Why Harvard Sees Potential In Investing In Plant-Based Innovations
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When we think of plant-based innovations, we tend to think of veggie burgers and soy-based chicken. A course at Harvard, titled the “Great Food Transformation,” looked at the journey towards a sustainable, resilient food system. They discovered that such a quest is both a challenge and an opportunity. Reflecting back, the authors of the survey that emerged from the course determined that the collective effort of all stakeholders — investors, companies, policymakers, and consumers — to advocate for, invest in, and adopt plant-based innovations can combine to make real substantive change.
A survey of best practices for stakeholder engagement in plant-based innovation and protein diversification, titled “A Collaboration Between VegTech™ Invest and Harvard University’s ‘GOV 1318 Great Food Transformation’ Course,” offers a practical guide for engaging stakeholders to foster environmentally sustainable practices and promote plant-based innovations within companies.
Such plant-based innovation refers to innovating with plant-derived ingredients to ensure a sustainable food and materials supply chain. This includes creating a variety of proteins and strengthening the food production process by using more beans and legumes, and even using sugar to feed microbes to make fermented proteins and grow meat from cell cultures rather than animals. This definition also encompasses novel innovations around agricultural technology (“AgTech”) designed to improve the efficiency, productivity, and sustainability of food production, as well as strategies to reduce food waste.
While primarily focused on food, plant-based innovation can also refer to sustainable, nature-based ingredients utilized in the production of sustainable materials throughout the supply chain.
Through 6 case studies, the survey highlights strategies for implementing change through stakeholder advocacy tactics including letter-writing, shareholder resolutions, escalating, and remaining persistent as needed.
The case study of Engine No. 1’s interaction with ExxonMobil highlights the effectiveness of forming large coalitions and engaging on climate issues using tactics such as public engagement and strategic shareholder votes backed by a large alliance of investors. The ExxonMobil case illustrates the blend of both insider and outsider tactics in shaping corporate behavior. By leveraging insider approaches like board refreshment and shareholder votes, along with outsider methods such as press releases and media outreach, Engine No. 1 crafted a comprehensive strategy. Importantly, the success of this activism was bolstered by a coalition of large institutional investors. Their collective stance sent a strong message.
The case study of Carl Icahn’s engagement with McDonald’s notes the shortfalls of a campaign lacking a broad and diverse coalition, as well as the progress that has been made from a high-profile initiative covered by mainstream media. In 2022, Icahn made headlines for his efforts to get two members of McDonald’s board of directors replaced over concerns about animal welfare. Specifically, Icahn was critical of McDonald’s use of gestation crates for pigs, which are small metal enclosures used to house pregnant pigs — they are so small the mothers are not allowed to turn around. Icahn argued that these gestation crates were cruel and inhumane. Icahn’s campaign highlights the tension between investors who prioritize short-term profits versus those who prioritize long-term sustainability goals. It also raises questions about the responsibility of fast-food chains and other corporations to address pressing social and environmental issues, including animal welfare, worker rights, and the climate crisis.
The work of FAIRR, which has brought together institutional investors concerned about the financial materiality of Environmental, Social, and Governance (ESG) risks in companies and their supply chains, shows how large and diverse coalitions have encouraged companies to diversify their portfolios towards plant-based innovation and diversified proteins. (“ESG” refers to the set of criteria used to evaluate a company’s environmental performance, social impact, and policies.) To drive further change, FAIRR finds it essential to align with investor members to ensure that companies recognize the connection between protein diversification and climate mitigation and align with climate goals by advocating the use of Science-Based Targets as well as integrate portfolio diversification into their net-zero narratives. They find 94% of the GHG emissions for these companies come from the supply-chain (Scope 3 emissions), and that addressing this issue is crucial for achieving carbon reduction goals. Certain companies, like Conagra Brands, have already witnessed emissions reductions by increasing their plant-based procurement, highlighting the positive impact of this strategy.
