The hamburgers and cheese that come from U.S. cattle may be favorite fare at many summer cookouts, but the methane the same cows produce is significantly less appetizing.
That’s especially the case for sustainable investors looking for a low-emission place to park their cash. “Enteric fermentation,” or livestock’s digestive process, accounts for 22 percent of all U.S. methane emissions, and the manure they produce makes up 8 percent more, according to the U.S. Environmental Protection Agency.
And although agriculture is a growing industry as the world looks to feed its swelling population, some investors are reluctant to support a sector with such a hefty methane footprint.
“There are a lot of factors or buckets that go into agricultural emissions, but livestock tends to be one of the largest focuses,” said David Nicola, portfolio manager of the Gratitude Railroad Farmland Fund, which launched this week and is targeting $40 million in capital commitments focused on regenerative agriculture.
It’s also an issue for Michael Landymore, a senior portfolio manager at Impax Asset Management responsible for the firm’s food and agriculture strategy. “We tend not to invest in companies that are solely focused on growing livestock,” he said in an interview Wednesday.
Methane, like carbon, is a greenhouse gas, but methane’s global warming impact per molecule is 25 times greater than carbon’s, according to the EPA.
In June, scientists from the Consultative Group for International Agricultural Research found that the agricultural sector must reduce non-CO2 emissions by 1 gigatonne per year by 2030 if it’s going to help meet the two degree limit on increases in global temperature required by last year’s United Nations climate agreement in Paris. Almost 130 countries that arrived in Paris last year to agree on emissions reductions included agriculture in climate change mitigation targets, according to CGIAR.
But while many agree lower emissions are an important goal for the livestock industry, just how they get there is still up for debate. It doesn’t help that there isn’t even a uniform way to measure cow-produced emissions.
For meat producers, “monitoring greenhouse gas emissions from cattle is challenging as there are more than 700,000 cow-calf stocker ranches in the U.S.” beef supply chain, Cargill Inc. spokesman Michael Martin said in an e-mail.
Isolating the impact of direct livestock emissions versus indirect emissions such as fertilizer, crop production, and transport for animal feed is also a challenge, companies and investors say. “The issue for agriculture is identifying the actors and creating levers for change,” Cynthia Simon, senior manager of investor initiatives at CDP, a not-for profit focused on corporate carbon and water measurement, said in an e-mail.