Why the 2020s Are A Watershed Decade for Plant-Based Alternatives
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Why the 2020s Are A Watershed Decade for Plant-Based Alternatives

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10 things investors should know about the plant-based food market Part 1 of 6
Why the 2020s are a watershed decade for plant-based alternatives Part 2 of 6
Plant-based meat vs. animal meat Part 3 of 6
 From bean to burger 4 of 6
Plant-based consumer potential 5 of 6
5 innovations in plant-based technology 6 of 6

The following content is sponsored by The Very Good Food Company

plant-based alternatives infographic

The 2020s: A Watershed Decade for Plant-Based Food

Are you among the millions of people who have been eating less meat in recent years? Plant-based alternatives are exploding in popularity, a trend that has become especially apparent during the pandemic.

This infographic from the Very Good Food Company (VGFC) sheds light on why the global plant-based market is expected to go from a novelty to a new normal within the next decade.

The Market Outlook for Plant-Based Alternatives

Ever since the first vegetarian society was formed way back in 1847, plant-based diets have come a long way.

The U.S. plant-based food market is growing at impressive rates, as plant-based alternatives to conventional meat and animal products are flying off the shelves.

Total U.S. plant-based food marketGrocery sales of plant-based alternativesGlobal plant-based market value
2019: $5.5 billion2019: $850 million2020: $29.4 billion
2020: $7.0 billion2021: $1.3 billion2030P: $162 billion
National growth in sales of plant-based food outpaced regular retail food by nearly double between 2019 and 2020.This represents a 53% increase in just two years.Plant-based alternatives will make up 7.7% of future global protein demand.

Despite a slight dip in U.S. sales in the latter half of 2021, the big picture outlook for the industry remains promising for investors.

There are three factors powering this eye-watering growth: a more reliable supply chain, a boost in conscious consumers, and a move towards local, ethical brands.

1. Reliable Supply Chain

During the early days of the COVID-19 pandemic, the livestock industry was hit hard. A typical supply chain to produce animal-based meat looks like this:

  1. Farm and Production
  2. Packaging and Processing
  3. Distribution and Delivery
  4. Retail
  5. Consumer

Amid these complex steps, many processing facilities emerged as hotspots for the virus, forcing them to shut down. Despite the surging food demand of stay-at-home consumers, meat suppliers struggled to keep up.

Plant-based alternatives jumped in to fill the gap. Between March and May of 2020, growth in sales of plant-based meat skyrocketed, while animal-based meat stalled:

 Plant-based meatAnimal-based meat
March 1, 2020+44%-1%
March 15, 2020+152%+80%
May 10, 2020+71%+41%

Footnote: Figures represent the rise in dollar sales compared to the same week in the previous year.

While the plant-based market is not immune to supply chain issues of its own, the requirement for fewer steps makes it more resilient. The overall growth of plant-based alternatives has stabilized, and the sector continues to outperform animal products.

2. A Boost in Conscious Consumers

Plant-based alternatives were not only a matter of convenience, but a reflection of wider consumer shifts in attitudes during the pandemic.

Near 14.5% of all global greenhouse gas (GHG) emissions that come from humans are from the rearing of livestock. Of this share alone, cattle make up a whopping 65% of emissions, in creating products such as beef and milk.

As consumers become both more environmentally-aware and health-conscious, various surveys reveal the impact this has on less people choosing meat—and on the growth of the plant-based alternatives market:

  • 70% of people are more aware of the effects human activity has on the climate, compared to before the pandemic.
  • 33% of respondents consistently reduce the amount of meat they consume.
  • 62% of consumers would reduce meat consumption due to environmental concerns.
    Among these, 43% say they would replace meat-based protein with plant-based protein.
  • 52% of U.S. consumers are eating more plant-based due to perceived health benefits.

Increased public awareness and changed behaviors means that the plant-based trend is more than a fad. It could potentially be the future.

3. A Shift Towards Local, Ethical Brands

A growing focus on sustainability led by consumers’ concern for the environment is altering their purchasing habits. In a survey of over 18,000 consumers by IBM, it was reported that:

  • 57% are willing to change their shopping habits to reduce environmental impact.
  • 77% indicate sustainability is important to them.
    Within this group, 72% would pay more for brands that are sustainable and environmentally responsible.

Consumers are becoming more conscientious of what they eat, and are more perceptive to the impacts of their consumption habits.

Thanks to these evolving decisions, plant-based alternatives have firmly taken root. The market’s adoption is expected to maintain its momentum, making the 2020s a watershed decade for the industry.

Click here to learn more about the Very Good Food Company and how its clean, healthy protein alternatives are feeding this growing global movement.

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How Ending Tropical Deforestation Can Keep Global Warming Below 1.5°C

Tropical deforestation is a culprit of carbon emissions—which makes protecting forests crucial to keep to the Paris Agreement 1.5°C pathway.

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How Ending Tropical Deforestation Can Keep Global Warming Below 1.5°C

In the case of global warming, a few degrees make all the difference.

The United Nations’ latest IPCC report emphasizes that the Earth is on a collision course with catastrophic climate change—that is unless, in line with the 2015 Paris Agreement, the global rise in temperatures can be limited to 1.5°C.

To achieve this however, the world will need to significantly reduce its carbon emissions. Today’s graphic from The LEAF Coalition highlights how protecting forests is essential to this process.

Tropical Deforestation: A Carbon Emissions Culprit

According to the World Economic Forum, to keep to a 1.5°C pathway by 2030, we’ll need to cut greenhouse gas emissions in half. For this trajectory to be maintained in 2050, emissions need to be completely eliminated.

