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The Growth of the Alternative Meat Market and Its Implications for ESG Management

2022.4.28

Plant-based meat alternatives, which originated in Europe and North America and have since expanded globally, offer advantages over conventional animal-derived meat in terms of environmental impact. This article explains the plant-based meat market and key considerations for companies, with a primary focus on environmental sustainability.

Table of Contents

1 ESG Management Risks in the Meat Industry
2 Expansion of the Alternative Meat Market
3 Alternative Meat from an Environmental Perspective
- 3.1 Monoculture and Environmental Impact
- 3.2 Soybeans and Genetic Modification Technologies
4 Debates Surrounding ESG Ratings of Alternative Meat
5 Alternative Meat Viewed Through Life Cycle Assessment (LCA)
6 Efficiently Enhancing Corporate Value from an ESG Perspective

ESG Management Risks in the Meat Industry

Alternative protein foods that are artificially produced to replace animal-derived protein sources such as meat, fish, and dairy products have become widespread globally. In particular, the appearance, taste, texture, and convenience of alternative meat products have advanced significantly.

Alternative meat is also referred to as “fake meat” or “vegetable meat”. Together with cultured meat produced through cell cultivation, these products are sometimes collectively described as sustainable protein sources.

Alternative meat can be categorized into three production pathways: plant-based, microbial fermentation, and cell cultivation (*1). The plant-based alternative meat discussed in this article (hereafter referred to as “alternative meat”) is generally made from ingredients such as soybeans, peas, and wheat, and is sold in product formats including burgers, sausages, patties, and nuggets.

The expansion of the alternative meat market reflects diversification in consumer purchasing behavior. Growing awareness of ethical consumption, health considerations, and animal welfare issues associated with industrial livestock farming has contributed to the market’s growth (*2).

However, one of the primary drivers behind rising consumer interest in alternative meat is the environmental burden associated with meat production and consumption, including greenhouse gas emissions, land and water use, and soil pollution. This article examines the risks and opportunities in the alternative meat market by positioning environmental impact reduction as the core value proposition, supported by specific case studies.

Livestock farming, which supports the production of meat, dairy, and eggs, accounts for 14.5% of global anthropogenic greenhouse gas emissions and occupies approximately 80% of the world’s agricultural land (*3)(*4). Wastewater discharge and the excessive use of antibiotics associated with livestock production have also been identified as significant concerns (*5).

Beyond being a major contributor to climate change, the livestock industry is highly vulnerable to climate-related risks. Rising capital costs for water, land, and energy, as well as productivity losses caused by extreme weather events, pose challenges across the entire livestock-related supply chain (*5).

The international community and national governments are promoting a shift toward plant-based foods while seeking to curb meat production and consumption. The Intergovernmental Panel on Climate Change (IPCC), in its Sixth Assessment Report and 2023 Synthesis Report, reiterates that reducing demand for animal-based foods and transitioning to balanced, plant-centered diets are effective measures for reducing greenhouse gas emissions from food systems (*6). The European Commission, under its Farm to Fork Strategy, is progressively institutionalizing frameworks that require food-related companies, including meat producers, to disclose and monitor environmental and social impacts (*7). These initiatives include the Corporate Sustainability Reporting Directive (CSRD), which mandates standardized sustainability reporting for companies operating in the EU (*8), and the proposed Corporate Sustainability Due Diligence Directive (CSDDD), which seeks to require companies to identify, prevent, and mitigate adverse environmental and human rights impacts across their value chains (*9).

These developments indicate that the alternative meat market has been growing globally in response to the ESG risks faced by the meat industry.

Expansion of the Alternative Meat Market

According to U.S.-based market research and consulting firm Grand View Research, the global alternative meat market is projected to reach approximately USD 23.4 billion by 2030 (*10). Alongside increasing consumer demand, accelerated technological innovation surrounding alternative meat is expected to support sustained global market growth (*11).

For food manufacturers, diversifying their product portfolios to include both animal-based and alternative proteins is increasingly recognized as a way to mitigate supply chain risks, enhance responsiveness to evolving consumer preferences, and support corporate growth and innovation.

Alternative Meat from an Environmental Perspective

Despite the market’s momentum, concerns have been raised regarding the sustainability of alternative meat supply chains. Researchers and environmental organizations argue that alternative meat is not necessarily superior to conventional meat in environmental terms in all cases (*12).

