Jeff Simmons, CEO of animal health company Elanco, wants you to know something: You don’t have to stop eating burgers to save the planet. And you shouldn’t blame cows for climate change, either. In his view, “climate-neutral farming” is possible, and that would mean no one would need to give up meat and farms could continue to have just as many animals as ever.
When I spoke to Simmons a while back on the phone, his analysis surprised me. There are many conceivable scenarios for how the agrifood industry could adapt to increased environmental scrutiny. But I’ll readily admit that this one—no change in the scale or intensity of animal farming—was not one I had considered. Is it possible?
Elanco, a multibillion-dollar spin-off of Eli Lilly and the fourth-largest animal health company in the world, embraces technology to solve adverse climate impacts from agriculture. To succeed, “the cow is the how,” Simmons told me on a Zoom call. New food supplements and other innovations can reduce methane emissions from cows by up to 50%, he said.
I’ll spare you the technicalities of exactly how it works. But essentially, the idea is that if you change what goes into cows, bulls, and other farm animals, you can also affect what comes out of them.
In fact, it’s not just an idea: Before the end of the year, Elanco and Nestlé plan to roll out new food supplements in California designed to lead to emissions reductions (albeit modest ones of a few percent), Simmons said. In Europe, even more effective food supplements from Dutch company DSM with reductions of up to 35% in emissions are already on the market.
With these and other techniques, Simmons expects to eliminate the need to shrink meat consumption to reduce greenhouse gas emissions and slow climate change. And that’s not just good, but necessary, he says, because consumers in the U.S. and elsewhere simply aren’t getting rid of animal proteins from their diet. “Changing the diet is not where energy needs to go,” he said. “It’s not going to happen.”
Simmons is likely right. The only continent where total meat production has stopped growing in recent decades is Europe—and only as population growth stopped there. Everywhere else in the world, including the U.S., Latin America, Asia, and Africa, more meat is produced than ever before, despite the rise of plant-based alternatives.
To me, two questions remain open before betting the farm on climate-neutral agriculture.
The first is whether true climate-neutral farming is a real possibility and not just a promise. Despite the promises of methane reductions that Simmons touts, the National Oceanic and Atmospheric Administration warned that methane in the atmosphere had its fourth-highest annual increase in 2022. We’re far from climate-neutral farming, then, at least on a global scale.
The second is whether climate is too narrow a focus. At the conferences I’ve attended recently, more and more attention is going to a broader nature agenda beyond climate and carbon. Taking that wider lens, many issues with meat production remain, Greenpeace says. Those issues include the effects on deforestation and wildlife, particularly in South America, and the risk of more zoonotic diseases spreading, such as SARS or COVID-19.
But Elanco’s strategy is based not only on protecting the climate but also on the premise of continued agricultural sector growth. Yet volume growth in the sector could end, whether because of preferences, rules, or planetary boundaries. In that case, continued growth for Elanco would depend more on the quality and margins of its offerings.
I did, however, appreciate Simmons’s approach to climate action. Although many Elanco customers—farmers—come from America’s heartland, and their political agenda may well be very different from that of climate pioneers on the coasts, that hasn’t stopped Simmons from working towards a climate agenda.
“I stand here to say, climate-neutral farming is possible, and farms today prove that it is possible and is profitable,” he told me. His one caveat: “Sustainability is only sustainable if it is profitable.” It is also the best argument to bring his customers on board.
Separately, I’ll be interviewing Joe Preston, CEO of sportswear company New Balance Athletics, live this Saturday in New York. We’ll talk about the company’s purpose, its social impact (including sponsorship of the New York City Marathon, which takes place the next day), and its sustainability journey. The interview is live on Zoom at 9:00 a.m. Eastern. You can sign up here.
More news below.
Peter Vanham
Executive Editor, Fortune
peter.vanham@fortune.com
This edition of Impact Report was edited by Holly Ojalvo.
ON OUR RADAR
BlackRock study finds gender-balanced companies outperform peers (BlackRock)
Companies with the most diverse workforces outperformed their country and industry peers with the least diverse workforces by an average of almost 2% per year over 2013-2022, a BlackRock study released today found. Diversity is the key word here, BlackRock added, as neither an over-representation nor an under-representation of women—or men, for that matter—was found to be optimal, but rather a "sweet spot" of "gender parity across key roles."
Women CEOs perform better than men on average, the study also found, though they still make up only 6% of CEOs at large public companies. Other findings: Investing in companies with "women-friendly cultures" may help performance and having fewer women in middle management is a predictor of future under-performance. BlackRock suggests disclosing and standardizing diversity, equity, and inclusion metrics.
Our take: These findings should not be surprising. The case for corporate gender parity has long been made, on the basis of equity and inclusion as well as performance. It's past time companies organize accordingly if they are serious about shareholder returns if not gender parity.
Firms with diverse boards achieve higher ESG ratings (Harvard Business Review)
Board diversity "tangibly and positively affects a firm’s environmental sustainability," an analysis of 15 years of data of the S&P 1500, published in Harvard Business Review this week, shows. "A 10 percentage point increase in the proportion of females on a board—roughly equivalent to 1 additional female director—is correlated to a 17.5% increase in a firm’s environmental rating...A similar increase in the proportion of Black directors is associated with an 18.4% boost in MSCI environmental scores."
Interviews conducted by the researcher, Ethan Moon, to try and explain the correlation, pointed to a possible explanation: "Overall, my interviewees seemed to believe that the results were driven by the fact that minority directors are more likely to bring up ESG issues, a consequence of gender and racial structures in the United States," he wrote. His takeaway, to which we have nothing to add, is this: "The spillover benefits that come with improved diversity make a strong case for placing DEI at the front of any business agenda."
