Press Release

New sustainable food index finds Asian meat & fish companies responding to food safety challenges; but failing on emissions and antibiotics

  • 32 large Asian meat, fish and dairy producers ranked by new investor index, backed by $6.1 trillion investor network. Includes major suppliers to McDonalds and KFC, such as Chinese firm Fujian Sunner and Venky’s India.
  • Despite recent fears of a new strain of H7N9 bird flu emerging in China – four Asian firms are given the top ranking for food safety, with China-based dairy producer, Inner Mongolia Yili highlighted for best practice.
  • China’s antibiotics risk highlighted: China is the world’s largest consumer of antibiotics in agriculture, yet the Index ranks 15 out of 16 Chinese meat, fish and dairy companies (93%) as ‘high risk’ on antibiotics management – with the companies having little or no measures in place to reduce excessive use of the drugs.
  • Asian meat, fish and dairy sector also failing on emissions: 90% of Asian companies assessed rank ‘high risk’ on greenhouse gas emissions disclosure.
  • Norwegian firm Marine Harvest is top ranked company, with Thailand’s CPF is the top-ranked Asian firm, seventh in overall rankings.

 

(London, 26 June 2018). The Coller FAIRR Protein Producer Index, a ground-breaking new index for investors analysing how a $300bn group of 60 global food companies are managing critical environmental, social and governance (ESG) risks, has found that the large majority of meat, fish and dairy suppliers are failing to manage critical business risks including greenhouse gas emissions and antibiotic use.

In total, 52% of the Index (32 companies) are based in Asia including the largest by market cap: Inner Mongolia Yili.

The global ranking is produced by the $6.1 trillion investor network FAIRR which lists Aviva Investors and Schroders among its members. The Index aims to improve corporate disclosure on sustainability issues by all major livestock, dairy and farmed fish producers to help investors capitalise on risks and opportunities in the sector.

The Coller FAIRR Index finds:

  • Asian livestock producers are showing leadership on food safety. Despite concerns of a new strain of H7N9 bird flu reportedto be emerging in Chinese poultry, 44% of  the Index companies given the top ranking on food safety are from Asia. Inner Mongolia Yili (China), Vietnam Dairy (Viet), WH Group (China) and CPF (Thailand) are among only nine companies praised for the traceability of food products and feed production.
  • China and wider Asia failing on antibiotics: China is the world’s largest consumer of antibiotics in livestock production, yet 15 out of 16 of the meat, fish and dairy companies (93%) assessed by the Index are given the worst ‘high risk’ ranking for having little or no measures in place to reduce excessive use of antibiotics. This is despite growing levels of international action to combat antibiotic resistant superbugs. Of all 32 Asian companies assessed, 97% are ranked ‘high risk’ on antibiotics, compared to only 10% of European companies assessed.
  • Asian animal agriculture undermining Paris agreement: The global food supply chain is estimated to be responsible for over a quarter (26%) of global GHG emissions*, and Asian meat, fish and dairy suppliers sit at the heart of it. Yet 90% of the Asian Index companies were ranked ‘high risk’ for failing to manage or disclose their GHG emissions. This compares to only 50% of peers in Europe.
  • China Mengniu Dairy and Vietnam Dairy are both highlighted for diversification into plant-based alternatives to animal protein. For example, China Mengniu Dairy’s joint venture with WhiteWave Foods has helped to develop their plant-based dairy production.

Maria Lettini, Director of the FAIRR Initiative said,

“From fast food to fine dining, much of the food on our plates leads back to the Asian livestock and fisheries sector assessed by this Index. Investors in Asia will be encouraged by rising standards in areas like food safety. However, the failure to manage issues such as climate risk and the misuse of antibiotics is cause for concern. On antibiotics alone, the Coller FAIRR Index shows that most Asian meat, fish and dairy producers 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.

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 in Asia’s food sector and those at risk of long-term value destruction for failing to manage these critical business issues.”

 

Rebecca Lewis, Partner at asset management firm Arisaig Partners, headquartered in Singapore commented,

“This new Index offers investors both the opportunity to see how best practice is emerging in countries such as China, Vietnam and Thailand, and a reminder to keep a close eye on the long-term risks and unpriced externalities inherent in livestock and fisheries assets in Asia.”

 

“Investors have an increasing appetite for Asia’s animal protein sector and it’s no surprise that over half of the companies assessed by this Index are based in the region where building sustainable supply chains is a relatively new concept. We believe that excitement over the forecast growth in consumption of animal protein in Asia, should be tempered with an awareness that environmental and social issues such as pollution, deforestation and abuse of antibiotics all need careful management and risk a reduction in long term returns for shareholders. As an investor specialising in the emerging markets consumer sector we continue to monitor these risks carefully and the Coller FAIRR Index will assist in this process.”

 

One of the sustainability criteria assessed by the Index is ‘deforestation and biodiversity loss’ and Asian companies scored poorly in this area too. In total 97% of Asian companies, including all China-based companies, are ranked as high-risk on deforestation.  Chinese companies are exposed to deforestation risks in their feed supply chains. By 2026, China’s soybean imports – a significant feed commodity – is expected to increase by 143 million tons, 48% more than the amount the current leading soybean producer (Brazil) will export

 

Notes to editor

 

For more information or for exclusive interviews Maria Lettini, Director of FAIRR, please contact:

 

  • The overall league table of results is below. A full report with all results and details of the Coller FAIRR Protein Producer Index is available on request. The summary report can be downloaded here
  • 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 and the definition of China does not include Taiwan. All valuations are based on market capitalization figures as of March 28th 2018.
    * Reducing food’s environmental impacts through producers and consumers, J. Poore & T. Nemecek

 

 

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. 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)

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