Monoculture and Environmental Impact

The high greenhouse gas emissions of the meat industry are largely attributable to the resources required to cultivate feed crops for livestock. Soybeans, a representative feed crop for livestock, are also a primary ingredient in alternative meat products. In soybean-producing regions worldwide, industrial-scale cultivation often takes place in large monoculture fields consisting of a single crop (*13).

While expanding production scale reduces unit costs and improves efficiency, it is frequently accompanied by large-scale deforestation, land appropriation, and intensive water use. Soybeans are considered the second-largest driver of tropical deforestation after beef (*14).

The extensive use of chemical fertilizers and pesticides in monoculture farming disrupts nutrient cycles mediated by soil microorganisms. Repeated tillage accelerates erosion and decomposition, leading to the loss of organic matter that supports fertile soil and the release of greenhouse gases stored underground into the atmosphere.

The EU Deforestation Regulation (EUDR), which entered into force in June 2023, requires strict traceability and due diligence for operators handling specified commodities with high deforestation risk, including soybeans, for products produced after December 31, 2020. The regulation will be applied in stages from December 30, 2025, aiming to curb deforestation caused by agricultural expansion and ensure compliance with producer-country laws. Violations may result in fines of up to 5% of global turnover. (*15)

The Round Table on Responsible Soy (RTRS), a multi-stakeholder organization comprising producers, distributors, manufacturers, retailers, financial institutions, and NGOs, has established principles for economically viable, socially equitable, and environmentally sound soybean production (*16).

RTRS certification for producers is granted to soybeans and processed products that meet criteria related to deforestation, land conversion, biodiversity conservation, water and pesticide use, business conduct, labor conditions, and local communities. Certification is valid for five years and requires annual surveillance audits.

The RTRS Chain of Custody Standard applies to organizations that handle soybeans or soy-based products within the supply chain and is mandatory for those wishing to receive, process, or trade RTRS-certified soybeans (*17).

Soybeans and Genetic Modification Technologies

Monoculture cultivation of crops such as soybeans not only causes soil erosion and biodiversity loss but is also criticized by environmental organizations for relying on genetically modified organisms (GMOs) (*18).

Genetic modification technology provides crops with resistance to pests and herbicides, contributing to reduced pesticide use and improved weeding efficiency. However, genetic modification may cause crops to emit harmful substances or enhance weed resilience, potentially leading to increased pesticide use and creating a negative cycle (*19).

Alternative meat companies take markedly different positions on genetically modified crops. U.S.-based alternative meat leader Beyond Meat sources non-GMO soybeans, while competitor Impossible Foods has publicly stated that the use of genetically modified crops contributes to environmental protection (*20) (*21).

Because genetic modification technologies are subject to food regulations in many countries, Impossible Foods currently operates only in the United States, Canada, Hong Kong, Macau, Singapore, and the United Arab Emirates (*1).

As the alternative meat business evolves, addressing environmental challenges will require careful consideration of standards related to genetic modification and trends in the cost of imported soybeans (*22).

Debates Surrounding ESG Ratings of Alternative Meat

As investor and consumer demand for supply chain transparency increases, the food industry is under growing pressure to address ESG issues, and alternative meat is no exception.

ESG rating agency Sustainalytics classified Beyond Meat’s ESG risk as Severe Risk, ranking the company 512th out of 588 food manufacturers. This ranking is comparable to, or lower than, that of major global meat processors such as Tyson Foods and JBS (*23).

S&P Global Market Intelligence reported that Beyond Meat’s climate-related risk transparency score was 0% in 2018, compared with 98% for Tyson Foods (*24).

In addition to the high environmental burden associated with the meat industry, concerns have been raised regarding price-fixing litigation, tariffs, and consumer health risks. During the COVID-19 pandemic, outbreaks at processing plants, serious worker illnesses, and production disruptions became evident (*25). In the case of Beyond Meat, insufficient disclosure of ESG information was cited as a key reason for its low rating. The company was found to lack transparency in supplier selection policies related to product quality and safety, deforestation, human rights, pesticide and synthetic fertilizer use, and sustainable sourcing plans, raising concerns about potential risks to soil health and biodiversity.

Alternative Meat Viewed Through Life Cycle Assessment (LCA)

As noted above, ESG ratings evaluate a wide range of environmental, social, and governance factors, making them effective for assessing overall corporate risk, particularly for publicly listed companies. However, they are less suitable for evaluating environmental performance or risks at the level of individual products or small and medium-sized enterprises.

In the case of alternative meat, environmental advantages at the product level can represent a competitive strength depending on conditions, but such attributes may not be clearly captured in ESG ratings alone.

