Plant-Based Companies Performance in the Food Industry: A Sustainable Alternative to Animal Agriculture

Abstract

We provide evidence on the impact of global rise in veganism on the stock market, confirming that plant-based stock exhibits lower return. However, they are priced in accordance with market expectation. Analysis of value-weighted long-short portfolios over different periods reveals consistent result. We find no evidence of sustainability risk or ethical material that influence return. Ethical-motivated investors do not appear to contribute to the lower return of plant-based stock. The study also highlights the absence of a causal link between attributes of plant-based firms and ownership behaviour that drives differences in stock performance. Institutional investors do not exhibit behavioural change towards positive screening on plant-based companies. Collectively, this suggests that investors do not regard differences in sustainability issues between plant-based and non-plant-based companies as sufficiently significant; instead, they prioritize investments offering stability and a better risk-adjusted profile over sustainability consideration.