New food index sets roadmap for better health and sustainability; meat and fish companies worth $152 billion labelled ‘high risk’

 

New index, backed by $5.9 trillion investor network, analyses 60 global intensive farming companies on health, environmental and social issues

 

  • 60% of meat and fish companies in the Index – 36 large companies worth $152 billion – are categorized as ‘high risk’ by research aimed at world’s largest investors.
  • Major suppliers to McDonalds and KFC, including Chinese firm Fujian Sunner and Indian firm Venky’s, among those graded ‘high risk’. Sanderson Farms, third largest poultry producer in the US, also given bottom-tier ranking.
  • Sector is creating a health risk by not responding to antibiotics crisis: 77% of sector (46 companies worth $239bn) rank ‘high risk’ on antibiotics stewardship, with little or no measures in place to reduce excessive use of antibiotics – despite emerging regulation on issue.
  • Index also highlights global best practices in areas such as greenhouse gas emissions and alternative proteins. Norwegian firm Marine Harvest is top ranked company, with Europe-based aquaculture producers leading the sector on sustainability.

(New York, 30 May 2018). A ground-breaking new index for investors analysing a $300bn group of 60 global food companies has found that the large majority of meat, fish and dairy suppliers are failing to manage critical business risks such as greenhouse gas emissions and antibiotics risk.

 

The Coller FAIRR Protein Producer Index is the world’s first comprehensive assessment of how some of the world’s biggest, listed suppliers of meat and fish are managing critical sustainability risks from pollution to the Paris Agreement, food safety to worker safety. The global ranking is produced by the $5.9 trillion investor network FAIRR which has large investors such as Aviva Investors, Schroders and US fund University of California Office of the Chief Investment Officer of the Regents among its members. The Index aims to improve corporate disclosure on sustainability issues by all major livestock and fisheries companies and bridge the knowledge gap for investors on this sector.

 

The new Index finds:

  • Shareholder value at risk: 36 companies with a combined market capitalisation of $152bn are given the worst grade (‘high-risk’) across all sustainability factors [See overall league ranking below]. These include Cal-Maine Foods (US), Guangdong Wens (China), and suppliers to large fast food chains such as Venky’s (India) and Fujian Sunner (China)
  • Human health at risk: 77% of sector is failing to adequately manage or disclose antibiotic use, despite growing levels of regulation and international action to combat antibiotic resistant superbugs. Major suppliers to McDonalds and the fast food industry such as Fujian Sunner and Venky’s are among those ranked ‘high risk’ on antibiotics. One in five firms (22%) also fail to show full traceability of their food supply chain – a key part of food safety.
  • Paris at risk: The livestock sector is responsible for 14.5% of global greenhouse gas emissions, roughly equivalent to the emissions of the entire US, but 72% of the sector (worth $175 billion) is failing to manage climate risk, the Index finds. The Index reveals that no major livestock company uses an internal price on carbon.

 

The Index also highlights corporate best practice including:

  • Norwegian firm SalMar, praised for having a comprehensive target to reduce its greenhouse gas emissions by 10% by 2020.
  • US meat producer Tyson Foods, which is highlighted for launching Tyson Ventures, a $150 million venture capital fund to invest in companies such as ‘Beyond Meat’ developing plant based meats and other sustainable food products and technologies.

 

  • Norwegian aquaculture Marine Harvest – which is the top ranked company – is highlighted for its approach to antibiotics. The company tracks antibiotics usage on a gram of active substance per ton of product basis, and only uses antibiotics when fish are at risk. It aims to have “minimal” use of antibiotics by 2022.

 

Jeremy Coller, Founder of the FAIRR Initiative and Chief Investment Officer of Coller Capital said:

“Investors need ESG data and transparency to make better investment decisions, yet this information is lacking in the meat, fish and dairy sector. This is the first index to help investors bridge that knowledge gap.”

 

“As megatrends like climate change, antibiotic resistance and food technology radically reshape the way we produce and consume meat, fish and dairy, the Coller FAIRR index will help institutional capital identify both best in class companies and potential stranded assets in the food sector.”

 

Imogen Rose-Smith, Investment Fellow at University of California which manages over $120 billion of assets, said:

“The multi-trillion dollar global food sector is probably the world’s biggest industry, yet investors do not have the tools to understand its risks, especially the environmental and health risks hidden in big food’s labyrinth supply chains. That is why the new Coller FAIRR Protein Producer Index is a major breakthrough for investors. At a stroke it enables capital markets to more easily identify which intensive farming companies are adequately managing material business issues such as food safety, working conditions and environmental impacts, and which companies are at risk.  It’s clear that the intensive farming sector must address its sustainability challenges with great urgency. On climate change alone, almost three quarters of the sector is failing to put in place the policies and processes required to respond to the issue’s serious regulatory and operational risks. That presents serious concerns for most investors.”

