Food Giant Pledges Undermined by “Plodding” Meat and Dairy Industry On COVID and Climate

New data from $25 trillion investor network shows climate commitments of food brands such as McDonalds and Nestle undermined by supplier failings

• Coller FAIRR Protein Producer Index: New data published for world’s only comprehensive sustainability assessment of large meat, fish and dairy producers.
• 86% of major meat and dairy suppliers failing to declare, or set meaningful reduction targets for, all greenhouse gas emissions. Undermining climate commitments from household brands such as McDonalds and Nestle.
• 73% of animal protein firms graded ‘high-risk’ on pandemic-related criteria for failing to prevent future zoonotic diseases like COVID-19.

LONDON--(BUSINESS WIRE)--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, who provide may 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 (see full league table in Notes to editor).

Climate commitments undermined

Many well-known food brands have recently made vocal climate commitments. McDonalds has pledged a 31% reduction in emissions intensity by 2030 and Nestle to reach zero net emissions by 2050. However, FAIRR’s Index finds that McDonalds and Nestle currently use suppliers like Fujian Sunner (China), Seaboard Corporation (US) and Cherkizovo Group (Russia) who score 1% or less on FAIRR’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 signs of progress too however. 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 include for example emissions caused by livestock feed). And 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 and mining many more companies (30, 39 and 15) have committed to SBTs respectively).

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 companies’ policies, standards and engagement 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 is 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, US company, Tyson Foods, have seen more than 8% of their 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 this year in the number of Index companies meeting best practice on alternative proteins: 22 firms in 2020, compared to 15 last year, and 5 in 2018. 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 lowest average score among all Index companies.
• Deforestation: 72% (43) of all companies are ranked as high risk on deforestation. Only 2 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 Asset Management recently dropped Index Brazilian company JBS from all its funds over concerns stemming from the company’s handling of deforestation and other sustainability issues.
• Water use: This year, 7 companies are conducting risk assessments for water use in owned facilities compared to two last year. However, 8 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 & eggs companies categorised high risk than any other protein. Only 8 companies in this year’s Index rank as ‘low risk’, and many still have no disclosure on animal welfare metrics.
• Governance: Two-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.

Nina Roth, Director of Responsible Investment, BMO Global Asset Management said:

“The Index demonstrates that investors must continue to push for sustainability improvements across the meat and dairy sector as a whole as it is far from optimal. In Asia in particular, the majority of industry suppliers are poorly managing risks related to climate change and are failing to prevent future zoonotic diseases like COVID-19. It is imperative that a shift take place to secure the on-going trust of global markets.”

Nikki Gwilliam-Beeharee, Director of ESG research, Invesco said:

“The food sector is facing unprecedented challenges including being impacted by climate change, COVID-19 and shifting consumer preferences. As investors we need quality insights and accurate data to assess how ESG performance might affect companies in our portfolios. The Coller FAIRR Index is therefore a useful tool and at Invesco this helps inform our ESG research and company engagement efforts.”

Jerry Goh, Investment Manager, Aberdeen Standard Investments (Singapore) said:

“There is enormous growth potential in Asia’s animal protein sector but a failure to measure and manage sustainability risks from emissions to antibiotics is likely to ruin investors’ appetite. The fact that 9 of the bottom 10 performers in this Index are based in Asia is especially concerning. The global animal protein industry is at a crossroads. On one hand, there are some signs of improvement with previously poor performers turning around their ESG performance around and some greater commitments from food companies on Scope 3 and science-based emissions targets. On the other, it’s clear from FAIRR’s data that the global meat and dairy industry, and the Asian suppliers in particular, have more room to improve in order to secure the trust of both markets and wider society in their management of critical risks like climate change.”

Notes to editor
For more information or for interviews with a FAIRR spokesperson or the investors involved, please contact:
Martine Nadeau, Ping Communication
T : 514-238-0568  | e: [e-mail]

• Access to all data is available on request via the Coller FAIRR Index microsite. Overall league table below.
• Investor action on COVID-19: FAIRR’s ‘Working conditions engagement’ will ask investors to write to eight companies and ask them to publicly disclose information to strengthen (1) governance and (2) worker representation to support and protect labour rights and worker safety in internal operations and suppliers across the value chain for all workers including workers in vulnerable condition.
• Methodology: All companies are given an overall ranking of ‘low’, ‘medium’, ‘high’ risk’ or ‘best practice’, based on their scores against ten sustainability factors. These are: Governance, Greenhouse gas emissions; Deforestation and biodiversity loss; Water scarcity and use; Waste and pollution; Antibiotics; Animal welfare; Working conditions, Food safety, and alternative proteins. More details of the methodology are available online. All statistics are based on publicly available data from the reporting period 01 January 2019- 31 August 2020. Valuations are based on market capitalization figures as of 7 August 2020. The seven criteria used in the ‘Pandemic Ranking’ are: Antibiotics stewardship, managing deforestation and biodiversity loss, working conditions, animal welfare, waste and pollution, food safety and investment in alternative proteins. A Pandemic Ranking’ league table is available below.
  * This year FAIRR also used an AI-powered tool to gather data on reported controversy events related to Index companies (for example product recalls, working conditions issues, or legal and regulatory alerts), however this information does not inform the companies’ overall performance score this year.

