Lipstick on a Pig: An ESG Case Study of Tyson Ventures
Sustainability and Scandal, The Paradox of Tyson's Reputation
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In recent years, the term ‘sustainability’ has become a buzzword in the world of investing. Companies across all industries are making public declarations about their dedication to environmental, social, and governance (ESG) practices, and investors are taking notice. But what happens when a company's investment arm is caught up in environmental scandals of its own?
Enter Tyson Foods and their investment arm Tyson Ventures. As one of the largest producers of meat in the United States, Tyson Foods has been the subject of environmental criticism for years. In 2016, they were named the top water polluter among agribusinesses, and in 2020, they were sued by the state of Alabama for wastewater pollution that killed an estimated 175,000 fish. They have also faced allegations of price fixing and irresponsible treatment of workers.
Despite these missteps, Tyson Ventures has made public declarations about their commitment to sustainability, stating that it is a consideration in all of the investments they make. But can they be taken seriously when their parent company is mired in environmental scandals?
(This is Tyson’s Sustaianability Matrix highlighting the Company’s Top Material Issues. Source: Tyson’s ESG Hub.)
Investors in Tyson Ventures must demand tangible operational, product, and behavioral changes in the area of sustainability—not just talk. They must pressure Tyson to take immediate action to address waste, increase transparency in paying their farmers, and improve their treatment of workers. Long-term reputational risk and costs from litigation make it difficult for Tyson's investment arm to have credibility in the marketplace as an investor who puts dollars into projects concerning animal welfare and water management.
This situation highlights the need for investment groups to manage the reputation of the brand with which they are most closely affiliated. Sustainability starts at home, and companies must be held accountable for their own environmental missteps before investors can trust them to invest in sustainable projects. Investors must push companies to not just talk the talk but walk the walk when it comes to sustainability. Only then can we make real progress toward a more sustainable future.
A Counter-Example: DSM Venturing
As DSM Venturing proves, investing in sustainable food production can have a positive impact on both the environment and society. While Tyson Ventures may be struggling with their sustainability efforts, DSM is finding success by focusing on health and nutrition in their investing. By empowering small businesses to produce food more sustainably, DSM is helping to address the major environmental challenges associated with food production, including greenhouse gas emissions and freshwater consumption.
One of DSM's success stories is their investment in Meatable, a startup that produces lab-grown, cultivated meat. This innovative approach to meat production has the potential to reduce land and water use, as well as greenhouse gas emissions. In addition, Meatable's process eliminates the need for antibiotics in livestock farming, which has been a major contributor to the rise of antibiotic-resistant bacteria.
The partnership between DSM and Meatable shows how small businesses can attract large-scale investments when sustainability is baked into their business model. The alternative meat industry as a whole is attracting lucrative investments, as more and more investors recognize the potential of sustainable protein production solutions. The billions of dollars invested in the industry in 2020 alone demonstrates that sustainable food production is not only good for the planet and society, but also a viable investment opportunity. As we continue to face pressing environmental challenges, sustainable food production will become increasingly important, and investors who recognize this fact will be poised to profit from this growing market.