 

Abigail Herron, Global Head of Responsible Investment, Aviva Investors said:

“From fast food to fine dining, much of the food on our plates leads back to the livestock and fisheries sector assessed by this Index. That is why it is of deep concern to investors that a majority of these global food suppliers are failing to manage such significant business risks. On antibiotics alone, FAIRR’s research shows that three in four of these companies are ignoring the calls from regulators, health professionals and the financial community to manage and reduce their use of antibiotics. That failure puts both global public health and their business models at risk.”

Other findings from the new Index include:

 

  • Chinese companies score poorly on sustainability metrics. 14 out of 16 of the China-based firms assessed (87.5%) are categorized as ‘high risk’. Norwegian aquaculture companies rank as the most sustainable, and European companies score more highly than those of the US or Asia.
  • Only five of the 60 companies accounted for the emergence and growth of the ‘alternative proteins’ sector – a rapidly growing segment of the protein sector expected to reach $5.2 billion by 2020.

 

The Coller FAIRR Protein Producers Index is being formally launched at an event in New York on 30th May 2018.

 

Notes to editor

 

For more information or for exclusive interviews with Aarti Ramachandran Head of Research and Corporate Engagement at FAIRR or investors involved, please contact:

 

  • A full report with all results and details of the Coller FAIRR Protein Producer Index is available on request. The overall league table of results is below.
  • Methodology: All companies are given an overall ranking of ‘low’, ‘medium’ or ‘high’ risk, based on their scores against eight sustainability risk factors. These are based on stakeholder understanding of environmental, social and governance (ESG) issues and are specifically: Greenhouse gas emissions; Deforestation and biodiversity loss; Water scarcity and use; Waste and pollution; Antibiotics; Animal welfare; Working conditions and Food safety. All eight risk factors and KPIs were weighted equally and each sustainability risk factor has several KPIs underlying its scoring – these are available in the methodology appendix of the main report. All scores are based on a company’s commitments, policies and disclosure.  Note, ‘Sustainable proteins’ is an additional risk factor which was assessed but not scored. All valuations are based on market capitalization figures as of March 28th 2018.

 

  • Environmental, social and governance (ESG) factors have become a crucial part of mainstream investment with investors managing over $70 trillion of assets now signed up to the UN-supported Principles for Responsible Investment. The Coller FAIRR Index aims to ensure ESG issues associated with the animal protein sector are considered within these mainstream investment practices.

Overall league ranking

Company Legal Name Market Cap ($bn) Country Final Score  

Ranking

Marine Harvest ASA 9.894 Norway 82 Low risk
Lerøy Seafood Group ASA 3.733 Norway 80 Low risk
Bakkafrost P/F 1.860 Faroe Islands 78 Low risk
Fonterra Co-operative Group Ltd 6.881 New Zealand 69 Low risk
Salmar ASA 4.726 Norway 67 Low risk
Cranswick PLC 2.120 UK 65 Medium risk
Charoen Pokphand Foods PCL 6.963 Thailand 65 Medium risk
Marfrig Global Foods SA 1.162 Brazil 62 Medium risk
Hormel Foods Corp 17.789 USA 60 Medium risk
Grieg Seafood ASA 1.035 Norway 55 Medium risk
Empresas AquaChile SA 0.580 Chile 53 Medium risk
Maple Leaf Foods Inc 2.919 Canada 53 Medium risk
Tassal Group Ltd 0.504 Australia 52 Medium risk
Tyson Foods Inc 26.291 USA 52 Medium risk
Grupo Nutresa SA 4.138 Colombia 48 Medium risk
Vietnam Dairy Products JSC 12.938 Vietnam 46 Medium risk
Scandi Standard AB 0.426 Sweden 43 Medium risk
BRF SA 6.906 Brazil 41 Medium risk
JBS S.A. 8.480 Brazil 38 Medium risk
China Shengmu Organic Milk Ltd 0.866 China 38 Medium risk
Pilgrim’s Pride Corp 6.093 USA 38 Medium risk
WH Group Ltd 15.632 China 36 Medium risk
MHP SE 1.458 Ukraine 36 Medium risk
RCL Foods Ltd/South Africa 1.337 South Africa 35 Medium risk
Inner Mongolia Yili Industrial Group Co Ltd 27.029 China 32 High risk
NH Foods Ltd 4.386 Japan 31 High risk
New Hope Liuhe Co Ltd 4.865 China 30 High risk
GFPT PLC 0.534 Thailand 30 High risk
QAF Ltd 0.416 Singapore 28 High risk
China Mengniu Dairy Co Ltd 18.555 China 28 High risk
Beijing Sanyuan Foods Co Ltd 0.944 China 27 High risk
COFCO Meat Holdings Ltd 0.631 China 27 High risk
LDC SA 2.549 France 26 High risk
Inghams Group Ltd 0.993 Australia 25 High risk
Nippon Suisan Kaisha Ltd 1.611 Japan 25 High risk
Great Wall Enterprises Co Ltd 0.840 Taiwan 24 High risk
Henan Shuanghui Investment & Development Co Ltd 13.366 China 22 High risk
Sanderson Farms Inc 2.735 USA 20 High risk
Shandong Oriental Ocean Sci-Tech Co Ltd 0.910 China 20 High risk
Muyuan Foodstuff Co Ltd 8.697 China 19 High risk
QL Resources Berhad 2.104 Malaysia 19 High risk
Fujian Sunner Development Co Ltd 2.702 China 18 High risk
Guangdong Wens Foodstuffs Group Co Ltd 17.537 China 17 High risk
Prima Meat Packers Ltd 1.407 Japan 17 High risk
Japfa Ltd 0.581 Singapore 16 High risk
Almarai Co JSC 14.766 Saudi Arabia 15 High risk
Fortune Ng Fung Food Hebei Co Ltd 1.324 China 14 High risk
Chuying Agro-pastoral Group Co Ltd 1.110 China 14 High risk
China Modern Dairy Holdings Ltd 1.047 China 12 High risk
Thaifoods Group PCL 0.705 Thailand 10 High risk
Australian Agricultural Co Ltd 0.590 Australia 10 High risk
Beijing Shunxin Agriculture Co Ltd 3.622 China 10 High risk
Venky’s India Ltd 0.827 India 7 High risk
Seaboard Corporation 4.467 USA 7 High risk
Cherkizovo Group PJSC 1.232 Russia 5 High risk
San Miguel Food and Beverage Inc 2.304 Philippines 5 High risk
Industrias Bachoco SAB de CV 3.118 Mexico 5 High risk
Cal-Maine Foods Inc 2.280 United States 4 High risk
Grupo Bafar SAB de CV 0.657 Mexico 3 High risk
Inti Agri Resources Tbk PT 0.532 Indonesia 0 High risk


