This week, both GDP and employment failed to reach expectations, and cyber-attacks hit the news. We also examine the risks associated with the factory farming of meat – could new protein alternatives help?

In the UK, Gross Domestic Product (GDP) for May came in lower than expected1, meaning that the road to recovery is lengthening. Figures released earlier this week show that the economy in GDP terms grew by 1.8% in May, having dropped by circa 19% for the three months previous. This is considerably lower than the 5.5% forecasted by economists2.

As the lockdown continues to ease, it is hoped that people will return to ‘normal’ and start spending, which in turn will stimulate the economy. However, one of the main issues we see is that uncertainty is not just about safety around the virus, it is worry about job retention and an uncertain future that has also prevented consumption from jumping back to pre-crisis levels. There may be relief in the form of relaxed lockdown measures, as the announcement from the Prime Minister today is expected to encourage employees to return to work if safe to do so, in an attempt to support struggling city centres. Nevertheless, we suspect that this will continue for some time and the likelihood of a V-shaped recovery will continue to fall – although we do hope we are wrong in this assumption.

Job figures were also released in the UK this week, showing that, between March and June, the number of paid employees fell by 649,000, job vacancies have disappeared and payrolls look to have fallen 1.9% compared with last year3. The unemployment rate stands at 3.9% which does not tell the true picture, with many people still furloughed. The concern is that once furlough is rolled back, those that are currently on the scheme will be made redundant, with the Office for Budget Responsibility assuming that between 10-20% of those currently furloughed could, unfortunately, lose their jobs4.

News of vaccine-related cyber-attacks also hit headlines this week, as the Foreign Secretary Dominic Raab hit out at Russian intelligence services for targeting therapeutic sectors in multiple countries5. This comes a week after the US accused China of attempting to steal vaccine research6. The race for the vaccine does not appear to be as diplomatic as it should be, with flagging political reputations on the line.

The rally in European stocks hangs in the balance today, as EU leaders meet to discuss a potential €750bn recovery fund7. The European Central Bank played its part in stimulating markets, which despite disagreement amongst policymakers, is likely to maintain the current bond-buying programme8.

In a week where Burger King unveiled a “climate-friendly” burger9, we’ve been considering the implications of excessive meat consumption and investment in protein production. The link between animal agriculture, climate change and, consequently, Environmental, Social and Governance (ESG) risks that may impact financial performance has all too often been overlooked. Research conducted by the Farm Animal Investment Risk and Return (FAIRR) initiative, demystifies these connections and so investors are better equipped to analyse risk and therefore improve investment decision-making10.

The first report produced by the FAIRR initiative identified 28 ESG risks that are associated with factory farming11. One such risk explained by the initiative is the worrying trend of the overuse of antibiotics in livestock supply chains. Globally, most antibiotics are used in farm animal production12. Usually, this is to prevent the spread of disease among animals housed in unsanitary conditions and close confinement. However, overuse contributes to the emergence of antimicrobial resistance13. This concern, along with other health and environmental hazards, has led to a boom in recent years of meat alternatives14. These products are being consumed by hungry vegetarians, vegans and flexitarians (those who avoid meat sometimes) who are keen to limit their impact on the Earth15. There are clearly opportunities as well as risks associated with increased scrutiny over where we source our protein. For more to digest on this topic, have a read of our earlier article on The Food Revolution here.

Thorough consideration of ESG risks has long been the lifeblood of the Holden & Partners approach to investing, allowing us to build a holistic picture of the issues associated with certain industries and investments. We are very keen to hear the view of our clients regarding our approach to responsible investment and so would love for you to answer our latest survey so you can help shape our decision making in the future https://www.surveymonkey.co.uk/r/ZHHX2J5.


1 https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/gdpmonthlyestimateuk/may2020

2 https://www.theguardian.com/business/2020/jul/14/at-18-uk-economy-returns-to-growth-more-slowly-than-expected-covid-19

3 https://www.independent.co.uk/news/business/news/uk-unemployment-rate-payroll-latest-coronavirus-a9621766.html

4 https://cdn.obr.uk/OBR_FSR_July_2020.pdf

5 https://www.publictechnology.net/articles/news/uk-calls-out-russia-‘despicable’-cyberattacks-vaccine-efforts

6 https://www.cnet.com/health/us-accuses-china-of-trying-to-hack-coronavirus-vaccine-research/

7 https://www.bbc.co.uk/news/world-europe-53429064

8 https://www.theguardian.com/business/2020/jun/04/ecb-agrees-to-inject-additional-600bn-into-eurozone-economy

9 https://www.bloomberg.com/news/articles/2020-07-14/burger-king-s-climate-solution-is-a-limited-supply-whopper?sref=1LVTCemH

10 https://www.fairr.org/

11 http://www.fairr.org/wp-content/uploads/FAIRR-Factory-Farming-Assessing-Investment-Risks-2016-Report.pdf

12 https://www.fairr.org/engagements/antibiotics-engagement/

13 https://www.who.int/en/news-room/fact-sheets/detail/antibiotic-resistance

14 https://www.foodmanufacture.co.uk/Article/2020/05/18/Plant-based-meat-alternatives-market-set-for-growth

15 https://www.theguardian.com/environment/2018/may/31/avoiding-meat-and-dairy-is-single-biggest-way-to-reduce-your-impact-on-earth


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