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Why Farm Animal Welfare should matter to investors

By Neville White, Head of SRI Policy and Research
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It is estimated that each year 70bn animals enter the food chain; in the UK alone 2.6m cattle, 10m pigs, 14.5m sheep and lambs, 80m fish and 950m birds from part of the human food chain.

Whilst the humane treatment of animals in transport and slaughter is set down in domestic and EU regulation, welfare often left to farm assurance schemes, retailer or processor welfare policies, or plain consumer pressure. As a result farm animal welfare has been poorly understood and with poor corporate disclosure.

The business case for investors taking more notice is self-evident: With over a billion individual sentient animals in the supply chain the systemic business risk from compromises to food safety, regulation or reputational damage is acute. Consequently this satisfies the twin conditions from an investor perspective of materiality and probability for putting it firmly on investor radars.

At EdenTree we have been strong supporters of the Business Benchmark on Farm Animal Welfare (BBFAW) which launched its fourth survey of 90 global food retail, processor and hospitality companies in late January. Benchmarks such as BBFAW have the ability to define a business risk, catalyse behaviour and nudge higher standards and greater transparency.

As a result of bringing this issue into the light, 69% of companies surveyed now address the issue by publishing a policy - compared to 46% in 2012. Over half have published targets on farm animal welfare – up from barely a quarter in 2012. More impressively, 13 of the 40 companies in the bottom two tiers of the Benchmark and which have been the subject of collaborative investor engagement are beginning to make substantive progress on management and disclosure and have moved up at least one tier since 2014.

However there is still much to do, four successive Benchmarks have seen some impressive results but 40% of the 90 companies covered by the 2015 Benchmark still do not even acknowledge farm animal welfare as a business issue or do not have established processes for managing it – and these include some well-known names: Burger King, Dominos Pizzas and Starbucks are three of them.

We remain convinced that this is a material issue for many companies and that managing it will better prepare companies. We are proud to be a supporter of the Benchmark and commend it to other investors who may be interested in the issue, or who have clients, as we do, questioning what investors can do to address farm animal welfare concerns.


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