About FAIRR

The FAIRR Initiative is a collaborative investor network. It aims to raise awareness of the material impacts factory farming and poor animal welfare can have on investment portfolios, and works to help investors share knowledge and form collaborative engagements on these issues. www.fairr.org

FAIRR’s members (as of 23/05/18) are: Acrux Partners (UK); ACTIAM (Netherlands); Active Earth Investment (UK); Aegon Asset Management (Netherlands); Amazonia Wealth Management (formerly Treebeard Financial Planning) (US); Appleseed Capital (US); Arisaig Partners (Asia) Pte Ltd (Singapore); Auriel Equity Investors LLP (Jersey); Australian Ethical Investment Ltd. (Australia); Aviva Investors (UK); Bard Family Trust (US); Barrow Cadbury Trust (UK); Boston Common Asset Management (US); Callidus Capital Corporation (Canada); Calvert Research and Management (US); Castlefield Partners (UK); Christian Super (Australia); Clean Yield Asset Management (US); Coller Capital (UK); ColorStone Co. Ltd (China); Cornerstone Capital (US); Cruelty Free Super (Australia); Dana Investment Advisors (US); Dignity Health (US); Domini Impact Investments (US); Dunning Capital, LLC (US); E.G. Thomson Holding Ltd (UK); EBG Investment Solutions AG (Switzerland); Equity Investment Corporation (US); Esmee Fairbairn Foundation (UK); Etho Capital (US); Farmland LP (US); Five Seasons Ventures (UK); Green Century Capital Management, Inc. (US); Health Foundation (UK); Hermes Equity Ownership Services Ltd (UK); ICCR (Interfaith Center on Corporate Responsibility) (US); Impax Asset Management (UK); InvestEco Capital Corp (Canada); iSelect Fund (US); Jeremy Coller Foundation (UK); Joseph Rowntree Charitable Trust (UK); JPS Global Investments (US); Kames Capital (UK); Kempen Capital Management NV (Netherlands); Man Group (UK); Mirova (France); MP Investment Management A/S (Denmark); Natural Investments LLC (US); Neuberger Berman SRI Team (US); New Crop Capital (US); NN Investment Partners (Netherlands); Ohman (Sweden); Quantum Financial Planning LLC (US); Quiota (US); Robeco (Netherlands); Schroders (UK); Scotiabank Wealth Management (Canada); Seal Cove Financial (US); Socially Responsible Investment Coalition (SRIC) (US); Sonen Capital (US); Strathclyde Pension Fund (UK); Stray Dog Capital (US); Sturgeon Ventures LLP (UK); Sustainable Insight Capital Management (US); Swift Foundation (US); Sycomore Asset Management (France); Polden Puckham Charitable Foundation (UK); Trillium Asset Management (US); Triodos SRI Fund (Netherlands); UBS Asset Management (Switzerland); UFF – African Agri Investments (South Africa); Ultra Capital (US) University of California, Office of the CIO of the Regents (US); Valoral Advisors (Luxembourg); VaR Capital (UK); Walden Asset Management (US); Wellesley Group (UK); Zevin Asset Management (US)