There are various reasons for food companies to be concerned about farm animal welfare: food scares, tightening regulatory requirements, pressure from industry peers, the media and non-governmental organizations, market opportunities for higher welfare products, and consumer interest in food quality, safety, provenance and traceability.
Despite these drivers, the results of the latest Business Benchmark on Farm Animal Welfare (BBFAW) – an annual benchmark of global food companies – suggest that many companies have yet to respond to increasing investor interest in the issue.
While the BBFAW identifies companies with well-developed management systems and processes (including Greggs, Marks & Spencer and Unilever), it also notes that almost half of the 99 companies covered by the benchmark (including Domino’s Pizza, Starbucks and Burger King parent Restaurant Brands International) provide limited information on their management of farm animal welfare.
There is growing investor awareness of the risks and opportunities presented by farm animal welfare. Twenty-three investors, representing £1.83 tn ($2.28 tn) in assets under management, have signed a Global Investor Statement on Farm Animal Welfare. These investors identify farm animal welfare as potentially material to long-term investment value creation and commit to taking account of the issue in their investment analyses and in their engagement with food companies. They are also integrating farm animal welfare into their investment processes, using the BBFAW to assess the business risks and opportunities of farm animal welfare for individual companies.
The BBFAW’s International Investor Collaboration on Farm Animal Welfare has seen 20 global investors, representing more than £1.34 tn in assets under management, write to companies in the benchmark commending leaders on their performance and encouraging laggards to improve their practices and performance on farm animal welfare.
This level of investor activity suggests IR professionals in food companies need to pay greater attention to farm animal welfare in their reporting and in their engagement with investors. Specifically, they should:
1. Familiarize themselves with investors’ expectations on farm animal welfare, noting that BBFAW is the key source of investor information on this issue
2. Assess how their company performs against the requirements of the benchmark and use this to identify gaps in their management approach. Companies covered by the benchmark receive a detailed assessment of their performance against its criteria. Companies not covered by the benchmark can apply to the BBFAW secretariat to be assessed independently
3. Align their company’s reporting on farm animal welfare with the requirements of the BBFAW
4. Provide regular and timely updates on their practices and performance on farm animal welfare. While companies often provide a robust and regular account of their activities and actions for well-established issues such as climate change, farm animal welfare tends to be reported in a more ad hoc manner
5. Ensure they can respond effectively to questions from investors about their performance in the benchmark and their approach to farm animal welfare more generally.
Nicky Amos is the program director and Rory Sullivan is expert adviser to the BBFAW