The VegTech Invest and Harvard coalition also delved into the work of As You Sow. This campaign is focused on engaging companies to promote responsible antibiotic policies throughout their supply chains, aiming to phase out the routine use of antibiotics. The campaign is supported by Rachel’s Network, a community of women environmental funders concerned about the growing threat of antibiotic resistance. They believe that addressing the overuse of antibiotics is a crucial step towards creating a more sustainable food system. The campaign has included shareholder proposals and requests for companies to review and potentially change their practices regarding antibiotic use.
The fifth case focused on the Humane Society of the US v. Tyson, deliberating how public interest in shareholder resolutions can spark change. Beginning in 2012, the Humane Society of the US (HSUS) filed a number of different shareholder proposals with Tyson Foods. These proposals were aimed at improving animal welfare standards in Tyson’s operation, particularly regarding the use of gestation crates. The events were covered in the national news, including the HSUS President seeking a seat on Tyson board. Although none of the shareholder proposals passed a vote, the public and key decision makers within the company were exposed to Tyson’s practices, and in October 2012, Tyson began to audit its suppliers and their standards. Despite the challenge of working within the limits of the laws that make it illegal for activists to publicize undercover videos of livestock treatment, Tyson’s use of gestation crates was exposed in the national media by NBC by 2014. Due in part to the public exposure of bad practices and in conjunction with HSUS’s shareholder proposals, in January of 2014, Tyson Foods sent a letter to its pork suppliers, urging them to improve animal welfare standards, including moving away from gestation crates.
The final case study was that of Mighty Earth, a global advocacy organization dedicated to protecting the environment by focusing on conserving threatened landscapes, protecting oceans, solving climate change, and driving industry-wide transformations towards sustainable practices. Mighty Earth’s effectiveness in driving change stems from its multifaceted approach to environmental advocacy, combining insider and outsider tactics with a focus on impact. Tactics range from distributing data-driven reports to practicing shareholder engagement with decision-makers. For example, Mighty Earth was involved in the successful shareholder revolt faced by Sumitomo Corporation over what was perceived as empty climate action rhetoric. Mighty Earth focuses on disrupting entrenched interests in industries that are significant contributors to environmental degradation, deforestation, biodiversity loss, and climate change. One of the core strategies employed by Mighty Earth is the creation of a “Perfect Storm” of campaigns, communications, and engagement with decision makers.
The report moves on to a list of recommendations for future advocacy efforts that make the best use of resources for the greatest impact. These guidelines include:
- Define your objectives. As the leading organization of a stakeholder initiative, identify the key issues, aims/goals, and benchmarks that you would like to communicate to the targeted company and its stakeholders for effective coalition building. Objectives should be clear, attainable, and have a broad mandate. Ideally, they should align with regulatory proposals, standards, or rules requiring climate transparency. Having sufficient resources to ensure the longevity of a campaign is essential.
- Identify sustainable profits. Take note of the financial upside that is possible due to sustainable practices to appeal to profit-focused company board members, the CEO, and shareholders.
- Build collective action. Greater success can be achieved by engaging corporations with large, diverse coalitions that utilize both insider and outsider tactics. Coalition-backed letter-writing and social-media campaigns are an easy, efficient, and impactful way to advocate. Engage in press and social media campaigns to efficiently galvanize the public interest. When regular press, socials and hashtags don’t lead to change, expose information on bad company practices and educate the public on the same through the press and in social media. This not only keeps the public informed, but also garners external support and can be helpful in negotiations.
- Escalate strategically. If the initial tactics such as composing open letters fail to yield substantive progress, invested parties should consider a shareholder resolution proposal, paying strict attention to guidelines that are summarized herein to better their chances of success.
- Keep the pressure on. Even a successful commitment doesn’t mean that the company will implement that to which they have agreed. Follow-up examinations of corporations and oversight committees may be needed.
In summary, this report lays out rules for joining forces to successfully engage and influence industry to help promote sustainable production and activities. There is room for many stakeholders to have an impact. By drawing on these strategic recommendations, advocates can more effectively grow coalitions to advance corporate social responsibility and sustainable business practices.
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