Are We at a Tipping Point on Farm Animal Welfare?
By Rory Sullivan and Darren Vanstone
Sixteen major institutional investors are supporting a global collaborative engagement programme on farm animal welfare. This provides further evidence that farm animal welfare is now recognised as a mainstream investment issue.
The Business Benchmark on Farm Animal Welfare is the first global measure of company performance on animal welfare. Its aim is improve farm animal welfare practices, processes, performance and reporting in the world’s largest food companies.
The third annual Benchmark report, launched in February 2015, evaluated 80 global food companies – across the three food industry subsectors of food retail and wholesale, restaurants and bars, and food production – on their policies, governance, management processes and reporting on farm animal welfare. The report commented that a growing number of these companies have now integrated farm animal welfare into their management practices and processes, with ten considered to have well developed management systems and processes, and have a clear focus on farm animal welfare performance measures. However, the report also noted that 40 of the 80 companies – a group which includes Burger King, Costco Wholesale, Domino’s Pizza, Mars Inc, Quick and Starbucks – have provided limited evidence that they recognise farm animal welfare as a business issue.
Following the launch of the third report, the Benchmark Secretariat launched a collaborative engagement programme directed at encouraging companies to adopt robust policies on farm animal welfare, to strengthen their management systems and processes, and to report on their practices and performance. The initiative involves the participating institutional investors writing to, and subsequently engaging with, the low ranking companies in the Benchmark to encourage them to improve their farm animal welfare policies, practices and reporting. It also involves these investors commending the high ranking companies for their performance in the Benchmark.
To date sixteen institutional investors from Canada, the US, the UK, the Netherlands, France and Australia (see the full list below) have joined the collaboration. While it is too early to offer a definitive view on the effectiveness of the collaboration, we have already seen a number of food companies improving their reporting on farm animal welfare, and others have signalled that they intend to do so over the next year. We are optimistic that this pressure from investors, together with the wider societal pressures for companies to adopt higher standards of farm animal welfare will, over time, contribute to substantive improvements in how food companies manage farm animal welfare.
This collaboration provides further evidence that investors now recognise farm animal welfare as an important investment issue. Our discussions with institutional investors indicate that there is growing awareness of the business risks and opportunities associated with farm animal welfare, and of the importance of taking these into account in investment research and decision-making relating to the food sector. These investors also acknowledge the important contribution that they can make to mitigating these risks by using their influence to encourage companies to effectively manage farm animal welfare-related issues.
The final point to be made is that the Benchmark itself has played an important role in enabling us to reach this point. If we look back five years, i.e. prior to the launch of the first Benchmark in 2012, perhaps the key obstacles to investor action on farm animal welfare was the absence of a clear understanding of what investors should expect of companies, or of tools that enabled investors to delineate between strong and weak performers, and that provided them with a robust basis for engaging with companies. The Benchmark addresses this issue by providing a clear framework of expectations for companies and, through the annual Benchmarking process, enabling company progress to be tracked.
Furthermore, the fact that it is repeated annually means that the Benchmark allows the effectiveness of engagement to be clearly tracked.
To better understand the engagement strategy, follow this link.
Dr Rory Sullivan is Expert Advisor to the Business Benchmark on Farm Animal Welfare. He is an internationally recognised expert on responsible investment, and is the author of Valuing Corporate Responsibility: How Do Investors Really use Corporate Responsibility Information? (Greenleaf Publishing, 2011).
Darren Vanstone is Corporate Engagement Manager for World Animal Protection Canada where he helps organizations address animal welfare issues in their supply chains. He has extensive experience in the retail, grocery and foodservice industries. For more information contact him directly at email@example.com or see www.worldanimalprotection.ca
The Business Benchmark on Farm Animal Welfare has been developed with the support and expertise of leading farm animal welfare organizations, Compassion in World Farming and World Animal Protection, with additional funding from Coller Capital and the Esmée Fairbairn Foundation.
The participants in the investor collaboration 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, NEI Investments, Nelson Capital Management, Rathbone Greenbank Investments, Royal London Asset Management, Schroders, Trillium Asset Management, Triodos Bank and Walden Asset Management.