Nicole Astra: Welcome to Talking Plant Protein. My guest today is Aarti Ramachandran with FAIRR initiative. Aarti, welcome to the show.

Aarti Ramachandran: Thank you for having me, Nicole, I'm glad to be here.

Nicole Astra: I want to talk about ESG investors and what they value and how perhaps it's differed from, say, even five years ago.

Aarti Ramachandran: I think to your question around what investors value, what has been interesting to see is, certainly in the food sector, previously, I think a lot of the discussion and the agenda was being driven by companies, by the civil sector. And I think we're seeing a slow shift in that in which investors are getting much more involved in what constitutes good reporting, what constitutes proper risk management, and getting into the real granularity of it.

            And that's partly been driven by a focus on risk because they're beginning to see, certainly post-pandemic, they're beginning to see how an environmental or social factor can completely shift, have systemic shocks. And certainly, this year especially, with climate risk, and the extreme weather events that we're seeing play out around the world, how they've morphed into price volatility in feed commodities and so forth. All of that has played out in investors taking a much more focused role on why these risks need to be integrated, what is the right way to measure these risks, report on these risks and so forth. And certainly, regulation is moving in that area too, for investors and for broader economies. So you're seeing that a lot of investors are really pushing for more specific, granular detail, when it comes to areas like ESG and, certainly, climate risk.

Nicole Astra: And let's break down the tools that you have provided for these investors, the protein producer index and a climate risk. Break those down for us.

Aarti Ramachandran: Well, FAIRR's primary, what we've tried to do over the last four years, is to really build awareness within the institutional investor community on the risks and opportunities linked to protein production systems, and how those play out in their own investment decision-making. And leveraging capital markets to drive strategic action within the food sector. And so part of our offering to large institutional investors is, of course, data, bottom up company analysis of key players in the sector, and how they are managing, integrating, reporting risks, across a range of issues, in terms of their day-to-day business.

Nicole Astra: Did you anticipate the plant protein growth, from five years ago even, to today? The opportunity, the investment, being poured into research and development in the plant protein space alone is monumental.

Aarti Ramachandran: Absolutely, yes. Well, I'd like to say we foresaw the explosive growth, but certainly, I think we were very, very optimistic. It's one of the reasons why we launched an engagement called the sustainable proteins engagement, where we are, essentially, asking 25 large manufacturers and retailers to build a protein diversification strategy in line with their climate targets. So what that means is to make sure that their protein does not... The protein profile and the product profile of these companies, whether it's a Walmart or a Tesco or a Nestle or Unilever, it grows in line with their climate targets. And so, similar to the energy sector where we are seeing a lot of push into alternative sources of energy and alternative sources of fuel, similarly, we're asking companies to start thinking about alternative sources of protein and more plant-based sources of protein to address some of the key risks that are linked to conventional protein supply chains.

            So we started this five years ago, the engagement is in its fifth year this year. We're, in fact, going to launch our fifth report in the next two to three weeks with how this engagement has progressed this year. We've seen phenomenal momentum from companies, in terms of setting targets on increasing their alternative protein portfolios. Having more conversations with their boards on how they need to start thinking about integrating some of these portfolio conversations and transition conversations into their sustainability strategies. So it's been really interesting and exciting to watch.

            So I'd say while we definitely didn't think it would be such an explosive growth, we absolutely thought that, from a sustainability perspective, this was going to become a much more material issue. We've been right about that. And certainly, investors are now definitely recognizing that this engagement has grown to about 17 trillion in investor support. So it's the largest engagement in the market. And I think we've also always emphasized the fact that this is a real growth story for food companies. It presents a phenomenal amount of disruption for companies, especially if the alternative proteins market scales. So it's something that companies should absolutely be paying attention to, and their investors too.

Nicole Astra: Looking to the future, can you share any predictions with us?

Aarti Ramachandran: I think there's a lot of work being done to keep the status quo, use innovation to keep the status quo, essentially, to maybe innovate on feed additives that already use methane from cows, while continuing to keep the herd of cows or grow the conventional beef business and so forth. I see a lot of mainstream growing interest in cultivated technologies, whether it's meat or dairy. We're already seeing this year a tremendous amount of momentum, the number of investor profile ranges from, of course, global FMCG companies to even some of the large institutional investors in the technology. So we've seen a lot of companies come up with reduced costs this year. We're seeing some interesting partnerships. For example, Nestle is partnered with one of the Israeli cultivated meat companies. So it'll be interesting to see how that technology scales.

Nicole Astra: Such an interesting perspective. We really appreciate your time today. Thank you, Aarti.

Aarti Ramachandran: Thank you.