About FAIRR | www.fairr.org
The FAIRR Initiative is a collaborative investor network, established by the Jeremy Coller Foundation. Its mission is to build a global network of investors who are focused and engaged on the risks linked to intensive animal production within the broader food system. FAIRR helps investors to exercise their influence as responsible stewards of capital to engage and safeguard the long-term value of their investment portfolios. This is the third year of the Coller FAIRR Protein Producer Index which was shortlisted by the UN-supported PRI as ESG Research Report of the Year.

Full league table
2020 Rank overall	Company Legal Name	Country	Category
1	Mowi ASA	Norway	Low risk
2	Maple Leaf Foods Inc	Canada	Low risk
3	Bakkafrost P/F	Faroe Islands	Low risk
4	Marfrig Global Foods SA	Brazil	Medium risk
5	Tyson Foods Inc	USA	Medium risk
6	Grieg Seafood ASA	Norway	Medium risk
7	Fonterra Co-operative Group Ltd	New Zealand	Medium risk
8	Lerøy Seafood Group ASA	Norway	Medium risk
9	JBS S.A.	Brazil	Medium risk
10	BRF SA	Brazil	Medium risk
11	Hormel Foods Corp	USA	Medium risk
12	Charoen Pokphand Foods PCL	Thailand	Medium risk
13	Cranswick PLC	UK	Medium risk
14	Thai Union Group PCL	Thailand	Medium risk
15	Multiexport Foods SA	Chile	Medium risk
16	WH Group Ltd	China	Medium risk
17	Grupo Nutresa S.A.	Colombia	Medium risk
18	Salmones Camanchaca SA	Chile	Medium risk
19	Vietnam Dairy Products JSC	Vietnam	Medium risk
20	SalMar ASA	Norway	Medium risk
21	LDC SA	France	Medium risk
22	China Mengniu Dairy Co Ltd	China	Medium risk
23	Bell Food Group AG	Switzerland	High risk
24	NH Foods Ltd	Japan	High risk
25	Tassal Group Ltd	Australia	High risk
26	Scandi Standard AB	Sweden	High risk
27	Inner Mongolia Yili Industrial Group Co Ltd	China	High risk
28	GFPT PCL	Thailand	High risk
29	Australian Agricultural Co Ltd	Australia	High risk
30	RCL Foods Ltd/South Africa	South Africa	High risk
31	MHP SE	Ukraine	High risk
32	Cal-Maine Foods Inc	USA	High risk
33	Minerva SA	Brazil	High risk
34	Beijing Sanyuan Foods Co Ltd	China	High risk
35	Nippon Suisan Kaisha Ltd	Japan	High risk
36	QAF Ltd	Singapore	High risk
37	Almarai Co JSC	Saudi Arabia	High risk
38	Maruha Nichiro Corporation	Japan	High risk
39	Astral Foods Ltd	South Africa	High risk
40	Japfa Ltd	Singapore	High risk
41	Great Wall Enterprise Co Ltd	Taiwan	High risk
42	QL Resources Berhad	Malaysia	High risk
43	New Hope Liuhe Co Ltd	China	High risk
44	Industrias Bachoco SAB de CV	Mexico	High risk
45	Seaboard Corporation	USA	High risk
46	Sanderson Farms Inc	USA	High risk
47	Thaifoods Group PCL	Thailand	High risk
48	San Miguel Food and Beverage Inc	Philippines	High risk
49	Cherkizovo Group PJSC	Russia	High risk
50	Inghams Group Ltd	Australia	High risk
51	China Modern Dairy Holdings Ltd	China	High risk
52	COFCO Meat Holdings Ltd	China	High risk
53	Beijing Shunxin Agriculture Co Ltd	China	High risk
54	Wens Foodstuff Group Co., Ltd.	China	High risk
55	Prima Meat Packers Ltd	Japan	High risk
56	Grupo Bafar SAB de CV	Mexico	High risk
57	Muyuan Foodstuff Co Ltd	China	High risk
58	Venky's India Ltd	India	High risk
59	Fujian Sunner Development Co Ltd	China	High risk
60	Fortune Ng Fung Food Hebei Co Ltd	China	High risk