Life Cycle Assessment (LCA), an internationally recognized environmental impact assessment method defined by ISO standards, enables quantitative evaluation of a product’s environmental impact across its entire life cycle, from raw material sourcing and manufacturing to processing, distribution, sales, and disposal (*26).

By modeling each stage of a product’s life cycle, LCA estimates resource inputs, waste generation, and emissions, and calculates environmental impacts using standardized indicators. LCA also supports marketing strategies such as environmental declarations and certification schemes (*27).

For example, a Johns Hopkins University study compared alternative meat and conventional meat using global warming potential (GWP), which represents total greenhouse gas emissions across the life cycle, based on existing LCA reports (*28). According to LCAs conducted by Beyond Meat and Impossible Foods, the GWP per kilogram of hamburger is 3.4 kgCO2-eq/kg and 3.5 kgCO2-eq/kg, respectively, which is lower than that of U.S. beef produced using total mixed feed (*29)(*30).

When assessing the environmental impact of alternative meat, conventional meat is often used as the benchmark. However, meat is among the most environmentally intensive foods. LCA allows alternative meat to be compared not only with industrially produced meat but also with meat produced through sustainable livestock practices and minimally processed plant-based protein sources, enabling a more comprehensive and relative assessment (*31).

Although alternative meat is attracting attention for its potential contribution to sustainability, diverse opinions exist regarding its environmental performance. Rigorous evaluation is therefore essential to substantiate sustainability claims.

The Good Food Institute (GFI), an international nonprofit think tank, dedicated to advancing sustainable global food systems, has compiled life cycle comparison studies of plant-based meat conducted in English-speaking regions. These studies compare products using indicators such as land use (m²·year/kg), global warming potential (kg-CO2-eq/kg), and eutrophication (g-PO43–eq/kg) (*32).

Quantitatively demonstrating the environmental impact of a company’s alternative meat products can visualize differentiation from competing products and serve as an effective strategy for engaging consumers who seek to contribute to environmental and food system solutions.

Efficiently Enhancing Corporate Value from an ESG Perspective

As discussed in this article, alternative meat has gained social attention as a product that can reduce greenhouse gas emissions and support sustainable food systems when compared with resource-intensive conventional meat. At the same time, it is a market with high expectations regarding sustainability performance.

In this context, obtaining LCA-based evaluations of a company’s products enables objective communication of how its alternative meat offerings are positioned environmentally within the broader alternative meat market, including competitors.

While this article has highlighted selected trends through specific examples, “cuoncrop” leverages a team of ESG management data analysis experts, primarily with backgrounds in global strategy consulting firms, together with proprietary analytical systems. The company provides services such as the “ESG/SDGs Management Maturity 360° Diagnostic & Improvement Support” and “My-Eco-Ruler,” which help companies identify and enhance the ESG initiatives necessary to become a preferred choice in the market.

These services are applicable not only to companies that already have in-house ESG teams and seek to improve analytical efficiency, but also to relatively smaller organizations that do not yet have ESG management analysis capabilities and are considering a strategic shift toward ESG-driven management. Companies interested in a scientific and efficient analytical approach to accelerating ESG management are encouraged to contact “cuoncrop”.

cuoncrop ESG Global Trend Research Division

References

*1https://www.nri.com/-/media/Corporate/jp/Files/PDF/knowledge/publication/region/2021/11/2_vol220.pdf?la=ja-JP&hash=38F4889DF7319D8417F34D7D338CA2A6B5E87296

*2https://www.jeri.or.jp/membership/pdf/research/research_1910_01.pdf

*3https://www.fao.org/family-farming/detail/en/c/1634679/

*4https://ourworldindata.org/global-land-for-agriculture

*5 https://www.maff.go.jp/j/kanbo/kankyo/seisaku/climate/attach/pdf/visual-60.pdf

*6https://proveg.org/press-release/ipcc-report-diet-change-is-crucial-in-mitigating-climate-change/

*7https://www.auditcomply.com/building-a-sustainable-food-system-eus-farm-to-fork-strategy/

*8 https://www.simmons-simmons.com/en/publications/ckq2dt9nx1jdk0957na53e2j3/corporate-sustainability-reporting-directive-final-approval

*9 https://www.anthesisgroup.com/regulations/corporate-sustainability-due-diligence-directive-csddd/

*10https://www.grandviewresearch.com/press-release/global-meat-substitutes-market