Farm Animal Welfare Takes Centre Stage
A benchmark scrutinising company performance has been updated to encourage increased focus on the transition to a sustainable global food system.
Global food companies have come under increasing scrutiny on their efforts to account for and prioritise farm animal welfare.
Originally created in 2012, the Business Benchmark on Farm Animal Welfare (BBFAW) is an investor-supported framework assessing food sector companies on related policy commitments, governance and management, and targets. Investors supporting the benchmark include Aviva Investors, BNP Paribas Asset Management, and Brunel Pension Partnership.
Following a brief pause in 2022, the BBFAW has now been relaunched with tougher assessment criteria for the 150 companies that it assesses globally. These include an increased focus on performance impact and new questions on how companies are recognising the need to reduce reliance on animal-sourced foods, in recognition of the need to support a more sustainable global food system.
“Since [BBFAW] has been established, it’s dramatically changed the way in which investors think about farm animal welfare as an investment topic, [moving] from being a niche ethical investment issue to being more broadly recognised as a source of potential investment risk and opportunity,” Nicky Amos, Executive Director of the BBFAW and Managing Director at global sustainability advisory firm Chronos Sustainability, told ESG Investor.
“If a company is not clear about how they are recognising the risks associated with welfare and the scope of those issues to their business, that should be a red flag to investors.”
Although assessed companies have improved since the benchmark’s inception on areas such as transparency and animal welfare-related policies, previous iterations noted limited progress on the implementation of stated ambitions. In 2021, the benchmark reported an average overall score of 12% for its ten performance impact-related questions.
As a result, the 2023 benchmark increased the number of such questions from ten to 20, asking companies to detail progress on issues such as the time farm animals spend in live transportation. These questions represent 55% of the overall benchmark score, compared to 45% in 2021.
None of the companies assessed in 2023 achieved an ‘A’ or ‘B’ rating for performance impact, while the overwhelming majority (93%) were awarded an ‘E’ or ‘F’ grade, and 4% received a ‘C’. The 150 companies included in the benchmark included global food producers, retailers and food service companies – including McDonalds and Tesco – with combined revenues of more than US$4.9 trillion.
“It’s important that companies can demonstrate they have assigned responsibility for animal welfare both at the senior management level and operational level,” said Amos. She suggested investors ask themselves: have these individuals undergone training on animal welfare? Is there a system in place to manage non-compliance? How are these companies ensuring suppliers meet their expectations in these areas?
Future-mapping
The benchmark has also been updated to consider the extent to which companies are reducing their reliance on animal-sourced foods.
“We’re not saying that the number of animals farmed for food every year has to be reduced,” Amos explained. “We are asking companies to report on whether they are putting in place commitments to manage the important balance between over-reliance on animal-sourced foods, and the need to deliver good welfare benefits in a more sustainable food system.”
A quarter of assessed companies recognised the need to reduce reliance on animal-sourced foods as a relevant business issue in 2023. Twenty-one companies, including Greggs and Carrefour, have published time-bound targets to reduce this reliance.
“The changes we have introduced in the 2023 benchmark will not be universally popular among assessed companies,” Amos acknowledged. “But we believe these revisions were both timely and necessary if we are to substantially improve the welfare of the 92 billion animals farmed for food globally every year.”
The report did note areas of progress in this area – most notably, that 95% of global food companies recognised farm animal welfare as a core business issue, up from 79% in 2012. In addition, 73% of assessed companies with eggs in their supply chains now have cage-free egg commitments.
Investor efforts
As part of BBFAW’s assessments, investors can request a summary report on the performance of individual assessed companies, which they can use to inform future engagements.
The BBFAW’s investor coalition – which collectively represented US$2.3 trillion in assets – has been writing annually to the CEOs of assessed companies since 2015, encouraging them to strengthen management systems and processes around farm animal welfare.
“Last year, just over one in three of the companies responded to these letters,” Amos said. The next batch of letters will be sent in May, with BBFAW investor members expected to focus on areas that require improvement.
For example, 18% of assessed companies – including Tyson Foods – still have no policy commitment to end the use of close confinement. Just 9% of companies with pigs in their supply chains have set credible targets to end the use of sow stalls and gestation crates – small metal enclosures that are banned the UK and Sweden.
In addition, only 40% of companies have committed to ending prophylactic and routine metaphylactic antibiotic use, despite research warning of a surge in antibiotic resistance among animals and humans.
Poor animal welfare has also increased the risk of the rapid spread of zoonotic diseases – transmitted from animals to humans – which can massively disrupt agriculture supply chains.
“The BBFAW continues to be a valuable guide in helping investors analyse management quality in a systematic and consistent manner across the global food industry,” said Abigail Herron, Global Head of Health and Nature Policy at Aviva Investors. “It helps to shine a light on those who are making critical progress towards addressing these challenges and enables us to analyse management quality in a systemic and consistent manner.”
Assessments for the 2024 iteration of the benchmark will take place between October to November this year, with findings expected to be published in March the following year.
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