China is now the world's largest agricultural producer, accounting for more than 25% of global production by value.1 In 2019, China’s agrifood system produced 1.9 billion tonnes of CO2 equivalent, contributing 16.7% to the country’s total emissions.2 China is also the largest emitter of greenhouse gases in the world's agricultural systems. Given the national goal to peak carbon dioxide emissions in 2030 and achieve carbon neutrality in 2060,3 reducing the greenhouse gas emissions from the agrifood sector is a key strategy for China to achieve this “dual carbon” goal.
The need for capital markets to support this transition has been well recognised, resulting in the creation of the China Climate Engagement Initiative (CCEI). This is China's first collaborative investor initiative to promote green, low-carbon corporate transition. And FAIRR is delighted to be jointly leading a collaborative engagement with China Asset Management through the CCEI Agriculture Working Group, working with Muyuan Foods Co., Ltd.
Launched by the Institute of Finance and Sustainability and China SIF in July 2023, the CCEI has 27 institutional investors as members, representing more than CNY 50 trillion assets under management (AUM). The CCEI aims to assist institutional investors in actively promoting its portfolio companies' green and low-carbon transition. Earlier this year, investor members of the CCEI and supporting organisations formed seven working groups, which will be followed by joint climate engagement work prioritising a short list of companies in key industries such as chemicals and agriculture.
FAIRR is pleased to be working alongside China Asset Management, one of the largest asset managers in China, with over $260 billion in AUM. As a leading investment firm, has been actively implementing the concept of responsible investment in its investment analysis and decision-making process, corporate operations, and incorporation of ESG issues into its policies and practices for exercising shareholders' rights. China Asset Management is also the first asset manager in China to join FAIRR as a member in 2023 and has been actively participating in FAIRR’s other engagement workstreams since.
Muyuan Foods is the largest hog and pork producer and one of the largest animal feed producers in the world. In FY2023, Muyuan Foods sold 63.8 million heads of pig, accounting for 8.7% of total pig sales in China. The Coller FAIRR Protein Producer Index (Index) has assessed Muyuan's performance across ten ESG factors since 2018. FAIRR has been in conversation with Muyuan since 2022 through our benchmark and Nature workstreams.
In 2024, FAIRR and China Asset Management will collaborate with other supporting investors to engage with Muyuan Foods to help them better understand and mitigate the climate risks through the best practices and improve the climate-related information disclosure. FAIRR will use the Index assessment framework to develop engagement targets and plans for the company, considering the public disclosure, investor priorities, industry characteristics and other factors. FAIRR will also maintain regular communication with the company to improve its climate performance and accelerate its climate transition.
For more information on CCEI or our involvement through the Agriculture Working Group, please get in touch with Changtong Huang at Changtong.huang@fairr.org.
1 FAO STAT: Value of Agriculture Production. Available from: https://www.fao.org/faostat/en/#data/QV
2 Ministry of Ecology and Environment of the People’s Republic of China (MEE). The Second Update Report on Climate Change of the People’s Republic of China. MEE, 2018 (in Chinese)
3 The state council, the People’s Republic of China. China maps path to carbon peak, neutrality under new development philosophy. Available from: https://english.www.gov.cn/policies/latestreleases/202110/24/content_WS61755fe9c6d0df57f98e3bed.html
FAIRR insights are written by FAIRR team members and occasionally co-authored with guest contributors. The authors write in their individual capacity and do not necessarily represent the FAIRR view.
