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Companies Reliant on Agricultural Products May Face Lower Policy Risk
Many companies in the Global Industry Classification Standard (GICS®) consumer-staples sector,1 such as food producers, food retailers and beverage makers, are reliant on crops.2 While the potential impact of physical climate risk3 (especially changing weather patterns) on food companies has been examined, the risk these companies face from emissions-reduction requirements4 (i.e., climate-transition risks) has arguably had less airtime.
Agriculture is increasingly included in the emissions-reduction pledges of key crop-producing countries and regions — yet food, beverage and food-retail companies have often been exempted from emissions-reduction schemes.5 That may change soon. And if it does, investors might need to assess the risks food and beverage companies face from their inclusion in, for example, a carbon tax.
Our interactive chart compares the MSCI Climate Value-at-Risk (Climate VaR) of crop-reliant consumer-staples companies to applicable peers across all sectors in their home markets.6 It shows that, with the exception of the U.S., across most transition-risk scenarios (particularly for 2⁰C or 3⁰C policy scenarios) and countries, crop-reliant companies on average appear to have reduced downside risk compared to the home-market average.
Comparing MSCI Climate VaR of Consumer-Staples Companies
How to use this chart: Click on a GICS industry and select the climate scenario. Hover over the dots to learn more about the company and its MSCI Climate VaR scenario assessment. The “all sector” average is equal-weighted; CSDR = consumer-staples distribution and retail. Data as of Nov. 19, 2023. Source: MSCI ESG Research
1 GICS® is the industry-classification standard jointly developed by MSCI and S&P Global Market Intelligence.
2 Only companies with a minimum 50% of disclosed assets in their home market are included. All constituents (n=1,072, as of Nov. 19, 2023) belong to the MSCI ACWI Index. Constituents in beverage (n=22), consumer-staples distribution and retail (n=29) and food products (n=33), as of Nov. 19, 2023.
3 Ændra Rininsland. “How will global warming affect the crops that we grow?” Financial Times, July 20, 2023.
4 As outlined in the Paris 2015 Climate Accords.
5 For example, according to the International Carbon Action Partnership, of the 29 jurisdictions with established emissions-trading schemes in force as of December 2023, none include food, beverage or food-retail companies.
6 Many companies have internationally diversified assets that will be exposed to numerous national-level policies. Thus, for comparison purposes, only companies with at least 50% of their disclosed assets in their home market are included.
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