Case Study

Ethical Screening: Enabling clients to opt out of intensive farming

Ethical Screening is a UK based ethical investment research firm that provides information and guidance to help institutional investors, charities (including those with particular animal welfare concerns) and private individuals, invest responsibly or in accordance with their values. It uses ethical screens to analyse investment portfolios and funds according to a broad range of social, human rights, environmental concerns including issues related to animal welfare and the production of animals for food.

Enabling clients to opt out of intensive farming

Ethical Screening’s research is not intended as financial advice for clients, however Client Co-ordinator at Ethical Screening Elina Vikmane says there are a number of material risks linked to factory farming and farm animal welfare, explaining:
“Farm animal welfare in modern farms is intertwined with a range of short-term and longterm social and environmental risks that may impact the financial performance of the sector. In
the short-term companies, particularly retailers, may be exposed to reputational risk and loss of customer trust and a drop in share price if issues arise in the supply chain. In the long term animal agriculture is linked to a number of negative environmental impacts including significant greenhouse gas emissions, impacts on water scarcity and deforestation. A lack of fresh water, for example, can restrict the operations of a cattle farm and in water scarce regions the cattle farms might need to compete for water with local communities, thus risking their social license to operate in the area.”

Identifying the issues

“Farm animal welfare in modern farms is intertwined with a range of shortterm and long-term social and environmental risks that may impact the financial performance of the sector.” – Elina Vikmane, Client Co-ordinator at Ethical Screening.

Managing the non-financial risks linked with certain business practices, such a low animal-welfare standards, will play a key role in progressive, forward-looking investment
strategies. Ethical Screening helps investors identify companies whose practices align with their personal beliefs and values, including high animal welfare standards. The company
takes a client-centred approach to its services, providing research that is detailed, personal and tailored to the particular concerns and values of investors. Clients with concerns about
animal welfare issues include animal-welfare charities and ethical fund managers who wish to exclude involvement in intensive farming from their funds. Ethical Screening’s research
covers a wide range of ethical criteria, including traditional negative issues (such as gambling and tobacco), environmental impacts, animal welfare concerns, and bespoke criteria tailored to specific client requirements. Four of the criteria address company involvement in the meat, egg and dairy industry. These criteria cover the full spectrum of the meat and dairy industry from factory farms to animal transport and technology to food retailers.

The four criteria are:

Breeding and rearing
Companies involved in the breeding and rearing of livestock (including egg and dairy production), such as farms and companies selling animal breeding stock.

Abattoirs or transport
Companies which operate abattoirs or companies involved in the transport of animals to slaughter. This includes animal processing units with battoirs and supermarkets that operate their
own abattoirs.

Industry services
Companies that provide equipment, machinery or technology essential to the intensive production of animals for food, as well as companies transporting animals. This includes companies making and supplying milking machines, stunning equipment and growth promoting drugs.

Processing and retail
Companies involved in processing animals for food or selling animal products as food. This is subdivided into Major, Medium or Minor involvement based on the proportion of turnover
generated by these activities.

All Ethical Screening’s research is based on a neutral approach to the issues – indicating whether a company is involved in a particular activity, and the extent of its involvement.
Where relevant and applicable, Ethical Screening also makes use of standards such as the Business Benchmark on Farm Animal Welfare in assessments of company activities.
These assessments can then be integrated into materiality analyses to help inform better investment decisions.

More information: