So far, campaigns against factory farming have focused largely on exposing animal abuses, promoting animal-friendly legislation, and encouraging people to eat either free-range and pasture-raised meat and dairy, or eschew animal products entirely.

Now campaigners have a new tool in their arsenal: They are going after the money.

Activists encourage divestment

In much the same way as fossil fuel divestment has helped shape the debate around the ethics of profiting from polluting industries, Tom Levitt over at The Guardian reports that animal rights campaigners are now encouraging institutions and individuals alike to move their money away from factory farming operations, as well as companies that derive a significant proportion of their profits by either supplying or buying from the industry.

The moral case is inescapable. Many of us "green-minded consumers" who go out of our way to support local farms, and avoid factory farmed products where possible, will more likely than not still have pension funds and savings that are invested in major agribusiness operations, fast-food chains and others whose practices we might personally find abhorrent. By either moving our money out entirely, or engaging companies in dialogue about their practices, campaigners hope to move the needle on some of the worst practices such as overcrowding, overuse of antibiotics, or overt animal abuse by workers.

Investor engagement drives incremental change

As Levitt's article points out, this approach already appears to be having some impact. With major investors like Aviva, Allianz and Alliance Trust raising concerns about reputational risks, many companies including McDonalds and Tyson have signed up to the Business Benchmark on Farm Animal Welfare, a scheme that rates companies and encourages them to set targets for improvements. Whether it's McDonald's efforts to increase transparency or Burger King's pledge to use cage-free eggs, there are some encouraging signs that incremental reform is underway among major food chains. And that change may well be influenced by reputational concerns raised by ethically minded investors.

Will financial case drive transformation?

However, the ethical argument for divestment and/or shareholder engagement is only likely to take us so far. After all, for every investor that sells his stock, there will most likely be another, less animal-friendly investor who is ready to snap up a bargain. But here too, animal rights advocates appear to be taking a leaf out of the fossil fuel divestment playbook — because the case for divestment may be economic, not just moral. In the same way that the fossil fuel argument has started to look at the impact of a low carbon transition and "unburnable" coal and oil, factory farm divestment campaigners claim there are very real financial risks that could impact companies' bottom lines.

From updated nutrition advice harming meat sales (and investment) to concerns around climate change leading to dietary changes, there are plenty of ways that our eating habits may change as we gain a deeper understanding of how food and farming impacts our environment. And while factory farms may be designed to squeeze every last drop of profit from their animals, there's also reason to worry that industrial-scale feedlot operations are uniquely vulnerable to disease outbreaks and food scares. It doesn't take a genius to understand that food scares hurt investors.

Existential threats on the horizon

For now, it seems likely that factory farm divestment will play second fiddle to the fossil fuel divestment movement. But it may not stay that way for long. And if lab grown meat really does take off, or if climate-conscious governments start enacting major policy shifts to discourage meat and dairy consumption, then factory farms may face an existential threat every bit as real as the one that electric vehicles pose to the oil industry.

For those interested in learning more, check out Farm Animal Investment Risk & Return.