The 2016 Business Benchmark on Farm Animal Welfare

The results of the fifth annual report from the Business Benchmark on Farm Animal Welfare (BBFAW), published this month, show continued progress in how global food companies are managing and reporting on farm animal welfare.

The Benchmark shows that the proportion of companies with a published farm animal welfare policy has increased from 46% in 2012 to 73% in 2016, and the proportion with published objectives and targets for farm animal welfare has increased from 26% to 65% over the same period. Thirteen companies (BRF, Cargill, Coop Group (Switzerland), Cranswick, Greggs, McDonald’s, Migros, Marks & Spencer, Noble Foods, Co-op (UK), Tesco, Unilever and Waitrose) are shown to have strong commitments to farm animal welfare, well-developed management systems and processes, and a clear focus on farm animal welfare outcomes.

Despite the growing number of leadership companies, overall practice and performance on farm animal welfare continue to lag behind practice on other corporate responsibility issues. For example, 42 of the 99 companies covered by the 2016 Benchmark provide scant information on their approach to farm animal welfare and, of these, 13 do not even publicly acknowledge farm animal welfare as a business issue.

What Do Investors Think?

The terms of debate on investment and farm animal welfare have changed dramatically since we launched the first Benchmark in 2012. At that time, farm animal welfare was seen as a niche ethical issue with limited relevance to investors, other than perhaps in the case of a corporate scandal. That has changed.

An increasing number of investors now consider farm animal welfare-related issues in their investment research and decision-making. Some focus on the business risks presented by farm animal welfare to the companies in which they invest, others use the Benchmark as a measure of the quality of companies’ risk management systems or of their supply chain management processes more generally, and a growing number are interested in farm animal welfare as a source of business opportunity (e.g. new markets, product innovation, brand enhancement, premium products).

Investors have also started to engage with companies on farm animal welfare. In mid-2015, the BBFAW secretariat initiated the International Investor Collaboration on Farm Animal Welfare, the first global investor initiative aimed at encouraging major global food companies to strengthen their management systems and processes on farm animal welfare. To date, twenty institutional investors, including Aviva Investors, BNP Paribas Investment Partners, NEI Investments and Schroders, representing £1.34 trillion in assets under management have joined the initiative.These investors have engaged with 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 engaged with the companies that provide little or no information on their approach to farm animal welfare to encourage them to improve their performance in the Benchmark. These efforts are starting to make a difference in the way that companies respond to external pressure on farm animal welfare. For example, of the 36 companies in the lowest two tiers of the 2015 Benchmark, 10 improved their ranking in the 2016 Benchmark, while other companies have written to investors to explain how they are managing risks and opportunities associated with farm animal welfare.

Where to From Here?

We are hugely encouraged that the Benchmark is recognised as a robust and credible tool, and that more investors are starting to use the Benchmark in their investment research and decision-making and in their company engagement. During 2017, we will continue to encourage investors to take action in three ways: (a) to signal the importance they assign to farm animal welfare by signing the Global Investor Statement on Farm Animal Welfare, (b) take account of farm animal welfare in their investment research and decision-making, and © use their influence to encourage and support leading companies to maintain and improve their performance on farm animal welfare through, for example, supporting the International Investor Collaboration on Farm Animal Welfare.

Moving forward, there is a continued need to raise the profile of farm animal welfare and the investment-related risks and opportunities in the investment community. Companies can help by strengthening their reporting on farm animal welfare, and by publicising the business case for higher standards of animal welfare. The BBFAW will support these efforts by working with investors to strengthen the investment case for action, both on how animal welfare affects share prices and other financial metrics, and on how higher standards of farm animal welfare can enhance company financial performance.

Nicky Amos is the Programme Director of the Business Benchmark on Farm Animal Welfare (BBFAW) and Rory Sullivan is Expert Adviser to the BBFAW. The 2016 Business Benchmark on Farm Animal Welfare can be downloaded here.

BBFAW 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. For further information see www.bbfaw.com