Conagra Brands Inc

Conagra Brand’s plant-based expansion continues to be primarily driven by consumer demand, however, the company shared with investors that inflationary pressures on animal-derived proteins are becoming a financial incentive to diversify protein sources. From discussions, Conagra has a high level of awareness of the materiality of animal protein exposure. The company is increasingly using alternative proteins as a climate mitigation tool. For example, it increased the total plant-based procurement of ingredients by 1%, from 78% to 79%. This resulted in a decrease of 9.8% of Scope 3 emission intensity. However, it is unclear from the disclosure whether the company chose to strategically mitigate emissions through plant-based procurement, or whether it was an unintended benefit. The company has not increased its transparency around whether it intends to diversify protein sources to reduce its exposure to animal proteins. It continues to lack a target to diversify product portfolios. There is no evidence of the company’s Board of Directors taking a more active role in the adoption of sustainable diets, nor any changes in board oversight on ESG. However, Conagra Brands has launched the Sustainable Protein Centre of Excellence which means the plant-based portfolio will now be a part of the innovation updates to the Board. Conagra Brands annually reviews its TCDF-linked scenario analysis to identify unmitigated ESG risks associated with ingredients, this includes animal proteins. However, the company does not disclose outputs nor mitigation and adaptation needs specifically relating to animal protein supply chains.

Overall, Conagra has made some progress on its sustainable sourcing commitments, however, the extent of these improvements has not exceeded investor expectations. For example, the company has started expanding its sustainable sourcing to address its environmental impacts and climate change. Conagra has reduced the quantities of beef sourced from Brazil to just 2% in 2021, down from 5% in 2020, with the rest sourced from low-risk deforestation areas. Additionally, the company anticipates a Scope 3 emissions reduction by purchasing from suppliers aligned to the Round Table on Sustainable Dairy (an industry association aiming for a 30% reduction by 2030). Although, due to limited data availability, the company has not calculated the carbon abatement potential of being part of this initiative. However, Conagra has not made positive progress in two areas; the number of direct suppliers assessed by Conagra on their overall ESG performance decreased from 75% of the overall spend in 2020 to 60% in 2021; the company did not explain this 15% decrease. Furthermore, for the majority of the animal proteins purchased the company continues to be focused on animal welfare rather than environmental issues. The company maintains a best-in-class rank for its healthy product portfolio, as determined by the Access to Nutrition Index and shows evidence of considering the nutrition of alternative protein products. Conagra Brands continues to work on its climate strategy. It shared with investors that protein diversification will play a role in its strategy, with the pathway of actions due to be published later in the year. The company has identified ‘swaps’ as an environmental risk management tool, they are considering swaps in the context of animal proteins, for instance switching from beef to pork to reduce overall emissions. Despite these positive steps, the company did not report a protein diversification target. The company indicated it will readjust its SBTi target by 2025 or before and will adopt the FLAG Guidance at that point. Conagra Brands is considering adopting an SBTi net-zero target. To meet its current Scope 3 target the company has a programme to enrol suppliers to set their own Scope 3 targets through the SBTi. However, participation in this scheme has dropped year-over-year due to the need to source outside traditional suppliers to maintain supply throughout Covid-19. The company expects the share to increase again in the post-pandemic era.

During the last 12 months, the company has shown significant progress in its product portfolio, through its reformulation programmes that limit animal-derived ingredients. It’s also achieved positive progress in incorporating nutrition in plant-based product development, setting the company up to take the opportunity of a growing alternative foods market. The company opened the Sustainable Protein Centre for Excellence, which will drive innovation and R&D into plant-based products for the company. Additionally, it has made a strategic partnership with the global food innovation ecosystem MISTA. Together they plan to accelerate innovation in areas including plant-based. These actions indicate that Conagra Brands is strategically improving its product offering, and the taste/texture of existing brands, to meet consumer demand. This has been recognised by VegNews which awarded Gardein as the best-tasting plant-based product on the market. Conagra Brands is one of the few companies to reformulate products to reduce their animal protein content. The company disclosed to the CDP that it has reduced the amount of beef used in its key product lines; reducing purchasing by 3.6 million lbs and consequently causing a decline in Scope 3 emissions. The company continues to grow its product portfolio, particularly under the Gardein brand; with the company providing consumers with products in the underserved categories. Conagra Brands continues to focus on the health and nutrition aspect of plant-based foods. The company disclosed that it uses Nutri-Score to ensure plant-based meals and meat analogues are nutritious; with 80% of its plant-based products achieving a score of A or B. The company disclosed that its brand Gardein generated more than $173 million in retail sales in the fiscal year 2021, up 8% from $160 million in 2021.

Conagra Brands disclosed to investors that its current consumer engagement approach is not based on shifting consumer demand towards alternative proteins, instead, it is focused on appealing to the consumer’s current desires. The company also confirmed that its consumer engagement strategy is mainly focused on the environmental benefits of plant-based foods, as this is what consumers want to see, rather than engagement on the nutritional benefits. The company is receptive to the idea of engaging consumers on this in the future. It is still unclear whether plant-based products have the Nutri-score logo on them or whether it is solely used for internal purposes. Additionally, it is unclear whether the company's Smart-Label applies to all products or just specific product ranges. There is no evidence of Conagra Brands increasing its marketing spend for alternative proteins. The company does not disclose specific marketing spending at the brand level but confirmed that Gardein and Birds Eye products receive marketing investment annually, both in-store and through other marketing channels including digital, social and e-commerce to help drive growth in the market. While specific metrics were not provided, the company states it uses reach and engagement metrics to measure the success of plant-based marketing campaigns. It was unclear from the discussion as to whether the company promotions support meat at the same rate as plant-based, or if one is more frequently promoted than the other.

Conagra Brands has made progress in its tracking and reporting. The company disclosed that its plant-based offerings contribute to 79% of all ingredients by volume. The company defined plant-based; ingredients that do not contain eggs, dairy, or meat. The company confirmed to investors that it does not track revenue from its plant-based portfolio, instead, it is tracking revenue at a brand level. The company has publicly disclosed, in its Citizenship report, the percentage of Scope 3 emissions from its ingredients, broken down into categories: meat (53%), plant-based (36%), dairy (1%), eggs (1%), seafood and other (1%). Additionally, Conagra Brands was receptive to the idea of providing a breakdown of emissions by species; stating that it now collects the data to enable it to do this.

The company attended the technical roundtable on protein diversification metrics and presented its metrics during the roundtable. The company met with FAIRR and the investors, it was receptive to investor feedback and transparent about the challenges it faces. Conagra responded to FAIRR’s follow-up questions via email and reviewed the final assessment.