Dr Rory Sullivan, expert advisor to the Business Benchmark on Farm Animal Welfare, asks Abigail Herron, head of responsible investment engagement at Aviva investors, what impact the benchmark has had on investors.

In December 2013, the Business Benchmark on Farm Animal Welfare (BBFAW) released the results of its second benchmark of how global food companies are managing farm animal welfare. BBFAW evaluates and publishes a ranking of 80 of the world’s largest food companies – covering retailers, restaurants and bars, and food producers - on the basis of their policies, management practices and reporting on farm animal welfare.

The 2013 Benchmark concluded that farm animal welfare continues to receive much less attention than other corporate responsibility issues, with almost 30% of the companies covered by the Benchmark yet to even acknowledge farm animal welfare as a business issue. The Benchmark also identified seven companies – The Co-operative Food (UK), Coop Group (Switzerland), J Sainsbury, Marfrig, Marks & Spencer, Noble Foods and Unilever – that had made strong commitments to farm animal welfare, had well developed management systems and processes, and had a clear focus on farm animal welfare outcomes.

Dr Rory Sullivan, expert advisor to BBFAW, asks Abigail Herron, head of responsible investment engagement at Aviva investors, what impact the benchmark has had on investors.

Rory Sullivan (RS): What’s the potential value of the Business Benchmark?

Abigail Herron (AH): If we look across the investment industry, we see that there are many useful benchmarking initiatives ranging from the Access to Medicines Index for the pharmaceutical sector through to the Next Generation for house builders. However, until BBFAW arrived on the scene there was no corresponding tool for investors who wanted to bring farm animal husbandry into their engagement and analysis considerations.

BBFAW has played two critical roles; it has helped catalyse change by putting farm animal welfare on the investor agenda, and it has been an invaluable source of knowledge to identify the leaders and laggards.

In relation to investors’ interests, the reality is that farm animal welfare doesn’t occupy as a high profile a position as, for instance, executive pay, human rights or palm oil. This may be due to a historical perception of it not being a material issue or simply because of the prevailing culture of shying away from some of the more industrial processes livestock goes through to get on our plates.

This is changing. Scrutiny on supply chain transparency has reached a crescendo after the horse meat scandal and the recent announcement that McDonald's, Yum Brands and Starbucks have cut off orders from an American meat factory operating in China, Shanghai Husi, after it was accused of selling expired and tainted meat. Beyond these individual company case-studies, investors are increasingly recognising that good farm animal welfare performance (e.g. the management practices and processes adopted by the better performers in BBFAW) is often indicative of a company who has more awareness of the intricacies of its supply chain and a heightened awareness of the importance of reputational risk management, mitigation of impacts, and resilience alongside other sustainability challenges facing food producers.

RS: Has the Benchmark led to changes in investors’ attitudes on farm animal welfare?

AH: There are an abundance of reports and studies on responsible investment issues vying for attention from the investment community. For this reason we were delighted with the healthy audience numbers at the UK launch of the second iteration of the Business Benchmark on Farm Animal Welfare, which was hosted by Aviva Investors and UKSIF in March 2014. The debate was lively and it was clear that the benchmark has elevated investors’ awareness of this topic year-on-year.

As ever, awareness is only the first step. While pockets of engagement between companies and investors on farm animal welfare have begun to emerge, it is tricky to track exactly what engagement has been sparked by the benchmark. That said, it is clear that farm animal welfare is certainly gaining traction in the minds of investors. That alone is no mean feat when there is so much competition in terms of environmental, social and governance issues pertaining to investee companies.

In relation to investment research, we are still at a very early stage. We have yet to see sell side notes pay much attention to farm animal welfare and, anecdotally, relatively few investors have started to incorporate farm animal welfare into their investment research and decision-making. I am optimistic that this will change, not least given BBFAW’s plans to extend its geographic scope, which will see the universe of companies covered by benchmark being much more aligned with global investment portfolios.

RS: Has the Benchmark been useful to you in your day to day work?

AH: I previously headed up the corporate governance team at The Co-operative Asset Management. We were one of the first investors to pick up on the benchmark and to integrate its findings into our engagement plan and our company analysis.

Nowadays I lead the engagement with investee companies at Aviva Investors. I am in the fortunate position of daily meetings with companies, many of whom are in the benchmark. BBFAW has been invaluable in identifying which companies are making the most of opportunities in this space and which are leaving themselves wide open to the plethora of downside risks associated with poor farm animal welfare.

BBFAW is couched in terms investors are comfortable with and cuts through the myriad of complexity around the issues which is why I believe it will continue to grow in scale, scope and usage.

RS: What advice would you give us as we look to develop the Benchmark?

AH: The Benchmark is very helpful in helping us prepare for meetings with companies; it identifies how companies are performing relative to their peers, it allows us to see who is improving and it provides us with questions that we can ask in meetings.

Of course there are areas where the Benchmark could be made more useful to us! More case studies on the business case for taking farm animal welfare into account would be helpful for taking this topic beyond the enlightened and innovative early adaptors and into the mainstream. Understanding how the reputational risk inherent in poor animal welfare within companies supply chains is monitored would be welcome. So too would be more information on how the major buyers engage with the accreditation schemes, for instance, RSPCA backed Freedom Foods, and the commercial implications of these for suppliers. Finally, our corporate governance and corporate responsibility voting policy affords us the ability to withhold support from the re-election of directors where we have concerns. It would be helpful to identify the directors with oversight and responsibility for animal welfare so we can use companies’ positioning in the benchmark to inform our voting stance, if appropriate.

The Business Benchmark on Farm Animal Welfare has been developed with the support and expertise of leading farm animal welfare organisations, Compassion in World Farming and the World Society for the Protection of Animals (WSPA). For further information see www.bbfaw.com

While not a financial sponsor of the Benchmark, Aviva Investors has supported the benchmark by commenting on the Benchmark criteria, offering suggestions on the companies that might be included in the Benchmark and hosting a roundtable in London in March 2014 to discuss the Benchmark results and the implications for investors.


animal welfare  farm animals  food companies  responsible investment 

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