Fortunately, there is a growing interest in farm animal welfare, especially in relation to food scandals, tightening regulation - especially in the European Union - and investor concerns about supply chain management and risk. Investors are increasingly using their influence and stimulate companies to improve in this regard, to strengthen their long-term continuity and long-term shareholder value creation.

Interest in animal welfare is growing, but there is still ample room for improvement.
Iris Lether, Senior Sustainability Analyst at Triodos Research

Dialogue with the industry

Companies using large quantities of animal food ingredients, or companies that retail animal food products, should at the very least show commitment to animal welfare by having a global group-wide animal welfare policy. Their policy should go beyond legal requirements for all own-brand products, and should be implemented with robust standards on key issues, preferably by animal type, and compliance should be structurally monitored.  In 2014, we sent investor letters to companies in our Sustainable Investment Universe. The response to our engagement was positive, with seven companies agreeing to discuss matters further. Two other companies provided additional information.

Actions speak louder than words

Frontrunners

Several companies have significantly improved their practices since our initial contact, and have started new activities to improve farm animal welfare in their supply chain that go beyond the required legal minimum standards. Belgian supermarket chain Colruyt and Dutch food producer Wessanen belong to the frontrunners with regard to improved performance.

Colruyt – improved guidelines and monitoring

The Belgian supermarket retailer clearly addressed our recommendations and its progress is impressive. The company has not only implemented clear general animal welfare guidelines, but also substantially improved its reporting, and developed new standards for chickens, animal ingredients in non-food products and the use of antibiotics. Its monitoring and evaluation system has also been strengthened and is an important pillar of the company’s approach. Improved procurement policies and procedures concerning all animals in its supply chain are also top of the agenda. The company seeks close collaboration with its suppliers to progressively develop better standards. We would like to see Colruyt extend its commitment and publish more concrete standards, and to extend its scope beyond Belgium.

Wessanen - taking the issue a step further

Instead of improving animal welfare practices, Dutch food company Wessanen focuses on vegetarian, plant-based food products to replace animal proteins, thus taking the issue of animal welfare a step further. About 95% of the company’s food products are vegetarian. Products that do contain meat or dairy ingredients are all certified organic. The company links healthiness to the sustainability of food and believes that what is good for people is also good for the planet and vice versa

Next steps

Although the companies in our universe are making good progress, they still have to deal with a number of obstacles. Making improvements in their supply chain, for example, largely depends on the financial capacity of farmers to improve their practices. Having learned more about these obstacles helps us to develop our own standards further. Whilst companies in our investment universe are already leaders in farm animal welfare, particularly for fresh meat and eggs, we expect to see the leading companies develop more initiatives related to dairy and processed food. We will therefore continue our engagement efforts with companies in our investment universe.

For an overview of our engagement activities and how we influence the companies we invest in, please visit our socially responsible investing page.