Meat production from the perspective of a sustainable investor: why less is more

  • Mindfulness is a crucial element not only when shopping for food, but also when taking investment decisions
  • Conscious consumption: reduction of greenhouse emissions and deforestation – increase in animal, and ultimately, human welfare

Global meat consumption is a core investment topic not only for sustainable investors: the demand for products from livestock breeding has been on the rise in world food affairs.

The so-called food revolution, which concerns our dietary habits, is happening in particular in developing countries, which account for the majority of global population
growth. According to surveys by the Food and Agriculture Organization (FAO), meat consumption increases by an annual 5 to 6%.

Meat production has quadrupled since 1965

According to the FAO, global meat production almost quadrupled since 1965 from 84mn tonnes to 335mn tonnes. Both meat consumption and production could rise by 120% by the year 2050.

The large-scale cultivation of animal feed displaces first-growth forest, which provides crucial CO2 storage. In addition, the use of chemical fertiliser is both CO2- and
energy-intensive and is a burden to other eco systems such as flowing waters. Also, it is worth pointing out that 15% of the greenhouse emissions caused by man are a direct consequence from livestock breeding.

“Due to the heavy use of antibiotics in industrial agriculture, bacteria have also become
increasingly resistant to them. If you like to eat meat, you might therefore want to cut down on quantity and instead go for higher quality in production” says Walter Hatak, Head of Responsible Investments with Erste Asset Management (Erste AM).

Mindfulness in investment decisions

Curbing the detrimental consequences of the increased consumption of animal products is a matter of urgency. Investors can contribute significantly to this goal.

“Sustainable investors start their analysis where traditional ones often end theirs. The economic assessment is a basic condition for us to classify an asset as investable. But in addition, the issuer also has to convince us in terms of its sustainable criteria,” as Hatak points out.

Therefore, the following questions emerge in meat production: how does the company fare in the way it deals with its employees and the local community? These questions are crucial in addressing the ESG sustainability criteria (environment, social, governance).

How do breeding farms treat their animals, and how do they dispose of wastewater and animal faeces? “The goal of the ESG analysis is to identify risks and opportunities. To this end, we have an experienced team of ESG analysts who can critically scrutinise topics,” explains Hatak.

INFO

The future of meat consumption, glyphosate in the production of animal feed, and an organic producer from Lithuania. Our new ESG Letter discusses the topic of meat from every angle.

Disclaimer

This document is an advertisement. Please refer to the prospectus of the UCITS or to the Information for Investors pursuant to Art 21 AIFMG of the alternative investment fund and the Key Information Document before making any final investment decisions. Unless indicated otherwise, source: Erste Asset Management GmbH. Our languages of communication are German and English.

The prospectus for UCITS (including any amendments) is published in accordance with the provisions of the InvFG 2011 in the currently amended version. Information for Investors pursuant to Art  21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH pursuant to the provisions of the AIFMG in connection with the InvFG 2011. The fund prospectus, Information for Investors pursuant to Art  21 AIFMG, and the Key Information Document can be viewed in their latest versions at the website www.erste-am.com within the section mandatory publications  or obtained in their latest versions free of charge from the domicile of the management company and the domicile of the custodian bank. The exact date of the most recent publication of the fund prospectus, the languages in which the Key Information Document is available, and any additional locations where the documents can be obtained can be viewed on the website www.erste-am.com. A summary of investor rights is available in German and English on the website www.erste-am.com/investor-rights as well as at the domicile of the management company.

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