Climate change, environment, ESG, health, new economy, Socially Responsible Investing, SRI, Taxes

Pending Meat Tax Could Change Economic Behavior

In the past year plant-based meat products have made real inroads into many popular restaurant chains. Many plant-based brands have developed models that make them cost competitive and flavor competitive with animal-based meat products.

Animal-based meats have been criticized on several levels. The role that CAFOs (concentrated animal farming operations) play in deforestation, methane release, pollution, and accelerating climate change. In addition, several recent studies have shown that meat products have many negative health consequences, including cancer. (1)

In a recent paper Fitch Solutions Macro Research found that meat could be the target of new consumption taxes, similar to sugar taxes to fight obesity that have proliferated over the past few years.

“The idea is still its infancy and faces a lot of opposition from farming groups, but it’s emerging as a trend in Western Europe, said the research group. If taxes gain traction, it could encourage more people to switch to poultry or plant-based protein and help drive the popularity of meat substitutes.” (2)

Taxing negative behaviors is an effective tool to drive economic and social change.

“The global rise of sugar taxes makes it easy to envisage a similar wave of regulatory measures targeting the meat industry,” Fitch Solutions said.

“Seventy percent of consumers in Germany, France and the Netherlands support a meat tax that includes environmental costs, if tax revenues are used to reduce VAT on vegetables and fruit,” according to a 2021 survey. (3)

However, according to Fitch Solutions, “it is highly unlikely that a tax would be implemented anytime soon in the United States or Brazil.”

“The loudest argument against meat at the moment is not based on health but climate change.”

“According to the IPCC report, agriculture, forestry and other land use contribute to around a quarter of greenhouse gas emissions, a fact that policy-makers should consider when considering how they should invest to adapt to and mitigate the effects of climate change.” (4)

“Reducing greenhouse gas emissions from all sectors is essential if we want to keep the load to two degrees Celsius.”

Many industries are at risk with the coming changes because they have survived financially by externalizing many costs which impact all of society. It is no longer prudent to ignore the impact of such externalities, either as citizens or executives. Companies as well as individuals benefit when sustainability is integrated into what is produced.

As investors, we play an important role in how capital gets allocated within the economy. We all need to ask one simple question…

“Do your investments match your values?”

To learn more and discuss these issues feel free to contact me at james.cox@ffgadvisors.com

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To learn more contact:
James Cox
Cell: 267 323 6936
Email: james.cox@FFGadvisors.com
First Financial Group 150 South Warner Rd.  Suite 120 King of Prussia, PA 19406

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2021-128401 exp 10/23

  1. https://www.cancer.org/latest-news/world-health-organization-says-processed-meat-causes-cancer.html
  2. https://www.bloomberg.com/news/articles/2019-08-13/red-meat-could-be-the-next-sin-tax-after-sugar-fitch-says
  3. https://www.foodnavigator.com/Article/2021/01/27/Meat-tax-German-French-and-Dutch-consumers-support-price-hikes#:~:text=In%20Germany%2C%2080%25%20of%20voters,a%20%E2%82%AC1%2Fkg%20tax
  4. https://news.un.org/en/story/2019/08/1043921