn't the only one finding that disconnect. Greenpeace came to a similar conclusion earlier this year when it analyzed retailers, fast food chains and CPG companies on the fulfillment of sustainability and anti-deforestation goals published on their websites. The report found that "not a single company was able to demonstrate meaningful effort to eradicate deforestation from its supply chain."
The lack of follow-through is not universal. The FAIRR report deemed five companies — including Tyson — as low risk. According to the study, Tyson is the only protein producer from with specific, outlined goals for emissions reduction targets.
Achieving sustainability is not always straightforward. Not only can it be costly to alter supply chains to use sustainably sourced materials or switch to renewable energy sources, but access can be unpredictable or limited. Sometimes it can even require investment in technology that does not yet exist. These reasons partially account for why companies give themselves ample lead time to achieve these goals. Tyson has committed to reducing its greenhouse gas emissions 30% by 2030.
However, sustainability is a puzzle with many pieces. For companies to work toward affecting the climate positively, it requires commitments and action on multiple fronts. This could be challenging, especially because reports continue to claim companies have fallen short in addressing basic sustainability risks.