Veganism: The Next Sustainability Frontier

ESG Veganism

Global food consumption is at breaking point, with protein consumption in western economies far exceeding the required daily intake.

A sea change in global diets?

Veganism is going mainstream. Backed by A-list celebrities and global marketing campaigns, demand for meat-free food has increased rapidly over the last few years.

The market value of almond milk, for example, is predicted to rise from an estimated US$2.3 billion in 2018 to US$5 billion by 2024*. Meanwhile, in January this year, more than 250,000 people ‘went vegan’ as part of the global Veganuary movement – more than the previous four years combined. Not only that, ethical investors are backing the case, with the launch last year of the first ever ‘vegan ETF’.

The sustainable choice?

While the decision to switch to plant-based over animal products has traditionally been driven by ethical or health reasons, increasingly the focus is on veganism as a more sustainable choice, as meat and dairy are generally the more resource-intensive options.

Market value of dairy milk alternatives worldwide from 2013 to 2024, by category (in million U.S. dollars)

Global food consumption is at breaking point, with protein consumption in western economies far exceeding the required daily intake.

Demand for beef is set to grow 95% by 2050, but beef production requires 20x more land and emits 20x more greenhouse gases than plant-based proteins. In fact, according to the World Resources Institute, if cattle were a nation it would be the world’s third largest GHG emitter.

A recent report on sustainable food systems, published in medical journal The Lancet said a globally responsible diet requires a drastic reduction in red meat consumption, particularly in North America, and a large increase in consumption of legumes and whole grains.

A business case for vegans

We are certainly starting to see a shift in attitudes, with leaders in the food sector exploring new approaches to production. Danone, the world’s largest yoghurt maker, has plans to triple its plant-based food sales by 2025, owning brands that specialise in dairy-free yoghurts. Meanwhile fast-food chain, McDonald's, has introduced vegan options in Sweden and Finland.

From an investment point of view, veganism is still probably a niche concept, although last year saw the creation of the first ETF which screens out any company with business activity that harms animals.

For us, we see this latest activity as part of a wider trend, the increasing urgency of the need for action on climate change – one of the UN’s Sustainable Development Goals. Veganism (and its less-strict cousin ‘flexitarianism’, that is flexible or part-time vegetarianism) are evidence of the heightened global awareness of sustainability issues.

ESGVeganismabstract4

…but not the perfect solution

However, it is important to note this is not all one way. While vegan foods may be beneficial from the standpoint of reducing carbon footprints, they can be problematic in other areas.

The previous example of almond milk is a case in point. Its production is hugely water intensive (and more than 80% of the world’s almonds are grown in California which has experienced severe droughts for a number of years). Not only that, but many vegan products use palm oil, a major factor in global deforestation.

For us, this demonstrates the importance of viewing veganism as we do other sustainability issues in the round. By focusing on materiality and incorporating this into the questions we ask of companies and assessing the risks and opportunities, we can build a more sustainable investment case for the long term.

*Source: Statista; Grand View Research; Statista estimates.
Source: World Resources Institute This work is licensed under the Creative Commons Attribution 4.0 International Licenstional License.
To view a copy of the license, visit http://creativecommons.org/licenses/by/4.0/


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