Investors group warns weak effort to halt deforestation

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Investors group warns weak effort to halt deforestation

A global push to reduce methane emissions and end deforestation is at risk of being halted by weak corporate efforts in the livestock industry, according to an investor group on Wednesday. More than 100 countries pledged to cut methane emissions 30 per cent and halt and reverse deforestation by 2030 at last month's COP 26 climate talks, much of which will need to come from the livestock industry. Animals account for 44 percent of methane, according to the UN food agency.

More than a fifth of the world's biggest livestock producers currently measure some emissions, according to a report from the FAIRR Initiative FI, whose members manage more than US $45 trillion in assets.

As the largest driver of both methane from human activity and deforestation, the ambitions set at COP 26 handed a big slice of responsibility to the food and agriculture sector, said FI Chair Jeremy Coller.

The growing sense in the market that cows are the new coal is underlined by failures from methane to manure management. In its fourth annual report, the group assessed 60 publicly listed animal protein producers worth US $363 billion on 10 environmental, social and governance-related ESG issues, including emissions and antibiotic usage.

Norwegian aquaculture firms Mowi ASA and Grieg Seafood were regarded as medium risk, while the highest ranking meat and dairy companies, including the world's biggest meatpacker JBS SA and Tyson Foods, were viewed as medium risk, despite the fact that a number of its sourcing comes from regions at risk of deforestation, according to FAIRR.

JBS told Reuters that boosting its ESG performance was a priority. JBS noted that it was ranked 11 out of 60 companies, with an overall score of 57 per cent, representing a six percentage point improvement on 2020.

Tyson said it engaged with FAIRR and provided feedback on its commitments to prevent deforestation, including to begin sourcing verified deforestation free beef by the end of 2021, with the complete transition of Australasia sourcing by the end of 2025.

FAIRR makes the findings public so that other investors can use them when they look at company performance and engagement with company boards.

The report also found that 42 of 45 meat and dairy companies that source soy for animal feed from areas with high risk of deforestation, such as Brazil's Cerrado region, do not have a policy to mitigate deforestation.

The cattle industry hasn't done a good job in monitoring its supply chain, and is missing up to 90 per cent of the deforestation caused by indirect suppliers, according to the report.

Nearly a third of the cattle bought by JBS in the Brazilian Amazon state of Para came from ranches with irregularities such as illegal deforestation, prosecutors found in a 2020 audit.

The science is clear that in order to avoid runaway climate change high-emitting sectors such as agriculture must transform themselves in the next decade. FAIRR's latest research shows how far the food sector has to go, said Eugenie Mathieu, senior analyst at Aviva investors.