Press Release

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 Indexis 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 NameMarket Cap ($bn)CountryFinal Score 

Ranking

Marine Harvest ASA9.894Norway82Low risk
Lerøy Seafood Group ASA3.733Norway80Low risk
Bakkafrost P/F1.860Faroe Islands78Low risk
Fonterra Co-operative Group Ltd6.881New Zealand69Low risk
Salmar ASA4.726Norway67Low risk
Cranswick PLC2.120UK65Medium risk
Charoen Pokphand Foods PCL6.963Thailand65Medium risk
Marfrig Global Foods SA1.162Brazil62Medium risk
Hormel Foods Corp17.789USA60Medium risk
Grieg Seafood ASA1.035Norway55Medium risk
Empresas AquaChile SA0.580Chile53Medium risk
Maple Leaf Foods Inc2.919Canada53Medium risk
Tassal Group Ltd0.504Australia52Medium risk
Tyson Foods Inc26.291USA52Medium risk
Grupo Nutresa SA4.138Colombia48Medium risk
Vietnam Dairy Products JSC12.938Vietnam46Medium risk
Scandi Standard AB0.426Sweden43Medium risk
BRF SA6.906Brazil41Medium risk
JBS S.A.8.480Brazil38Medium risk
China Shengmu Organic Milk Ltd0.866China38Medium risk
Pilgrim’s Pride Corp6.093USA38Medium risk
WH Group Ltd15.632China36Medium risk
MHP SE1.458Ukraine36Medium risk
RCL Foods Ltd/South Africa1.337South Africa35Medium risk
Inner Mongolia Yili Industrial Group Co Ltd27.029China32High risk
NH Foods Ltd4.386Japan31High risk
New Hope Liuhe Co Ltd4.865China30High risk
GFPT PLC0.534Thailand30High risk
QAF Ltd0.416Singapore28High risk
China Mengniu Dairy Co Ltd18.555China28High risk
Beijing Sanyuan Foods Co Ltd0.944China27High risk
COFCO Meat Holdings Ltd0.631China27High risk
LDC SA2.549France26High risk
Inghams Group Ltd0.993Australia25High risk
Nippon Suisan Kaisha Ltd1.611Japan25High risk
Great Wall Enterprises Co Ltd0.840Taiwan24High risk
Henan Shuanghui Investment & Development Co Ltd13.366China22High risk
Sanderson Farms Inc2.735USA20High risk
Shandong Oriental Ocean Sci-Tech Co Ltd0.910China20High risk
Muyuan Foodstuff Co Ltd8.697China19High risk
QL Resources Berhad2.104Malaysia19High risk
Fujian Sunner Development Co Ltd2.702China18High risk
Guangdong Wens Foodstuffs Group Co Ltd17.537China17High risk
Prima Meat Packers Ltd1.407Japan17High risk
Japfa Ltd0.581Singapore16High risk
Almarai Co JSC14.766Saudi Arabia15High risk
Fortune Ng Fung Food Hebei Co Ltd1.324China14High risk
Chuying Agro-pastoral Group Co Ltd1.110China14High risk
China Modern Dairy Holdings Ltd1.047China12High risk
Thaifoods Group PCL0.705Thailand10High risk
Australian Agricultural Co Ltd0.590Australia10High risk
Beijing Shunxin Agriculture Co Ltd3.622China10High risk
Venky’s India Ltd0.827India7High risk
Seaboard Corporation4.467USA7High risk
Cherkizovo Group PJSC1.232Russia5High risk
San Miguel Food and Beverage Inc2.304Philippines5High risk
Industrias Bachoco SAB de CV3.118Mexico5High risk
Cal-Maine Foods Inc2.280United States4High risk
Grupo Bafar SAB de CV0.657Mexico3High risk
Inti Agri Resources Tbk PT0.532Indonesia0High 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. test.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)