Animal rights are a growing investment theme

Investments around climate change are now mainstream. Investments linked to animal welfare aren’t, but they are moving up in importance, driven by some influential individual investors.

Legendary investor Carl Icahn recently took on the cause of pigs concerning their use by the fast-food chain McDonald’s, telling Bloomberg last week: “I really do feel emotional about these animals and the unnecessary suffering you (McDonald’s) put them through.” 

Icahn, not known for his sentimentality when it comes to investing, isn’t alone in his animal welfare crusade when it comes to tough investor types

Mult-billionaire Icahn, arguably the original activist shareholder, wants McDonald’s to honour its 2012 commitment to phase out its use of pork from suppliers that use gestation crates. Typically, these crates are the same size as the animal and leave no room to turn or lie down. So far, McDonald’s hasn’t honoured its pledge. 

Icahn’s pig efforts have support from some institutional investors, including a Norway pension fund KLP, which owns around $75 million of shares in the fast-food company. KLP wants McDonald’s to stop buying pork from breeders who still use the gestation crates practice. 

OK, KLP’s holding in McDonald’s, with a market cap of $187 billion, is minuscule. But Icahn has a way of influencing others to follow his lead, and there’s a groundswell of public opinion in the West wanting better animal welfare. All this will feed through to the responsible investment heads of institutional investors, and they will want to see change. 

And Icahn, not known for his sentimentality when it comes to investing, isn’t alone in his animal welfare crusade when it comes to tough investor types. Also supporting the cause is Jeremy Coller, the UK-based founder and boss of the no-nonsense private equity group Coller Capital. 

Indeed, Jeremy Coller has gone a few steps further than Icahn, turning his family office, CPT Capital, into an investment group pretty much led by improving animal welfare standards, particularly when it comes to the dairy industry. A recent BBC documentary on the diary sector exposed the often terrible abuse inflicted on cows – Coller has known this for years. 

CPT’s latest investments include Tel Aviv-based Remilk, which develops animal-free dairy products through microbial fermentation, and San Francisco-based New Culture, developing animal-free cheese.

Icahn says he’s not interested in the profit when it comes to his fight for better treatment of pigs. Perhaps at 86, the investor has gone soft. He may be old, but he’s not stupid. He sees animal welfare issues as moving up the political and economic agenda. 

Coller sees an obvious money-making opportunity in supporting startups that produce synthetic diary products. That’s where the ethics of the issue can make investors money. 

Of course, animal welfare isn’t unrelated to climate change. And many proponents of clean energy and other environmental issues are either overtly or inadvertently pro better animal welfare. 

In his new book, How to Avoid a Climate Disaster, Bill Gates believes rich countries should consume entirely synthetic beef. He sees this more as a climate necessity than an animal welfare one. That said, the animal welfare implications of this move are pretty big. 

But the difference today is animal welfare in an investment context isn’t some footnote in moving to a carbon-neutral society. 

Now investors like Icahn and Coller see it as something that stands on its own. Yes, if better animal welfare leads to improved environmental outcomes, that’s all well and good. But that in itself isn’t the goal. The goal first is better animal welfare – and how that in itself is a standalone investment idea.