I think we're the ones getting milked --- not the cows!! :-(
Why your morning corn flakes could milk your money
MARKETWATCH 2:23 PM ET 07/15/14
Symbol Last Price Change ASBFF 51.2down 0 (0%) GPDNF 75.34up +1.78 (+2.42%) GIS 52.9999up -0.0401 (-0.08%) MDLZ 38.15 -0.41 (-1.06%) PEP 90.3636down -0.7164 (-0.79%) NSRGF 76.58down -0.981 (-1.26%) QUOTES AS OF 10:00:17 AM ET 06/26/2014
For many of us, climate change evokes images of skies darkened by coal-burning plants or oceans slick from spilled oil. But it's time to take a closer look at another industry with hands dirty from polluting the atmosphere -- an industry whose investors have a great deal to lose if nothing is done to stop the climate crisis: Food companies.
People don't normally think "climate change" when they sit down to enjoy a favorite meal. Tony the Tiger and the Pillsbury Doughboy don't evoke images of droughts, floods or storms.
But maybe they should.
Oxfam recently released a report, "Standing on the Sidelines," which shows that reckless deforestation, nitrous oxide released from the overuse of fertilizers, large-scale land clearance, and other harmful production practices in the industrial-scale supply chains of the world's 10-biggest food companies are huge contributors to global warming that, ironically, could cause tens of millions of people to suffer hunger unnecessarily.
Together, these 10 companies, Associated British Foods(ASBFF) , Coca-Cola (KO) , Danone(GPDNF) , General Mills(GIS) , Kellogg (K) , Mars, Mondelez International(MDLZ) , Nestlé (NSRGY) , PepsiCo(PEP) and Unilever (UL) , create an astounding 264 million tons of greenhouse gas emissions every year -- as much as 69 coal-fired power plants. If these " Big 10" were a country, it would be the 25th biggest polluter on the planet, spewing more emissions than oil and gas producers Qatar and the United Arab Emirates.
The emissions these companies cause are contributing to a growing humanitarian catastrophe. By 2050, there could be 50 million more people made hungry because of climate change. More frequent, unpredictable and extreme storms, floods, droughts and shifting weather patterns are affecting food supplies, driving up food prices and causing more hunger and poverty.
These disruptions are bad news for both food companies and their investors. Unilever says it now loses $415 million per year due to extreme weather events such as flooding and extreme cold. In March of this year, General Mills'(GIS) CEO Ken Powell said that in the previous quarter, extreme weather had dampened sales and cost his company 62 days of production, "which hasn't happened in a long time to us, think decades."
These types of losses could just be the tip of the iceberg. Oxfam's projections show that the price we pay for cereal brands like Kellogg's Corn Flakes and General Mills'(GIS) Kix could spike by as much as 30% in the next 15 years because of climate change.
The good news for the "Big 10" food companies is that they are immensely powerful players in the sector, with the influence to drive serious emissions reductions using existing tools and technologies. Oxfam's report showed that if these 10 companies replicated the best practice in the industry, they could cut a further 80 million tons of greenhouse gas emissions by 2020 -- equivalent to taking all of the cars in Los Angeles, Beijing, London and New York off the road.
Some companies are already on the right path to reducing emissions and disclosing their progress. Unilever, Nestle(NSRGF) and Coca-Cola are leading the pack, though even they have a ways to go. Yet too many companies are standing by silently, hoping the crisis will solve itself. Kellogg and General Mills(GIS) stand out as among the worst of the "Big 10" in this regard.
More than half of the greenhouse gas emissions caused by big food companies comes from their supply chains. Yet General Mills(GIS) and Kellogg don't even have targets to cut supply-chain emissions. They do little to ensure that their suppliers are growing ingredients responsibly and reducing emissions. Even though these companies spend tens of millions of dollars to influence government policies on issues from food safety to nutrition standards, they stand by silently as fossil-fuel companies lobby to prevent ambitious climate action.
That's where investors and consumers come into the picture. These two groups have a great deal to lose if the food industry continues to drag its feet in response to the real and present dangers posed by climate change. They also have significant sway over how companies operate. If consumers and investors speak out and urge the food industry to be a part of the solution to climate change, companies will have no choice but to listen.
Already many large investors and more than 239,000 people have joined Oxfam to call for more ambitious climate action from the food industry. The time has come for Big Food to step up.
Raymond C. Offenheiser is the president of Oxfam America. Find out more about food companies and climate change at www.behindthebrands.org/actnow.
-Raymond C. Offenheiser ; 415-439-6400; AskNewswires@dowjones.com
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