Animal Welfare Reporting Increasingly Linked to the Bottom Line

How can you know the hamburger you eat for lunch is sourced from a food supplier that humanely processes its beef?  As an investor, what key indicators are assuring you that a company has quality management in place?  Is your business adequately meeting the demands of consumers that increasingly scrutinize your product sourcing?  Farm animal welfare reporting helps answer these questions for consumers, investors and business owners.

The Business Benchmark on Farm Animal Welfare 2015 Report brings the topic of how animals are treated to the ongoing industry discussion of corporate responsibility.  It gives some companies good marks for attention to this often neglected topic, while pointing out that much progress remains to be made.

Expert Advisor to the Business Benchmark on Farm Animal Welfare (BBFAW), Rory Sullivan, says the 2015 report indicates this about the state of animal welfare: “It tells us two things. The first is that farm animal welfare is receiving nothing like the same level of attention as other corporate responsibility issues in the food industry. The second is that this is starting to change. There is now a group of clear leaders, and some 60 percent of the 90 companies covered by the benchmark have established policies and provide evidence that these policies are being implemented.” In 2012, this same report showed that less than half of the companies it surveyed had a published animal welfare policy.

The Benchmark report focuses on four core areas of self-reporting by global food companies:

• Management commitment and policy


• Governance management


• Leadership and innovation


• Performance reporting

Larger, established companies generally score prominently in the report, as do those diligently working to maintain public confidence.  BBFAW Executive Director Nicky Amos highlights: “The higher scoring companies in the benchmark tend to be the experienced reporters on corporate responsibility issues, either because they are publicly listed and/or because they have a strong ethical stance and well-developed communications and marketing on sustainability issues (for example, Marks & Spencer, Unilever, J Sainsbury, the Cooperative Food U.K. and Waitrose).

"There are also a number of companies (such as Tesco, McDonald’s, Tyson Foods and Nestle) that have historically found themselves under public scrutiny following media or NGO campaigns involving their supply chain practices. These companies have invested significant effort in engaging stakeholders and improving the transparency of their reporting as a means of restoring trust and rebuilding brand value.”

Restaurants and bars scored lower as a group, compared to the food industry in general. The more notable and publicly-traded restaurant companies tend to be more likely to weigh in on this topic, while privately-owned restaurants show the least interest in this sort of disclosure.  Study authors assert that customer and client demand will increasingly drive accountability for agricultural and food-processing practices.

While what happens on the farm or food-processing facility isn't always an indicator of what ends up on your plate, Sullivan says there is a connection. “There is strong evidence that higher standards of animal welfare correlate with better-quality food products. Assurance schemes that demand high standards of animal welfare, an example is the Freedom Foods scheme (now called RSPCA Assured), are the easiest way to communicate that products are underpinned by higher welfare standards." Sullivan goes on to concede that much third-party verification doesn't extend far beyond basic quality and food-safety standards.

Investors are increasingly watching animal welfare standards, Sullivan says, because they're both watchful about companies' risks and exposures to farm animal welfare, or because this is what he calls "a proxy for companies' wider quality of management."  To an investor, a grade from the benchmark could hold sway when determining company value.

One of the strongest business arguments for a company to become more transparent about attention to animal welfare is that this can reduce business risk.  Also, it allows business to be responsive to consumer demands about the origin of food products. "Reflecting the core message from the previous benchmarks, the key conclusion for investors is that farm animal welfare continues to be a systemic risk that many companies in the food industry are either not effectively managing or not properly reporting," the report authors write.

When you dig in, this report can also show you details about individual companies and related subtopics. Amos shares: “Alongside the report, the BBFAW provides supplementary resources for investors wanting to understand more about farm animal welfare.

"For example, our investor briefings on animal welfare topics cover relevant legislation, key welfare issues (such as the prophylactic use of antibiotics in intensive farming systems), and wider themes (on, for example, consumer attitudes to and perceptions of farm animal welfare, and the business and investment cases for managing the issue). Investors can also register to download two-page summary reports on individual companies assessed in the benchmark. These resources, along with the 2015 Benchmark Report, are available at www.bbfaw.com."

Image courtesy BBFAW