The Business Benchmark on Farm Animal Welfare

Doppelte Dividende – Trends in Nachhaltigen Investment 21 Oktober 2014, Frankfurt

Nicky Amos, Programme Director and Rory Sullivan, Expert Advisor

About the Benchmark

•  World’s first benchmark of leading food

companies on their management of farm animal welfare standards

•  Designed to help drive higher farm animal welfare practices across three food industry sectors:

•  Retailers •  manufacturers and processors •  Restaurants and bars

•  Compassion in World Farming and World Animal Protection provide technical expertise and guidance on farm animal welfare and related issues, funding and resources.

About the Benchmark

The Benchmark aims to provide: §  Investors and other stakeholders with

independent, impartial and reliable information on individual company efforts to adopt higher farm animal welfare standards and practices

§  Companies with guidance on how they can

effectively communicate their performance on farm animal welfare to key stakeholders

Summary of engagement – 2011/12

October 2011 Programme

launched at UK Social Investment

Forum Seminar hosted by Henderson

Global Investors. Speakers from CIWF,

Unilver, M&S and Henderson)

February 2012 Article published in

Ethical Corporation (first of four in 2012)

March 2012 Webinar hosted by

PRI with 40 registered

investment-related organisations (asset

managers and research houses).

Speaker from Sainsbury.

June 2012 Public consultation

on Benchmark criteria and

methodology

July 2012 Roundtable hosted by Co-operative

Asset Management

October 2012 Article published in

Responsible Investor journal

November 2012 Dialogue with

Business for Social Responsibility, USA

Summary of engagement – 2013/14

May-July 2013 One-to-one meetings with investors in UK, France, Belgium

July 2013 Meeting with

Delhaize Group, Brussels

Jun-July 2013 Public consultation on Benchmark criteria and

methodology

October 2013 Article on corporate

disclosure published in

Guardian Sustainable

Business

December 2013 Launch of 2013

Benchmark Report Launch hosted by BNP Paribas Bank in

Paris

December 2013 Various articles on 2013 Benchmark

results

Feb 2014 Webinar on regulatory

landscape for farm animal welfare

June 2014 Presentations at

Responsible Investor conference

and Good Farm Animal Welfare Forum, London

March 2014 Roundtable event, London, hosted by

UKSIF & Aviva

The Universe of Companies (2013)

•  70 companies evaluated (68 in 2012)

•  Broadly the same universe of companies as 2012, but updated to reflect ownership changes

•  12 countries across 3 regions (Europe, North America and South America

•  61% (43) companies are publicly listed, 23% (16) are privately-owned and 11% (8) are co-operatives (with the remainder being joint- or private equity-owned)

Food Retailers and

Wholesalers 33% Restau

rants and Bars 30%

Food Produc

ers 37%

Scope of Evaluation Criteria

•  18 questions (17 in 2012) •  3 categories:

•  Management commitment & policy (65 points)

•  Governance and management (85 points) (75 points in 2012 Benchmark)

•  Innovation & leadership (30 points)

•  Max score: 180 points (170 points in

2012 Benchmark)

German companies (with tier ranking): Aldi Nord (6) Aldi Süd (5) Kaufland (5) Lidl (5) Metro (5) Rewe Group (4) Müller Group (6) Edeka Zentrale* * from 2014

Overall Results (2013)

Key Findings (2013)

•  71% of food companies acknowledge farm animal welfare as a business issue

•  56% publish an overarching policy on farm animal welfare •  Companies are relatively unclear about their positions on key welfare

concerns •  Only 39% of companies describe their board/senior management

oversight of farm animal welfare •  Reporting on farm animal welfare performance is the exception rather

than the rule •  Beyond their own operations, there are few examples of how companies

are contributing to the wider debate on FAW.

Leading Companies (2013)

Tier Number of Companies

Companies

2012 2013

1 0 2 Co-op Switzerland, Marks & Spencer 2 3 6 Co-op (UK), J Sainsbury, Marfrig, Noble Foods,

Smithfield Foods, Unilever 3 6 9 Arla Foods, FrieslandCampina, McDonalds, Migros,

Morrisons, Nestle, Tyson, Vion, Waitrose 4 17 16

5 19 14

6 23 23

In summary

•  There is clear evidence that farm animal welfare is rising up the business agenda

•  19 of the 70 companies have moved up at least one tier •  First signs of companies demonstrating leadership in this area which will

provide the impetus for other strong performing companies to aim higher •  However:

•  While over 70% of companies acknowledge farm animal welfare as a business issue, only 56% have formal policies and just 39% describe management oversight

•  Overall average score of 28% [2012: 23%]suggests some modest improvements, but there is still a long way to go

Key Developments: 2014 Benchmark

•  Four significant changes were made to the 2014 Benchmark:            

1.  The addition of 10 new companies (BRF SA, Costco Wholesale Corp, Darden Restaurants Inc, Domino’s Pizza, Edeka Zentrale, Ferrero SpA, General Mills Inc, JBS SA, The Kroger Company, The Wendy’s Company)

2.  The addition of a number of questions on performance including: §  the proportion of animals free from confinement §  the proportion of animals subject to pre-slaughter stunning §  the proportion of animals transported within 8 hours journey time §  Specific welfare outcome measures

3. The expansion of scope to include finfish aquaculture alongside terrestrial animals

4. The addition of a new question on the prophylactic use of antibiotics

2014 Benchmark Schedule

Company Evaluations

80 assessments completed/quality assured/proof-read Technical review by NGO partners Preliminary reports shared with companies Reports finalised

Company & Investor Engagement

One-to-one meetings with companies (ongoing) One-to-one meetings with investors (ongoing) Oekom research conference: 'Doppelte Dividende', Frankfurt, 21 October 2014 Good Farm Animal Welfare Forum, Paris, 6 November 2014

2014 Benchmark Report/Launch

Media Planning Report drafting Draft report shared with partners Report finalised & signed off Report designed and printed Launch (Germany, January 2015)

Tools for Investors

How Are Investors Using the Benchmark?

•  To assess the business risks and opportunities of farm animal welfare for companies.

•  To provide insights into how effectively companies are identifying and managing risks in their supply chain processes more generally.

•  To cross-check their assessments of companies’ sustainability approaches and strategies.

•  To prioritise companies for engagement, both laggards (i.e. poor

performers) and leaders (to understand what has enabled these companies to become leaders).

•  To inform their engagement with companies, both on farm animal welfare and on sustainability strategy and governance.

•  To raise questions at Annual General Meetings.

Wider Reflections

•  Reporting on farm animal welfare is in its infancy, with progress hampered by a lack of a shared understanding of what performance reporting might look like.

•  From an investment perspective, the key conclusions are that farm animal welfare is a systemic risk to the food industry and that food companies have yet to effectively engage with the issue.

•  Encouragingly, a number of companies have already started to use the Business Benchmark framework to strengthen their approach to the management of farm animal welfare.

•  We anticipate greater engagement of companies and investors as the Benchmark is repeated year on year.

For further details please visit website www.bbfaw.com or contact the Programme Director, Nicky Amos nicky@nicky-amos.co.uk