Investors highlight biodiversity risks in the meat sector – focus on waste and pollution

The US$68 trillion-backed FAIRR Initiative has launched what is claims is world-first investor engagement addressing the biodiversity impacts of waste mismanagement and nutrient pollution from intensive livestock production. This is the first in a series of FAIRR engagements targeting biodiversity, which creates US$44 trillion of economic value – or 50% of global GDP – annually, making it critical to the economy.

Investors representing more than US$8tn in assets under management (AUM), including Robeco and Aviva Investors, will engage 10 intensive pork and chicken producers including JBS (Brazil), Tyson Foods (USA), BRF (Brazil), Cranswick (UK), Maple Leaf (Canada) and WH Group (China) – owners of Smithfield Foods in the US3.

The investors are asking each company to disclose a full assessment of how manure is managed in their supply chains and which concrete actions they are taking to manage the associated risks such as nutrient pollution.

Manure represents a precious store of nitrogen and phosphorus fertilizer. Yet, due to complexities surrounding its distribution, it is routinely treated as a waste product to be disposed of inexpensively rather than as a valuable fertilizer. It is rarely transported more than a few kilometres to be spread on crops, thus failing to spread to regions where there isn’t as much livestock.

Investors will, therefore, also engage with two agrochemical companies (Darling Ingredients and Yara International) to explore the potential use of animal waste as a circular source of raw ingredients, for example by isolating, enhancing, and reusing elements such as nitrogen and phosphorus to produce value-added fertilizer. Fertilizer prices have hit record highs since the start of the war in Ukraine, emphasising the need for better circular use of animal waste. Already, the EU is seeking to accelerate the development of alternative products to reduce its dependence on Russian products and gas.

The engagement is informed by a new report, published today, which states that more than three billion tonnes of waste are produced from animal farms each year, more than the volume of plastic produced worldwide. The report also highlights previous findings from FAIRR that show the volume of faeces produced by animal agriculture per year is equivalent to the faecal waste produced by twice the entire global human population. Many cases of inadequate management of animal manure lead to nutrient pollution that harms waterways, air quality and biodiversity, resulting in sizeable lawsuits and several examples of community opposition to farm expansion.

FAIRR’s investor members are keenly aware of growing biodiversity risks and their implications, particularly in the run up to the UN Biodiversity Conference (COP 15) this December. Increasing regulation to tackle waste and pollution from animal agriculture is being seen across the globe, including in the Netherlands, China and USA7 displacing supply chains and often pushing companies to increase their capital investments.

“The meat industry’s failure to manage manure effectively is threatening both biodiversity and the bottom line for investors," commented Jeremy Coller, Chair & Founder of the FAIRR Initiative, and Chief Investment Officer of Coller Capital. "Unbelievably, more waste is produced by animal farms each year than the volume of plastic produced worldwide. The practice of dumping excessive amounts of manure and allowing nutrients to pollute waterways is killing off marine life and endangering public health.

“Investors are well aware of the regulatory risk for companies, having seen initial steps taken in the USA and Netherlands. Moreover, companies are missing an opportunity to be part of a global solution by creating valuable fertilizer from waste, at a time when it has never been more expensive to procure.”

“Robeco is committed to protecting and restoring biodiversity through its financial activities and investments," added Peter van der Werf, Senior Manager Engagement, Robeco. "As a key driver of biodiversity loss globally, waste and pollution from intensive livestock production must be addressed – and this first-of-its-kind engagement is an important step forward.

“Around one quarter of our assets under management are either highly or very highly dependent on at least one ecosystem service – services reliant on healthy ecosystems. Protecting biodiversity is in the long-term interests of our clients and our investment performance, not to mention the planet.”

“Investors must be committed to protecting and enhancing the planet’s biodiversity, beginning with understanding the risks of inaction," noted Eugenie Mathieu, Senior ESG Analyst & Earth Pillar Lead at Aviva Investors. "More than half of global GDP is dependent on the ecosystem services that biodiversity provides, making mounting damage to ecosystems from the mismanagement of animal waste hard to swallow. We urgently need a collective effort from the animal protein supply chain to reduce the impact of its waste, and to build resilience against looming regulation. We urge companies to grab the bull by the horns to prevent the breakdown of global biodiversity, which would have profound economic effects on the world we live in.”

“This investor engagement shows it’s not enough to look at climate in isolation," concluded Max Boucher, Senior Manager, Research and Engagement, the FAIRR Initiative. "The animal agriculture industry needs to assess risks and opportunities through a lens of nature neutrality and eventually positivity – in this case managing nutrient pollution in addition to methane emissions. Investors will become increasingly demanding in this regard as initiatives like the TNFD gain traction and a global agreement on biodiversity becomes more likely.”