The growing focus on climate change threatens a number of industries’ very existence. One of them is the food industry – and especially the meat sector. This is forcing the entire industry to rethink how it will make money in the future.
Climate change has many victims. For a long time we have known that the climate endangers a number of species. But now we are also witnessing “endangered sectors”. That is, business sectors that contribute to exacerbating climate change – and therefore must be limited, transformed or even phased out. The most obvious example is the fossil fuel industry – and thus the companies working with coal, oil and gas. Here we are witnessing new political regulation, investors that are pulling back money, and new industries and technologies challenging the market with renewable alternatives.
But the gradual dismantling of the fossil fuel industry is just the beginning. There are a number of production industries next in line as these are also putting great pressure on global resources. This includes the transport sector, the fashion industry as well as the travel industry. It goes for all the sectors that are not “climate-politically” correct.
One of the absolute most “endangered” sectors is the food industry – especially meat producers. The reason for this is obvious: The food sector is currently one of the largest climate “sinners” and the sector alone is accountable for 25-33% of global greenhouse gas emissions. The effects on climate change posed by this industry alone are so great that it would cost 224% of the industry’s total earnings to limit the negative environmental impact, according to a study by KPMG. That is, so to speak, the unpaid bill the food industry is leaving for the rest of society to pay.
So the reality is that the big climate sinning sectors must prepare themselves for a comprehensive paradigm shift and innovate their production and business strategies. They should follow the mantra “kill your core or the core will kill you”.
A new and debated study from the University of Oxford has digested this challenge and represents it with some very specific numbers describing the danger confronting the food industry – and especially the meat sector: In most Western countries the consumption of beef, lamb and pork will have be reduced by 93%, eggs by 71%, milk by 60%, sugar by 64%, and chicken by 45%.
In the long-term, the climate must be the winner
To meet these goals, the agriculture and food industries must quickly find alternative ways to make money.
Arguments that there is a risk of losing jobs, economic profit, and national competitiveness, are not convincing because of the political obligations and commitments to the Paris Agreement and the 17 UN Sustainable Development Goals. The climate must and will win – and it must to protect the very conditions of doing business. So the reality is that the big climate sinning sectors must prepare themselves for a comprehensive paradigm shift and innovate their production and business strategies. They should follow the mantra “kill your core or the core will kill you”.
As climate change accelerates, the demand for sustainable production will increase, and the “endangered” sectors could very well benefit from paying close attention to the current lessons of the coal, oil and gas industries.
Four inescapable ‘cross-pressures’
The new reality for the food industry, especially the meat sector, is that they are threatened and confronted by inescapable cross-pressures. These four are:
1) Regulatory pressure: All governments will eventually have to introduce new regulation aimed at the agricultural and food production sectors in the coming years in order to meet their global obligations.
2) Consumer pressure: Consumers are increasingly becoming climate conscious. The decline in meat consumption, especially among young people, is a trend that will only strengthen. We have assessed this level of awareness elsewhere in this issue.
3) Competitive pressure: Alternative food products are being developed at a rapid pace and new food companies are mushrooming everywhere.
4) Investor pressure: Sustainability is gaining grounds in the minds of investors. They will follow new trends and gradually steer away from the environmentally harmful sectors, as documented in a previous issue of The Sustainian.
The agriculture and food industries are thus “endangered” sectors – and the sooner the industries realize this, the better their possibilities are to adjust to the future of sustainable food. A company that does not yet have a long term plan for how to handle this shift will quickly lose.
One “next practice” example is IKEA. Besides being one of the world’s biggest furniture companies, the company also operates the world’s 6th largest restaurant which accommodates 650 million people every year. Here, they hand out 110 million hot dogs a year, and now IKEA has gone as far as to develop a vegan hot dog. It was launched in Copenhagen this past summer and has become so successful that IKEA already expects to sell 10 million vegan hot dogs a year. IKEA is a great example of how a big player can adjust in due time. It is also an example of how fast new players are rising and gaining market share – these are the players that can quickly get a sense of the new sustainable food market and can meet new needs.
