Nicky Amos and Rory Sullivan: Farm Animal Welfare: Engaging Investors

The launch of the latest Business Benchmark on Farm Animal Welfare

The fourth annual Business Benchmark on Farm Animal Welfare (BBFAW), published in January 2016, assessed how 90 global food companies – covering the three food industry subsectors, i.e. food retailers and wholesalers, restaurants and bars, and food producers – are managing and reporting on farm animal welfare.

The Benchmark found that practice and reporting on farm animal welfare continues to lag behind practice on for other corporate responsibility issues. For example, while 84% of the companies covered by the Benchmark acknowledged farm animal welfare as a business issue, only 69% had published a formal farm animal welfare policy, 54% had published farm animal welfare-related objectives and targets and just 51% described their management responsibilities for farm animal welfare.

There are, however, important signs of change. The proportion of companies with a published farm animal welfare policy increased from 46% in 2012 to 69% in 2015, and the proportion with published objectives and targets for farm animal welfare increased from 26% to 54% over the same period. The Benchmark also identified eleven companies – Coop Group (Switzerland), Cranswick, J Sainsbury, Marfrig, McDonalds, Migros, Marks & Spencer, Noble Foods, The Co-operative Food (UK), Unilever and Waitrose –as having strong commitments to farm animal welfare, well developed management systems and processes, and a clear focus on farm animal welfare outcomes.

Changing Investor Views

When we developed the Business Benchmark on Farm Animal Welfare, we identified investors as a key audience for the information that we would produce. Our discussions with investors over the past year suggest that an increasing number are considering farm animal welfare-related issues in their investment research and decision-making. Some are focusing on the business risks and opportunities of farm animal welfare for the companies in which they are invested. Others are considering companies’ exposures to farm animal welfare-related issues and are using the Benchmark as a measure of how these companies are managing these issues. Others are using the Benchmark as a measure of the quality of companies’ risk management systems or of their supply chain management processes more generally.

A more striking change has been the willingness of investors to engage with companies on farm animal welfare. In mid-2015, the BBFAW secretariat initiated the first ever international collaborative initiative aimed at encouraging major global food companies to strengthen their management systems and processes on farm animal welfare. To date, eighteen institutional investors (see Note 1 below) from the UK, the Netherlands, France, Canada, the USA and Australia have joined the initiative.

The participating investors have written to the leading companies in the Benchmark to commend them for their performance in the Benchmark, and to encourage them to maintain their high level of performance. They have also written to a group of 40 companies that provide little or no information on their approach to farm animal welfare, encouraging these companies to take action to improve their performance in the Benchmark.

While it is too early to offer a definitive view on the effectiveness of this engagement, the signs are positive. The fourth Benchmark indicates that thirteen of the forty companies have already responded by publishing a farm animal welfare policy or providing high level information on their approach to farm animal welfare. While these are modest steps, they can also be seen as early signs of change within these companies.Where to From Here?

We are hugely encouraged by the progress that has been made to date, but we also recognise that there is much more to be done. In 2016, our priorities will be to:
• Raise the profile of farm animal welfare and the investment-related risks and opportunities in the investment community. We are very aware that many investors have yet to take significant account of farm animal welfare in their investment processes or in their engagement with companies. Farm animal welfare continues to be seen as an ethical rather than a mainstream investment issue. As a result, further work is needed both to set out a compelling business case for action, and to convince mainstream investors that farm animal welfare is an important issue for them to focus on.
• Develop the investor collaboration that we established in 2015, with a particular focus on encouraging greater investor engagement with the companies in the Benchmark.
• Strengthen demand in the investment system for research on farm animal welfare, for investors to use their influence with the companies in which they are invested, and for investors to consider farm animal welfare in their investment research and decision-making processes. We will discuss this issue with our NGO partners to consider how they might help create this demand through their own investment practices, through the dialogue that they have with their investment managers, and through mobilising their members and supporters to ask how their pension funds are addressing farm animal welfare in their investment practices.
• Strengthen the Benchmark’s focus on farm animal welfare performance. The relationship between management practice and performance is a critical issue for investors and we intend to both increase the weighting on performance-related questions in the Benchmark.
• Repeat the Benchmark. We will repeat the Benchmark in August/September 2016, and will publish the fifth Benchmark report in early 2017.

Note 1: The participants in the investor collaboration on farm animal welfare are: ACTIAM, Australian Ethical Investment, Aviva Investors, BNP Paribas Investment Partners, the Central Finance Board of the Methodist Church, Coller Capital, EdenTree Investment Management, Epworth Investment Management, The Sustainability Group (part of Loring, Wolcott & Coolidge Trust), NEI Investments, Nelson Capital Management, Rathbone Greenbank Investments, Robeco, Royal London Asset Management (RLAM), Schroders, Trillium Asset Management, Triodos Bank and Walden Asset Management.

Nicky Amos is the Programme Director of the Business Benchmark on Farm Animal Welfare and Rory Sullivan is Expert Adviser to the Business Benchmark on Farm Animal Welfare. The 2015 Business Benchmark on Farm Animal Welfare can be downloaded here.

The Business Benchmark on Farm Animal Welfare (BBFAW) programme is designed to drive higher farm animal welfare standards in the world’s leading food businesses. It provides investors, governments, academics, NGOs, consumers and other stakeholders with an independent, impartial and reliable assessment of individual company efforts to adopt higher farm animal welfare standards and practices.

The Business Benchmark on Farm Animal Welfare has been developed with the support and expertise of leading farm animal welfare organisations, Compassion in World Farming and World Animal Protection, with additional funding from Coller Capital and the Esmée Fairbairn Foundation. Home page