Food Giant Pledges Undermined by “Plodding” Meat and Dairy Industry on COVID-19 and Climate

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FAIRR

New data from the award-winning Coller FAIRR Protein Producer Index today finds that the world’s largest meat, fish and dairy producers are undermining global efforts to control both climate change and the spread of zoonotic diseases such as COVID-19. The Index assesses the 60 publicly-listed animal protein producers, worth a combined $338bn, which provide many of the burgers, nuggets and ready-meals on our tables and supermarket shelves. Firms are ranked against ten environmental, social and governance (ESG)-related criteria including GHG emissions, deforestation, antibiotic usage, working conditions and investment in alternative proteins. The results are presented in an interactive digital tool to help investors integrate ESG data and assess company performance.

Norwegian fish farmers, Mowi, Canadian packaged proteins firm, Maple Leaf Foods and aquaculture firm, Bakkafrost, are the top three performers in the Index in 2020 and the only companies to rank as ‘low risk’ for investors. Four of the five poorest performing firms are from Asia.

Climate commitments undermined

Many well-known food brands have recently made vocal climate commitments. McDonald’s has pledged a 31% reduction in emissions intensity by 2030 and Nestlé to reach zero net emissions by 2050. However, the Coller FAIRR Index finds that McDonald’s and Nestlé currently use suppliers like Fujian Sunner (China), Seaboard Corporation (US) and Cherkizovo Group (Russia) who score 1% or less on the Index’s GHG criteria, meaning they do not declare any GHG emissions or have no public targets to reduce them.

In total, three in four (78%) of the 60 Index companies do not declare or set meaningful reduction targets for all GHG emissions (Scope 1, 2 and 3), rising to 86% among just meat and dairy suppliers (i.e. excluding dedicated fish farmers).  Furthermore, 35% of Index companies reported an annual increase in emissions. Today’s findings suggest that the climate pledges of major high-street brands are being severely undermined by the animal protein supply chain’s failure to act on climate change.

There are, however, also signs of progress. A quarter (15) of Index companies now give a full picture of their climate impact by disclosing ‘Scope 1, 2’ and, crucially, ‘Scope 3’ emissions (which may, for example, include emissions caused by livestock feed). Seven companies have now committed to [or have now set] a ‘Science-based Target (SBT)’ for emissions reductions. (though it is worth noting that in other high-emitting industries (such as automobiles, electric utilities, mining and more), companies (30, 39 and 15 respectively) have committed to SBTs.

Failing to prevent future pandemics

As part of their flagship Index, FAIRR produced a ‘Pandemic Ranking’ based on the seven elements of the Index’s criteria which are seen as vital to preventing future zoonotic pandemics – including worker safety, food safety, animal welfare and antibiotic stewardship. This year’s Index found that 44 (73%) of the 60 Index companies are graded as ‘High Risk’ on these ‘Pandemic criteria’ and therefore are not doing enough to avoid creating and spreading a future pandemic.

It has been very clear throughout the COVID crisis that many company policies, standards and engagements on worker safety has not gone far enough to effectively safeguard workers and mitigate supply chain disruption.  To help address this, FAIRR is announcing that it launching a stand-alone engagement with eight of the global meat producers from the Index, including companies from the US, UK, Brazil, China and Japan, all of whom have experienced disruption. For example, the US company, Tyson Foods, has seen more than 8% of its US workforce infected with COVID-19 and experienced thirteen different ‘controversies*’ related to COVID this year.

Investors are also concerned that 42 companies (70%) have ranked as high risk for antibiotic stewardship, which some investors see as a proxy for how well an animal protein firm can manage pandemic risk. Only one Index firm assesses antimicrobial resistance risk for its workforce (i.e. 2% of the 57 firms that use antibiotics).  Widespread antibiotic resistance has been cited by the World Health Organization as one of the next big global threats to human health.

Jeremy Coller, Founder of the $25 trillion FAIRR network and CIO of Coller Capital said: “If global animal agriculture was a country it would be the second-highest emitter of greenhouse gases. FAIRR’s data shows three in four global meat and dairy giants are hiding the full extent of their climate emissions or failing to set comprehensive targets to reduce them. Factory farms are undermining both the climate ambitions of high-street brands and the viability of the Paris Agreement.

The COVID pandemic pushed an already under pressure meat and dairy industry to a tipping point, with many investors losing their appetite for the sector unless standards on sustainability are raised.”

Other findings among Index firms include:

  • Alternative proteins: A 46% rise in the number of Index companies meeting best practice on alternative proteins this year: 22 firms in 2020, compared to 15 last year, and five in 2018. The Canadian firm, Maple Leaf, is the only company to achieve a 100% score in this category, and have set a target to achieve $3 billion in plant protein sales by 2029.
  • Antibiotics: 70% (42 firms) rank as ‘High Risk’ for antibiotic stewardship. Although it is encouraging that four companies started disclosing antibiotics data this year. All beef or dairy firms in the Index rank as high risk and fail to disclose information on antibiotics usage.
  • Waste Management:49 of 50 (98%) of meat and dairy companies rank as ‘High Risk’ and do not discuss metrics or targets to manage wastewater or other potential pollutants. This is the risk factor with the second-lowest average score among all Index companies.
  • Deforestation72% (43) of all companies are ranked as ‘High Risk’ on deforestation. Only two of the 50 meat and dairy companies (excluding fish farmers) have a comprehensive policy to address or mitigate deforestation in all regions in which they source soy. Nordea AssetManagement recently dropped Index company, JBS, from all its funds over concerns stemming from the company’s handling of deforestation and other sustainability issues.
  • Water use: This year, seven companies are conducting risk assessments for water use in owned facilities compared to two last year. However, eight of 50 (16%) meat and dairy companies still have no disclosure relating to water use and a majority of companies do not measure and report on water scarcity.
  • Animal welfare: 41 companies (68%) are categorised as ‘High Risk’ on animal welfare, with more Poultry & Egg companies ranking as ‘High Risk’ than any other protein. Only eight companies in this year’s Index rank as ‘low risk’ and many still have no disclosure on animal welfare metrics.
  • GovernanceTwo-thirds (67%) of companies rank as ‘high risk’ on sustainability governance, a new risk factor introduced to the Index this year. Only two Index companies are categorised as low risk: Aquaculture firms Bakkafrost and Mowi.
  • Working conditions: Over half of Index firms (57%) rank as high risk on working conditions. Only 28% (17) of Index firms report having worker representatives on their health and safety committees.
  • Food safety: As the risk factor with the highest average score, 43% of Index companies rank as medium risk on food safety. 75% disclose that facilities have achieved certification recognised by the Global Food Safety Initiative (GFSI). However, only eight companies report that 100% of facilities are GFSI certified.

Download the report (pdf)

 

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