The meat industry has been accused of having its “head in the sand” on climate risk, with a clear majority failing to prepare for climate change.
A study carried out by the global investor network Farm Animal Risk and Return (Fairr), which has the backing of major asset managers such as Allianz and Aberdeen Standard, found that that just two in 43 (5%) of the world’s largest meat companies have undertaken their own climate scenario analysis.
The two firms that had done so were Tyson Foods and Marfrig.
The low proportion in the meat industry compares with 23% of energy companies that have carried out climate modelling.
The study also found that seven key climate risks (including higher feed costs due to poor crop yields, and increased livestock mortality) will impact the profitability of the meat sector.
Major meat stocks like Tyson Foods and JBS, who supply McDonalds, Walmart and Marks & Spencer could “face ruin” in a 2°C warmer world by 2050, the study concluded.
Robbie Miles, an ESG analyst at Allianz Global Investors said: “When it comes to the global food industry, financial markets have not adequately priced-in the costs of climate change including both the likely physical impacts and the costs of mitigation.
Climate risks including extreme weather are already impacting profitability in the Brazilian beef sector and increasing livestock mortality rates in Australia and as climate risks become more severe, this pioneering new financial model will help prepare investors.
“All investors should run their numbers to better understand their portfolio risks and engage with their investee companies accordingly.”
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