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New frameworks help alternative proteins industry to report on ESG metrics

Consumer appetite is increasing for plant-based alternatives to animal protein. Now the alternative proteins industry has a way to report on its sustainability impact, and to produce meaningful comparisons with the meat industry.

Two new reporting frameworks have been launched for food producers, retailers and manufacturers in the alternative, or meat-free, proteins industry to help them accurately report the sustainability impact of their businesses.

One framework is designed for manufacturers and ingredient suppliers whose core focus is an alternative protein to meat, dairy or whey protein, or gelatin. The other is designed for food companies, retailers, manufacturers, and animal protein producers with product portfolios that include both conventional and alternative proteins.

The frameworks were co-developed by the FAIRR Initiative, an investor network with a membership of $68tn assets under management that is helping to define the ESG issues linked to intensive farming, and the Good Food Institute, an international non-profit think-tank that is developing a roadmap for a sustainable, secure and just protein supply. 

Thirty-eight companies and investors, and 14 non-governmental organisations and ESG standard-setters – including Unilever, Eat Just, Newton Investment Management, Pimco, Blue Horizon and WWF-UK – also provided input and expertise in the development of the frameworks. 

Growing popularity

Alternative proteins – including plant-based, fermentation-enabled (that is, made using microbes), and cultivated (from cells) meat, seafood, eggs and dairy – are expected to provide a pathway to decarbonising food production while meeting the global demand for protein. 

GFI investor engagement manager Sharyn Murray says alternative proteins offer “meaningfully lower greenhouse gas emissions as compared to conventional animal protein, as well as considerable food safety and nutritional advantages”. 

She says as the alternative protein industry continues to partner with the private sector to build responsible and sustainable businesses of the future, these frameworks will “enable companies to claim their natural leadership role on ESG” and guide all alternative protein companies toward best practices.

Over the past few years, investment in alternative proteins has increased by an average five-year growth rate of 91 per cent up to 2021, according to GFI analysis of PitchBook data. Sales are estimated to rise by up to $1.1tn by 2040 and account for up to 60 per cent of the total meat market.

Material risks

Abby Herd, ESG analyst at FAIRR Initiative, told Sustainable Views that while some companies can identify some of the material risks in their business, others might not have the time or resources to do so. They can therefore use the frameworks to establish their most important material risks and opportunities.

For instance, a key material risk is deforestation, says Herd, yet many plant-based products are based on soy, which is often linked to the deforestation of the Amazon rainforest. Therefore, companies should consider this and possibly use alternatives such as pea protein.

On the social side, meanwhile, plant-based products have been criticised because of the risk of deficiencies of specific micronutrients, like vitamin B12, for example, which supports red blood cell production and nerve function, and is not found in plants. Herd suggests that in this case, companies should ensure their products include the right micro and macro ingredients and nutrients when creating their products.

Use of framework

While using the frameworks is not mandatory for companies, Herd hopes this will help them adapt their business strategy; they can also use the metrics from the frameworks for annual reporting, or share information with investors. 

“We are seeing regulations in all sorts of industries so it wouldn’t surprise me if it also came into the alternative proteins industry quite soon,” she said, adding companies can use the frameworks to prepare themselves.

Research published in the Proceedings of the National Academy of Sciences of the United States of America found many plant-based ‘meat’ products have a fifth to less than a tenth of the environmental impact of meat-based equivalents. However, there are no comprehensive standards for companies manufacturing and selling alternative proteins to assess and disclose the ESG data that investors, companies and consumers need to make informed decisions.

The frameworks would help both investors and consumers to make comparisons with the meat and dairy industry. They includes three areas for comparison: greenhouse gas emissions intensity, land-use intensity and water intensity, said Herd. She hopes companies will use the framework “so we have that data available to make robust conclusions”.

A service from the Financial Times