Here’s a Q&A with Nicky Amos and Dr Rory Sullivan, editors of the new book The Business of Farm Animal Welfare and architects of the Business Benchmark on Farm Animal Welfare.
1) Why is animal farm welfare a significant business issue today? Who does it actually affect?
Nicky Amos: The reasons why companies should care about farm animal welfare are well established:
• As a fundamental ethical principle, animals should be treated with dignity and respect.
• Certain consumers care about animal welfare and are willing to pay a premium for higher welfare products and/or to avoid products that are seen as lower welfare.
• Companies that fail to do a good job of managing animal welfare are exposed to brand or reputational risks.
• Animal welfare-related regulation is progressively tightening.
• There are business benefits associated with higher welfare, such as improved product quality, reduced product loss, and increased product margins.
The pressures for companies to act on farm animal welfare have strengthened in recent years. For example, the Business Benchmark on Farm Animal Welfare has prompted investors to regard farm animal welfare as a source of investment risk and opportunity, and there is growing consumer demand for higher quality and more naturally and sustainability sourced food. One of the most interesting developments we are seeing is that companies are moving from treating farm animal welfare as a cost and as a downside risk, terms. They increasingly see farm animal welfare as a source of competitive advantage.
Rory Sullivan: That’s a classic lazy stereotype which obscures the profound changes that we are starting to see. For years, there has been an assumption that people can be divided into those that simply see animals as a source of protein, and those that actively care about issues such as farm animal welfare.
But, as our book reveals, this division is becoming increasingly blurred. Consumers are increasingly concerned about the provenance of the meat that they and their families eat. While this may not be explicitly motivated by farm animal welfare – concerns about food safety, antibiotics, food quality and supporting local farmers are all at play.
The consequence is that companies can no longer treat farm animal welfare as a niche ethical concern or as something that can be dealt with through offering a limited number of higher welfare products. Modern progressive companies now see animal welfare as a sustainability challenge to be given the same level of importance as, for example, reducing greenhouse gas emissions or improving labour standards in their supply chains.
3) What evidence is there, beyond some niche “NGOs in suits” SRI investor-types, that investors take animal farm welfare seriously as a business risk?
Rory Sullivan: Two proof statements will help. The first is that 21 institutional investors representing over £1.7 trillion in assets under management (AUM) have signed the Global Investor Statement on Farm Animal Welfare, which commits them to encouraging food companies to improve their management practices, disclosures and performance on farm animal welfare, and to taking account of the information provided by the Business Benchmark on Farm Animal Welfare in their investment decisions. The second is that 19 institutional investors representing over £1.5 trillion in AUM are participating in the Global Collaboration on Farm Animal Welfare, which encourages major food companies to strengthen their management and reporting of farm animal welfare.
These numbers are just the tip of the iceberg. Over the past five years, as part of our work on the Business Benchmark on Farm Animal Welfare, we have engaged with over 300 asset owners, asset managers and insurance companies on farm animal welfare. While many of these organisations are still at an early stage of taking farm animal welfare into account, our annual surveys of institutional investors suggest that many now recognise farm animal welfare as an investment risk and they are building their understanding of the subject.
4) How serious an issue, specifically, is antibiotic use in the supply chain, and what’s being done about it by companies?
Nicky Amos: Antibiotic resistance in humans is probably the defining issue of the 21st Century. The relationships with farm animal welfare are clear. Antibiotics are frequently used on-farm (typically through feed or water) as a preventative measure, effectively ‘propping up’ intensive farming systems where animals are kept in confined and stressful conditions and where their immune systems are compromised and where disease outbreaks can spread rapidly.
Companies have recognized this issue and a number have adopted strategies to ensure that antibiotics are used responsibly and that their use is reduced over time. While these are important commitments, they effectively deal with symptoms rather than root causes. Wide scale use of antibiotics and the associated public health consequences will remain a problem for as long as so much of the world’s meat production comes from intensive systems. This is why, in the Business Benchmark on Farm Animal Welfare, we place so much emphasis on what we refer to as close confinement (or intensive production) and on addressing the practices (antibiotics usage is one, routine mutilations another) that enable those systems to operate.
We are seeing progress with an increasing number of companies moving away from close confinement systems although this is often limited to specific species and to countries where there are strong and influential NGOs.
5) Which companies lead, and which lag, on these issues? Please give us five saints and sinners, and a little about why each lead or lag.
Nicky Amos: In the most recent iteration of the Business Benchmark on Farm Animal Welfare, which surveyed 99 global food companies, we identified six as Tier 1 (or leadership) companies. These were Coop Group (Switzerland), Cranswick, Marks & Spencer, Migros, Noble Foods and Waitrose. So what do these companies have in common? While the details differ, they all have the following characteristics:
• Clearly defined policy commitments to higher standards of farm animal welfare, including commitments on specific issues such as the avoidance of close confinement and reductions in antibiotics usage.
• Clear senior management and operational management responsibility for farm animal welfare.
• Clear and ambitious targets for improving animal welfare across all relevant species.
• Clear reporting on the animal welfare outcomes that they achieve.
At the other end of the spectrum, many food companies provide little or no information on their approach to farm animal welfare. Notable examples include: ABF, KraftHeinz, Mars, Restaurant Brands International and Starbucks.
6) Is this yet another issue where farmers and suppliers are dumped on from a great height by retailers, who then seek to capitalise on their externalising of the cost in their labelling and marketing?
Rory Sullivan: One of the key conclusions from our book is that the business case for higher standards of farm animal welfare remains poorly understood, in particular in terms of the precise relationships between higher farm animal welfare standards and standard performance measures such as productivity and quality.
A further issue is that there is often a disconnect between the organisations that invest in higher welfare systems and those that reap the financial benefits. For example, producers need some level of confidence that their investments in higher animal welfare standards will actually be repaid or that they can charge a sufficient premium over a reasonable period of time to justify their investments.
Do retailers ‘dump on farmers and suppliers’? The answer is probably yes but there are an increasing number of examples of how retailers (i.e. those at the top of the food chain) work with suppliers to incentivise and encourage investments in higher welfare through, for example, providing education and training, modifying contract conditions, or committing to minimum levels of purchase of higher welfare products. There is much more that could be done to ensure that farm animal welfare-related investments are economically viable but we now have a good understanding of the role that can be played by suppliers and of how, through labelling and marketing higher welfare products, farm animal welfare can be a ‘win-win’ for all companies.
Dr Rory Sullivan is expert advisor to the BBFAW and Nicky Amos is executive director of the Business Benchmark on Farm Animal Welfare (BBFAW). Nicky and Rory designed and developed the Business Benchmark on Farm Animal Welfare (BBFAW), which is now the globally recognised investor framework for assessing the quality of companies’ practices, processes and performance on farm animal welfare.
The Business of Farm Animal Welfare is available to order here
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