However, tropical deforestation accounts for 10% of global carbon (CO₂) emissions today, which is comparable to the emissions outputs of entire countries.

 Est. Annual CO₂e Emissions
🇨🇳 China12.4 Gt/year
🇺🇸 U.S.6.0 Gt/year
🌳 Tropical tree cover loss5.3 Gt/year

In fact, combined emissions from tropical tree cover loss, including activities of deforestation, rival annual emissions from major emitters, coming in third just after China and the United States.

Protecting Forests is Key

The urgency of ending tropical deforestation to curb emissions cannot be understated. If in the previously mentioned 2030 scenario, it is assumed that emissions have already dropped steeply, deforestation today would still need to be cut by 75% in order to maintain the possibility of keeping to the 1.5°C pathway.

However, there’s a significant barrier—the FAO estimates that we are losing 10 million hectares of forests every year. To put that into perspective, that’s a loss equal to the size of New York’s Central Park every 18 minutes.

For these crucial reasons, urgent collective action is needed to protect forests. Find out how The LEAF Coalition, a public-private initiative is bringing together businesses to do more to fight climate change and halt tropical deforestation.

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ESG Data: The Four Motivations Driving Usage

ESG controversies can damage a company’s value, but ESG data may be able to help manage this risk. What are other reasons for using ESG data?

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ESG Data: The Four Motivations Driving Usage

Data is key to the environmental, social, and governance (ESG) revolution. Access to granular ESG data can help boost transparency for market participants. Unfortunately, 63% of U.S. and European asset managers say a lack of quantitative data inhibits their ESG implementation.

Being clear on the potential application of this data is equally important.

  • Investors and banks can use ESG data for risk assessment, to spot opportunities, and to push companies for change.
  • Companies can publish their own ESG data, quantify progress on their ESG goals, and use data to inform decisions.
  • Policymakers can use ESG data to inform regulatory frameworks and measure policy effectiveness.

This graphic from ICE, the second in a three part series on the ESG toolkit, explores four primary motivations of ESG data users.

1. Right Thing

The objective: Having a positive social or environmental impact.

For investors, this can involve screening out companies that conflict with their values and selecting companies that align with their ESG objectives.

As another example, it can involve comparing the social impact of municipal bonds. One way investors can measure social impact is through scores that quantify the potential socioeconomic need of an area, using metrics like poverty and education levels. Here are the social impact scores for three actual municipal bonds issued in Florida.

StateBond IssuerSocial Impact Score
(Higher = larger potential impact)
FloridaIssuer #176.5
FloridaIssuer #266.6
FloridaIssuer #343.2

Issuer #1’s bond is projected to have a community impact that is nearly twice as high/positive as Issuer #3’s bond.

For companies, doing the right thing can include assessing their progress on ESG goals and benchmarking themselves to peers. For example, gender and racial representation is a growing area of focus.

2. Risk

The objective: Managing ESG risks, such as climate and reputational risks.

For investors, this can involve back-testing or analysis around specific risk events before they materialize. Here are the risk profiles of two actual municipal bonds in California. The shown bonds are practically identical in many ways, except their wildlife score.

 Issuer #1Issuer #2
Current Coupon Rate5.0%5.0%
Maturity DateAug 01, 2048August 01, 2048
S&P RatingAAAA
Price to Date (Call Date)Aug 01, 2027Aug 01, 2027
Price122.0122.0
Yield1.0%1.0%
Wildfire Score (Higher = more risk)3.62.7

Managing ESG risk can also involve analyzing a company’s policies and governance for weaknesses. This is important as an ESG controversy can have long-lasting effects on the valuation of a company.

In one study, companies with ESG controversies dropped more than 10% in value relative to the S&P 500. They hadn’t fully recovered a year after the incident.

3. Revenue

The objective: Targeting outperformance through ESG analysis.

Selecting companies with strong ESG data can align with long-term growth trends and may help boost performance. For heavy emitting industries, research indicates that European companies with lower emissions trade at much higher valuations. The chart below shows companies’ price-to-book ratio relative to the Stoxx 600* sector median.

 UtilitiesEnergyMaterials
Above Median Emission Intensity (Bad)1.91.12.0
Below Median Emissions Intensity (Good)2.71.92.1

*The Stoxx 600 Index represents large, mid and small capitalization companies across 17 countries of the European region: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland and the United Kingdom.

Energy companies with low emissions trade at a valuation nearly two times higher than energy companies with high emissions.

4. Regulation

The objective: Understanding and complying with relevant ESG regulation.

The International Sustainability Standards Board has announced a global reporting proposal aligned with the Task Force on Climate-related Financial Disclosures (TCFD). In addition, a growing number of jurisdictions will require organizational reporting that aligns with the TCFD.

  • Brazil
  • European Union
  • Hong Kong
  • Japan
  • New Zealand
  • Singapore
  • Switzerland
  • UK

Not only that, a European Union regulation known as Sustainable Finance Disclosure Regulation (SFDR) came into effect in 2021. It seeks greater transparency in disclosures from firms marketing investment products. Even firms located outside the EU could be impacted if they serve EU customers. In total, the market cap of these non-EU companies exposed to SFDR amounts to $3.2 trillion.

Matching ESG Data with Motivation

There will be growing demand for transparent data as ESG investing flourishes. To remain competitive, investors, policymakers, and companies need access to ESG data that meets their unique objectives.

In Part 3 of the ESG Toolkit series sponsored by ICE, we’ll look at key sustainability index types.

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