The production of red meat and dairy is projected to grow by over 50% over the next three decades, noted the authors, so urged action is required.
Over 200 respondents from the investment community were surveyed for the report.
The findings provide key insights into what the financial sector sees as important with regards to how the meat and dairy sectors will address their climate footprint and adapt to an increasingly destabilized climate system, said the Changing Markets Foundation.
The results show that 82% of respondents agree that climate change presents a material risk to meat and dairy industry-related investments and 84% of those polled believe that a lack of mitigation of climate change could lead to stranded assets in this industry.
Investors also overwhelmingly (94%) think that reducing methane emissions alongside carbon emissions is important, while 83% of the participants said that investors should encourage companies to reduce their methane emissions.
More than half of respondents (55%) think that investors are not sufficiently addressing these risks.
Financiers ‘gripped’ by inertia
The survey results and the insights gleaned from interviews conducted for the report show that the investment community recognizes the risks of climate change but is gripped by an inertia that prevents action, said the authors, in the executive summary.
Nusa Urbancic, campaigns director at Changing Markets Foundation, commented: “Despite the majority of investors believing that climate change presents a material risk to meat and dairy industry-related investment, it is concerning that more than half also said that investors are not sufficiently addressing those risks. The alarming effects on the sector multiply the hotter the planet gets. Farmers across the globe are already feeling the pain and we need rapid action to break this vicious cycle.”
The organization is calling on financial institutions and actors in the finance sector to engage with the meat and dairy industry and ensure that it begins its transformation by radically reducing its carbon and methane emissions.
Actions investors can take range from requesting companies to report and reduce methane emissions to supporting the growth of genuinely sustainable alternative protein and better food production practices, said the team behind the publication.
An earlier Changing Markets Foundation’s report, released last October, claimed that the biggest meat and dairy companies were not reporting data about their methane footprint, and did not have any plans in place to reduce their methane emissions.
Methane emissions: A corporate reporting case study
This latest publication outlined how Upfield, the entity behind well-known plant-based brands like Violife and I Can’t Believe It’s Not Butter, was the first major food company to release a detailed report on their corporate methane emissions.
Released in March 2022, the company’s data showed that even though dairy makes up only 1% of its ingredients, this small percentage corresponds to 63% of its methane emissions. Another 27% of its methane emissions come from topical and liquid oils.
Upfield worked with sustainability experts to develop a methodology to enable it to track its methane emissions and develop an emissions reduction plan. Through this exercise, it said it was able to determine that methane forms 7.5% of its total greenhouse gas (GHG) emissions. Upfield also called on others in the food and agriculture sector to report their methane emissions.
COP26 methane pledge
Last year over 110 countries have signed up the Global Methane Pledge, launched at COP26, in which they committed to cut their methane emissions by 30% by 2030, compared to 2020 baseline.
“This is a collective, not an individual national reduction target and it is not yet clear how the effort will be distributed or what will be the governance framework around the Pledge.
The Pledge itself is reasonably well known by the investment community, with 67% survey respondents saying they were somewhat or very knowledgeable about it.
"However, in-depth interviews with experts from financial institutions and civil society for this report revealed investors’ concerns that voluntary commitments of this kind risk not driving sufficient change, however well supported and funded,” noted the Changing Markets Foundation report.