ACTIAM is a responsible fund and asset manager based in the Netherlands, with €52 billion in assets under management. They were one of the first FAIRR network members and have been a signatory to the PRI since it was formed in 2006.
Integrating intensive farming concerns into the ACTIAM investment process
ACTIAM’s investment process is underpinned by a set of Fundamental Investment Principles based on international treaties, conventions and best practices – such as the Principles of the UN Global Compact – that are applied across all investments. Issues such as animal welfare, where there is no global consensus, are not specified in these principles but are
still considered as part of the investment research process.
An Active Ownership Specialist at ACTIAM explains:
“We purchase ESG research from providers such as MSCI to screen our entire investment universe against UN Global Compact requirements every quarter. Any major controversies related to animal welfare are flagged as part of this screening. Furthermore, as part of our ESG integration process, we construct an ESG score for each company that we invest in or plan to invest in. Animal welfare issues will form part of that score where relevant”. The ESG score is fed into the investment process to enable an investment decision to be made. ACTIAM also uses the Business Benchmark for Animal Welfare (BBFAW) as a tool to assess how well food companies are performing in this area. ACTIAM explains, “BBFAW shows us what standards companies should be aspiring to. Because of its focus on farm animal welfare it also provides us additional insights for engaging companies, that more standard ESG research does not give us.”
ACTIAM also signed the recent investor statement on animal welfare coordinated by BBFAW.
Vision for change
The firm takes a thematic approach with a focus on climate, water and land. “Issues of animal welfare and intensive farming are linked to all three of our key themes”, says ACTIAM’s specialist.
She adds that ACTIAM’s approach to the livestock sector is to discuss the change they would like to see and what progress can be made. ACTIAM concedes that intensive farming will remain a reality in the near-term, but finds it important that all commodities, including meat, are produced in a responsible way.
They would like to see the following developments:
- A sector that rejects animal cruelty;
- A sector that aligns its emissions in order to meet the two degrees pathway set by the Paris Climate Agreement;
- A sector that helps provide access to affordable and healthy food.
Active ownership is crucial
ACTIAM sees voting and engagement as an important way to put their principles into practice and Verhoef says that animal welfare-related issues have begun to feature more frequently in their voting and engagement activities.
ACTIAM gives the example of a recent shareholder proposal at US meat giant Tyson Foods that ACTIAM supported. The resolution asked the board of directors to disclose potential financial risks and ‘impacts’ of using gestation crates in pork production. ACTIAM argues that confining pigs in gestation crates is out of step with consumer sentiment, animal welfare requirements and regulatory trends.
Although the resolution was defeated at the AGM, ACTIAM believes it sent an important signal to the company about the potential concerns of shareholders.
In May 2016, ACTIAM voted at the McDonalds AGM, urging them to adopt a policy to reduce the use of non-therapeutic antibiotics in their global meat and poultry supply chains, and joined the FAIRR collaborative engagement on the same topic.
“It’s important that investors fire a warning shot to put these issues on companies’ radars and be assured that they are managing them effectively.”
-Active Ownership Specialist at ACTIAM
Explaining their support for the engagement ACTIAM says, “We strongly agree with the arguments behind this initiative. The overuse and misuse of antibiotics in the meat industry is contributing to the rise of antibiotic-resistance. A health crisis needs to be prevented. We don’t claim to have all the answers but it’s important that investors fire a warning shot to put these issues on companies’ radars and be assured that they are managing them effectively.”
ACTIAM’s specialist adds, “I see a lot of similarities between the intensive farming sector and palm oil sector, where, several years ago deforestation and human rights violations seemed to be an unavoidable part of the industry. And while there are still many problems remaining, we have seen improvement, driven in large part by a handful of leading companies who are taking the issues seriously, and thus changing the industry in positive and innovative ways. I hope we soon see the same in intensive farming”.
ACTIAM has now published its first animal welfare policy, focusing on many of these areas.