An increasing number of both institutional and individual investors are aligning their investment dollars with their values. Whether you use the term “SRI (Socially Responsible Investing),” “impact investing,” “green investing,” or “ESG (Environmental, Social, and corporate Governance) investing” -- this approach to investing totaled $8.72 trillion in assets under professional management in the United States alone as of 2016 according to the Forum for Sustainable and Responsible Investing. Socially responsible investing strategies continue to evolve to reflect new concerns and heightened values that investors seek to integrate with their investment decisions.
In recent years, fossil fuel free investing has become an important response from investors of all sizes to growing awareness of the need to bring the fossil fuel age to a close. As people take action to address the climate crisis, concerns about the climate impacts of our food system and the benefits of a plant-based diet are also increasingly coming to the fore. As described in Drawdown, The Most Comprehensive Plan Ever Proposed to Reverse Global Warming: The Western “diet comes with a steep climate price tag: one-fifth of global emissions….business-as-usual emissions could be reduced by as much as 70 percent through adopting a vegan diet and 63 percent for a vegetarian diet, which includes cheese, milk, and eggs.”
Moreover, as cited by FAIRR (Farm Animal Investment Risk & Return – a UK-based investor initiative addressing factory farming), a 2016 report from the University of Oxford suggests that the public and environmental health issues linked to increasing demand for animal products could reach $1.6 trillion globally by 2050.
As people understand that decreasing meat consumption is good for the climate, there is simultaneously growing interest in plant-based diets -- and in plant-based or vegan investing.
Several members of the financial service industry and Green America’s Green Business Network share their perspectives on this emerging investment strategy:
Fran Teplitz, Green America: What is plant-based or vegan investing?
Tom Nowak, Quantum Financial Planning: The evolving strategy of plant-based investing shares some of the nomenclature issues of sustainable investing as noted above. Practitioners in this area use language they believe best resonates with their target audience, such as plant-based investing, vegan investing, cruelty-free investing, or humane investing. It is an approach that encompasses positive and negative investment screens, i.e., the criteria for including or excluding specific investments in a portfolio. Although humane treatment of animals has been a sustainable investment screen for some time, I believe the term plant-based might be helpful in recognizing that some investors focus on the health, environmental or faith-based issues.
Brenda A. Morris, Humane Investing, LLC: Ideally, in the near future, retail investors will be able to invest in vegan companies that are disrupting their respective industries on a massive scale. Until then, humane investing generally means avoiding funds that invest in businesses that support, cause, or contribute to animal exploitation and suffering, to the extent possible, while embracing those funds that are using their position as shareholders to advocate for positive change with businesses that are open to making improvements.
Marissa LaFave, Green Century Capital Management: Plant based investing means supporting the transition from animal-based products to plant-based products, through the companies in which one invests. The transition away from modern animal agriculture reduces negative environmental, animal welfare and public health impacts and focuses investments in innovative companies that understand and work to mitigate the financial risk that stems from the industry. This approach can be done by implementing specific investment screens or through shareholder advocacy campaigns and direct corporate engagements to press companies to better their practices.
FT: Who might be interested in this approach?
TN: As with many areas of sustainable investing, some investors have a strong interest in avoiding certain industries (e.g. alcohol, tobacco, fossil fuels, factory farms, dairy, meat producers). Plant-based investing may appeal to other investors who seek specific, positive outcomes such as the humane treatment of animals, sustainable agriculture, green technology. Some investors may find this area helpful in risk management (i.e. avoid industries with long term negative consequences).
BAM: Just as most animal activists would never consider buying meat products, many have no interest in buying mutual funds that own companies that profit from the exploitation of animals. Fortunately, most sustainable funds steer clear of some of the worst offenders (like factory farms) but a few do own companies that my clients and I do not wish to support, like fast food chains.
ML: Investors who are interested in supporting forward-thinking alternatives to the current food system are likely to be interested in plant-based investment strategies. Other investors may be interested because they may be able to mitigate risk in their investments by supporting companies building more resilient supply chains and actively positioning themselves to grow in the green economy.
FT: How do investors get started?
TN: As with the development of the fossil free divestment movement, client demand will be crucial to the development of plant-based/vegan investment strategies. At present, most investors would benefit from using a financial advisor to screen potential holdings based on vegan values and financial performance. On the equity side, the use of custom stock mixes or a focus on technology exchange traded funds might be appropriate for some. Others might benefit from mutual funds managed by leaders in cruelty-free investing. Some current SRI options focused on community development could help fulfill humane investing goals since those investments support sectors such as affordable housing, small business, and education.
BAM: More investment options are needed – and clients have a central role in creating demand for vegan products. We need investors of all sizes to contact their advisors and fund companies to express their interest in moving their assets into humane investments. In addition, my clients and I give preference to portfolio managers who have signed onto the FAIRR initiative. In 2018 we eagerly anticipate the introduction of a new exchange traded fund (ETF) based on vegan principles.
ML: Another way to support plant-based investing is by investing in fund companies engaged in shareholder advocacy on this topic. Green Century, for example, filed the first and only shareholder resolution on the opportunities associated with plant-based protein, with Tyson Foods in 2016. Following the proposal, Tyson took an ownership stake in Beyond Meat, a leading plant-based protein company, launched a $150M venture capital fund focused on exploring alternative protein innovations, and has become a vocal proponent of the plant-based industry.
FT: Should plant-based investors expect to sacrifice investment performance?
TN: From my perspective, a strategy can be developed that either protects or increases one’s assets depending on the mix of holdings. While no investment has guaranteed returns, there is growing momentum to support the wisdom of building a plant-based investment strategy.
BAM: Organizations that have joined the FAIRR initiative---now representing $4.1 trillion in assets --- acknowledge the risk associated with factory farming. From environmental damage to public health issues, not staying on top of the plant-based protein shift is not just a lapse of moral judgment, but is actually a financial risk as well.
ML: Investors with strong convictions can still perform in alignment with the broader market. In fact, investing using ESG ratings has been shown to reduce risk and offer financial advantages. Plant-based investing could result in a significantly smaller carbon footprint while avoiding the risks associated with animal production, all benefits that we expect more and more companies to seek.
Whatever name best speaks to your values – plant-based investing, vegan investing, cruelty-free investing, or human investing – investors are increasingly recognizing the power and promise of this investment strategy. Tell your financial advisor or mutual fund company today that you are looking for vegan investment opportunities. We need all investors to build demand for investment options that provide long-term, positive value for both people and the planet