Climate finance for agrifood systems has grown over 300% since 2019, reaching US$95 billion, reflecting a strong investment focus on transitioning food systems. However, a persistent challenge for investors is the gap between public corporate disclosures and actual sustainability practices within operations and supply chains. Over the past year, FAIRR has engaged with listed animal protein companies to understand how they navigate sustainability in practice, revealing structural and operational barriers that limit transparency, supply chain traceability, and governance effectiveness.
Public disclosures often fail to capture pilot projects, supplier engagement efforts, or operational improvements due to concerns about legal or reputational risks. This “greenhushing” limits investors’ ability to assess whether companies are managing sustainability risks effectively and slows the adoption of innovative solutions. Companies can address this by reporting early learnings, methodologies, and objectives from ongoing initiatives, while investors should look beyond high-level targets to evaluate implementation strategies and promote more decision-useful information.
Supply chain complexity and limited traceability remain major obstacles. Multi-tiered global supply chains make it difficult for companies to monitor upstream suppliers, particularly in areas such as animal feed, deforestation, and water use. This constrains risk management and reduces the credibility of sustainability commitments. FAIRR engagement highlights the need for peer learning on high-risk issues like soy-related deforestation, and research shows that best practices in traceability can support industry-wide improvements. Enhanced traceability is critical for enabling investors to allocate capital effectively and mitigate risks.
Corporate sustainability teams face governance challenges, as they are often small, overstretched, and insufficiently integrated into commercial and operational functions. Emerging regulations add administrative burdens, shifting focus toward compliance and reporting rather than transformative change. Executive incentives are another key factor; nearly half of protein producers do not link management remuneration to sustainability outcomes, reducing motivation for boards to prioritize these issues. Governance improvements, including sustainability KPIs in procurement and operational teams, can strengthen the implementation of strategies.
Overcoming these structural, operational, and governance barriers is essential to move from fragmented efforts to systemic change. Stakeholders—including investors, suppliers, clients, and NGOs—can support companies by setting clear disclosure expectations, sharing risk management best practices, and promoting supply chain resilience strategies. These actions can enhance operational performance, shareholder value, and the overall sustainability transition across the animal protein sector.
