ESG Investors Finding it Hard to Incorporate Food in Their Portfolios

Billy Nauman reported yesterday at The Financial Times Online that, “Food is at the nexus of practically every major sustainability issue: what we eat today determines not just our own health tomorrow, but also that of the planet. So the sector should be an obvious focus for ESG investors, who want their money to contribute to environmental, social and governance goals.

“Yet while they have had some high-profile financial successes with companies such as Beyond Meat and Impossible Foods, which tout their plant-based products as eco-friendly alternatives to meat, ESG investors are finding it hard to incorporate food in their portfolios. Food businesses’ far-reaching impacts are difficult to measure, making it unclear whether they meet ESG criteria.

“‘The food industry is at the root of a much bigger set of challenges the world faces, but it’s not obvious,’ says Andy Howard, global head of sustainable investment at asset manager Schroders. ‘There aren’t any sort of nice easy indices that you can make [like you can for] which companies have the most diverse boards.'”

The FT article noted that, “Unlike energy or utility companies, whose impact on the environment is relatively straightforward to quantify, food companies’ complex operations can leave investors scrambling to keep track of what they are doing. Their exposure to risk may also be much greater than appears at first glance.”

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