LONDON — A $23.7 billion decrease in earnings for 40 of the largest livestock producers is anticipated in 2030 compared to 10 years prior due to climate risks, according to the FAIRR (Farm Animal Investment Risk and Returns) Initiative’s Climate Risk Tool.

The climate risk tool gives investors a look into how climate risks may impact costs and profitability in the meat and dairy sector. The tool operates from the assumption that global temperatures will rise by 2°C by 2100.

The data suggests half of the top 40 companies will dip down into net operating losses in 2030, a 7% reduction in profit margins on average.

Tyson Foods Inc. could see profits fall by over $4.3 billion, which is a loss of profit margin by 0.9%. Egg producer Cal-Maine is expected to receive a hit to its profit margin by 13.1%, a loss of $354 million. FAIRR predicts JBS S.A. to fall by $5 billion, down 0.3%.

The predicted profit losses are driven by increased climate-related costs. On average, costs are expected to jump more than 9%.

As climate change impacts agricultural production, it adds to costs. Rising feed prices would be the biggest contributor to the total $23.7 billion decrease in EBIT, according to FAIRR. The North American companies would be hit the hardest, with profit margins falling by 11%.

“As investors start to factor climate risk into their long-term valuations of livestock companies, the allure of investing in meat and dairy could be approaching an expiration date unless companies take action to address climate risk,” said Jeremy Coller, chair and founder of FAIRR, and chief investment officer of Coller Capital. “These figures highlight the urgent need for meat companies to adapt swiftly or pay the financial price with investors increasingly not willing to bear the financial risk of investing in these companies.

“To mitigate the clear risk to the bottom line, companies should take a scientific approach and explore the best available strategies, including diversifying products and portfolios towards plant-based alternatives.”

Only 11 of the 40 companies have disclosed a plan on mitigating risks from rising feed costs. Six of the companies have published a climate scenario analysis, which is a tool for gathering effective climate risk mitigation strategies.

FAIRR said future profitability depends on companies mitigating the risks.

The FAIRR Initiative is a collaborative investor network, with a membership of $70 trillion in collective assets. FAIRR provides tools for the livestock industry to integrate ESG (environmental, social and governance) issues with their stewardship and investment decisions.