Investing in a Vegetarian and Vegan Lifestyle: Put Your Money Where Your Mouth Is

The meat industry has a significant carbon footprint, raising concerns about the sustainability of our consumer habits. However, investing in vegetarian products has emerged as a potential solution, with the development of the food tech sector taking it from a niche idea to mainstream territory. SustainFinance believes that investors should pay attention to this growing trend.

Vegetarianism and veganism have gained popularity due to concerns about environmental degradation, health implications, and ethics surrounding meat consumption. These dietary choices also align with the desire for more equitable food distribution and the protection of rural communities. Furthermore, data shows that vegan and vegetarian food production is more resource-efficient and less taxing on the environment.

The impact of animal-based food production on climate change cannot be ignored. By substituting beef with plant-based alternatives, the average American could reduce their food-based carbon footprint by a staggering 96%. If the entire world made this switch, up to a quarter of the planet’s ice-free surface and up to 15% of global fresh water usage could be repurposed or preserved. The efficiency of water usage in fruit production compared to meat is a mere fraction, with one kilogram of fruit requiring only one-fifteenth of the water needed to produce an equivalent weight of meat.

While enough food is produced globally to feed everyone, overproduction and overconsumption of meat in rich countries hinder the availability of grains and produce needed for healthy nutrition in emerging markets. Lengthy global agri-supply chains also contribute to the carbon footprint of food products, as they often travel hundreds of miles before reaching consumers.

Unfortunately, the pursuit of profit in the food industry has led to negative consequences. By encouraging consumers to consume excessive calories, global agri-businesses have perpetuated widespread obesity and associated health crises. They have effectively imposed a social cost that is only beginning to be understood. The addictive nature of our diets, with processed foods engineered to be as habit-forming as tobacco or alcohol, draws parallels to the prescription opioid crisis of the late 1990s and early 2000s.

Regulatory scrutiny of the sugary food and beverage industry in the United Kingdom indicates the potential for similar actions against the meat industry. Companies dominating the global food sector wield significant power, dictating what we eat, how it is produced, and where it comes from. Their consumption of resources, influence on government policies, and contribution to the developmental disparity between developed and emerging countries highlight the need for change.

Prioritizing short-term growth over the associated social and environmental costs has detrimental effects on natural resources and workforce health and safety. The use of fertilizers and pesticides may boost harvest yields but can lead to ecological damage. Neglecting long-term sustainability leads to depleted regional resources, declining crop yields, and increased poverty in less developed countries.

Consumers and investors can initiate positive change by educating themselves about the origins and resource requirements of the foods they consume. Reducing meat consumption, especially beef, and sourcing food from local suppliers are crucial steps toward sustainable eating habits. As demand for vegetarian and vegan products grows, the food industry will innovate and make non-animal alternatives more accessible and affordable.

To accelerate this cultural shift, the investment community must play a key role. Agri-businesses feature prominently in retirement portfolios, making it essential for fund managers to hold them accountable. Demand for good governance and transparency concerning carbon emissions, workforce practices, and consumer health and well-being should be prioritized. Ideally, boards of these companies should focus on sustainability and develop clear roadmaps for a less destructive, healthier, and more equitable food supply chain.

While ethical considerations and risk mitigation are crucial, investment portfolios must generate returns to meet client objectives. Initial results suggest that vegetarian and vegan investments have shown promising performance. Exchange-traded funds like Beyond Investing’s US Vegan Climate Change (VEGN) have outperformed the S&P 500 while avoiding companies associated with animal suffering, climate change, and environmental degradation. The successful IPOs of companies like Beyond Meat and Oatly further demonstrate investor interest in this sector.

Investment in sustainable food production systems is vital to reduce the environmental impact of the industry. However, access to such investments has historically been limited. The emerging food tech industry, coupled with innovative platforms like Invest Vegan, aims to bridge this gap and enable investors to align their financial goals with their values.

A green revolution has transformed energy and waste management systems, but a similar revolution is needed in global food production and diets. The investment community can catalyze this transformation by encouraging Big Food to adopt healthier and more sustainable practices.

Disclaimer: The opinions expressed in this article are those of the author and do not necessarily reflect the views of Pankaj Sihag or its employees.