Company reporting on farm animal welfare is being driven by consumers and, increasingly, by investors.
Over the past year, we have seen a significant increase in the level and quality of corporate reporting on farm animal welfare.
The 2013 Business Benchmark on Farm Animal Welfare, which assessed the reporting practices of 70 of the world’s largest global food companies, found that the percentage of these companies that had published a formal farm animal welfare policy had increased from 46% to 56% between 2012 and 2013, and the number that had published objectives and targets for farm animal welfare had increased from 26% to 41% over the same period.
Our research, including interviews with the companies covered by the benchmark, has identified four factors as particularly important in driving this increase in reporting.
Horsemeat
The first – and the most significant over the period 2012 to 2013 – was the European horsemeat scandal. Companies have sought to address customer concerns by publishing more information on their management of their supply chains.
This reporting has covered supply chain-related management processes such as monitoring, testing, supplier training and auditing, as well as specific product-related issues such as antibiotics usage and farm animal welfare.
Reporting guidance
The second is the guidance provided on issues such as reporting and management systems. This guidance has helped address one of the key obstacles to reporting, namely the lack of clarity on the issues and data that are of interest to investors and other stakeholders.
The fact that the benchmark publicly ranks companies on performance, and highlights good practice case studies, was noted by companies as a motivation for them to improve their reporting. Indeed, four companies, The Co-operative Food (UK), Marks & Spencer, Noble Foods and Unilever, have explicitly referenced the benchmark in their corporate responsibility reports or sections of their websites.
Investor interest
The third is that companies see that investors are increasingly interested in farm animal welfare, both directly (because of the risks presented by farm animal welfare) and indirectly (because companies’ approaches to the management of farm animal welfare provide valuable insights into corporate risk management processes more generally).
In fact, a number of the companies we interviewed commented that they had been asked about their approach to farm animal welfare and/or their ranking in the benchmark by investors.
Investor interest is likely to increase. A number of investors have asked us for more detailed information about individual company performance and have signalled that they intend to engage with these companies to encourage improvements in their practices and reporting.
We see investor engagement as particularly important in encouraging improvements in corporate practice. We support investor engagement with companies by making summaries of individual company performance available to them on request.
These two-page reports include an analysis of how companies perform against their sector peers, trends in company performance, areas of strength and weakness, suggestions for improvement, and commentary on whether the company has engaged with benchmark.
Supply chain pressures
The fourth is that pressures for higher standards and better reporting are coming through the supply chain. For example, 34% of the companies covered by the 2013 benchmark stated that they include farm animal welfare in supplier conditions, compared to just 15% in 2012. There has also been a significant increase in the number of companies that provide information to their customers or consumers on farm animal welfare, with 30 of the 70 companies (43%) assessed in 2013 providing this information compared to just 25% in 2012.
This proactive communication on farm animal welfare is a clear signal about the importance being assigned to farm animal welfare, and suggests that companies are likely to maintain their focus on this issue in years to come.
Our overall conclusion is that the pressures – from consumers, from investors, from retailers – for companies to manage farm animal welfare-related issues effectively and to report on their performance are likely to increase. Our expectation, which is backed up by our discussions with companies, is that the upsurge in reporting on farm animal welfare is only a start. We expect many more companies to report on their approach to farm animal welfare in the coming years.
Dr Rory Sullivan is an expert adviser to the Business Benchmark on Farm Animal Welfare, and Nicky Amos is the programme director of the Business Benchmark on Farm Animal Welfare.
consumers Farm animal welfare investors