World Food Day: How ‘less but better meat’ is creating new opportunities in portfolios

It’s the UN’s World Food Day this weekend

‘Less but better meat.’ This is the mantra for an increasing number of health and climate-conscious consumers. Pulses and tofu, along with organic, high-welfare meat are becoming the go-to sources of protein for consumers who recognise the high environmental impact of mass livestock production, alongside the health and economic benefits of switching to alternative sources of protein.

The success of a new breed of innovative alternative protein brands – including the likes of Quorn and WhiteWave – also points to the financial acumen of investors who seek to mitigate livestock’s huge carbon footprint and the impact of its overconsumption on public health. As the UN will highlight this week on World Food Day (October 16): the climate is changing, and food and agriculture must too.

Much of the shift in consumption patterns can be attributed to people who are cutting back on animal products, rather than cutting them out entirely. Supporting and accelerating this behaviour change is essential if we are to stick to a temperature change of two degrees or less.

I am a meat eater myself, but I have definitely found myself paying more attention to the composition of my shopping basket and dinner plate over recent years, and in the process cutting back on my meat intake. Market analysis and the explosion of less-meat and plant-based options in recent years would suggest that I am far from alone in that choice. Many consumers are already choosing to move away from an overreliance on animal protein – itself a dietary trend of recent generations – and seeking plant-based products and retail outlets to meet those needs. As Forbes recently remarked, on news that Starbucks is diversifying its non-dairy options, adapting to changed consumer preferences is essential for food and beverage companies looking to drive long-term growth.

This is why ShareAction is seeking to engage forward-looking investors and encourage leading companies to form and implement clear plans in response.

There are already signs of rapidly growing momentum among investors on related issues.Supporting an engagement led by the Farm Animal Investment Risk & Return (FAIRR) Initiative, more than forty investors with upwards of $1.25trillion AUM have endorsed a call for food companies to demonstrate vision and leadership on the future of protein.

These investors recognise that there are upside opportunities to be seized by companies who show leadership in instigating a greater shift towards more sustainable protein production and consumption.

Proactive companies can also help to future-proof their infrastructure and investments. Without such affirmative action, the collective impact and possible accumulation of related environmental and social risk factors creates supply chains that are inherently more susceptible to disruption. That could be due to the impact of a changing climate on production, or of changing tastes, with astute consumers seeking brands produced in an environmentally sound, socially responsible and economically viable way. The call for ‘less but better meat’ and an emphasis on promoting the availability and affordability of plant-based proteins should not be mistaken for urging a wholesale abstention from animal products – though some companies and consumers do choose that route. It is a call for reformulating recipes to have a less detrimental impact on public health and the planet, and about promoting existing and new non-meaty sources of protein that are marketed to a broad range of consumers.

Demand trajectories are not inevitable: what happens next depends on the actions taken by food manufacturers and retailers, as well as policymakers. With official ‘less meat’ recommendations in China and the Netherlands perhaps just a stepping-stone on the path towards a higher tax on meat – as is currently on Denmark’s agenda – eventual policy interventions to curb consumption could also pose a business risk.

Anticipating this tide, investors and food companies can seek competitive advantage now by fuelling a faster transition to diets based on more diverse sources of protein. This is one trend not to be ignored.

Catherine Howarth is chief executive at ShareAction.