Preventing Disease May Start With Supply Chains: Green Insight

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Pandemics haven’t always been top of mind for investors focused on environmental, social and governance issues. But a handful have been warning for years that some corporate practices—particularly those in global supply chains—lay the groundwork for them.

The novel coronavirus is just the latest infectious disease to originate from human interactions with animals. They are zoonotic—triggered by germs spread between animals and humans. Three out of every four new or emerging infectious diseases in humans come from animals, according to the U.S. Centers for Disease Control and Prevention.

Investors who focus on the interplay between environmental and public health issues—ensuring access to medicines, protecting antibiotic effectiveness, fighting deforestation—say their work had only just begun to gain traction. The current pandemic, it seems, may accelerate interest.

Finny Kuruvilla, chief investment officer at Eventide Asset Management, says reducing meat consumption, for example, would go a long way toward cutting the likelihood of such viruses cropping up.

A graduate of Harvard Medical School, Kuruvilla explained during an investor call this month the long history of human-animal interaction leading to disease and death. Influenza originated with pigs and chickens. Middle East Respiratory Syndrome (MERS) from camels. Salmonella from chickens. Mad cow disease from cows. And Severe Acute Respiratory Syndrome (SARS), which is similar to the new coronavirus, is thought to stem from bats and possibly civet cats.

Aerial view of deforestation in the Amazon Basin in Brazil last August.

Photograph: Joao Laet/AFP via Getty Images

Usually seen through the lens of global warming, deforestation also carries with it a nasty biological component for humans.

“There are all these other unintended consequences of deforestation, like the encroachment on endangered species, and the hunting and killing of wild animals that can release viruses previously contained in their ecosystem,” says Leslie Samuelrich, president of Green Century Capital Management in Boston.

Samuelrich says investors can reduce environmental and pandemic risks (both in their portfolios and out in the world) by dumping companies with factory farm products or engaged in deforestation. They can also push meat companies to cut antibiotic use (reducing the risk of antibiotic-resistant super-bugs) or invest in makers of meat alternatives, she says.

“The connections have always been there,” Samuelrich says. “Things that are problematic because they cause environmental damage are also incredibly relevant to investors concerned about public health.”

Jeremy Coller, chief investment officer of Coller Capital, agrees. Also the founder of London-based investor network Farm Animal Investment Risk & Return, Coller sees more bad news for big meat companies that are already under fire for environmentally destructive business models.

“After Covid-19, many investors will shift capital away those businesses most exposed to the risk of the next zoonotic-based pandemic,” Coller says. “That is, traditional animal protein producers who are failing to act in areas such as climate or alternative proteins.”

Sustainable Finance in Brief

• Sin stocks like alcohol, tobacco and casinos used to be resilient in downturns. Not this time: ESG investors have been outpacing vice.

• Green bonds are holding up better in tumultuous credit markets, but China’s boomlet appears to be drying up.

• The pandemic is turning leading ESG investors toward equal pay and the gig economy.

• Barclays said it will only finance projects that align with the Paris climate accord. The U.K. bank said it plans to cut its net greenhouse gas emissions to zero over the next 30 years.

—with assistance from Saijel Kishan.

Emily Chasan writes the Good Business newsletter about climate-conscious investors and the frontiers of sustainability.

To contact the author of this story:
Emily Chasan in New York at echasan1@bloomberg.net

To contact the editor responsible for this story:
David Rovella at drovella@bloomberg.net

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