The three key elements to the assessment are company selection, risk factors and key performance indicators.
We used the Bloomberg Industry Classification System (BICS) to identify publicly-listed companies with material exposure to the following industries:
- Animal production and processing
- Dairy and egg products
- Meat products
Through further analysis of company data and input from investor stakeholders, we refined this list to companies that were involved in the breeding, processing, distribution and sale of meat, dairy and/or aquaculture products. Several companies in our list are vertically integrated, and control the full extent of their value chain, from animal feed manufacturing to the sale of proteins. Others employ production contracts with growers but retain control over the animals and provide inputs such as feed.
As a final step, we identified companies with the largest market capitalisation:
- All listed companies with market capitalisation in excess of $450 million
- Shanghai listed companies with market capitalisation in excess of $750 million (a higher baseline due to limitations in disclosure or translation)
This process resulted in a list of 60 global companies with significant material exposure to five main animal protein categories including beef, dairy, pork, poultry & eggs and aquaculture. Some companies derive their most significant source of revenues from one protein category, while others produce multiple protein categories. See the full company list.
The eight critical risks in this Index were selected through consultation with a range of stakeholders including investor groups, NGOs and companies and found to be representative of the key sustainability risks facing the animal protein production industry. The ninth factor considered was whether companies were capitalising on the opportunity of alternative proteins.
It was also informed by earlier FAIRR research and reports, including: Factory farming: Assessing investment risks, Plant-based Profits, The Livestock Levy, Responding to Resistance, and Superbugs and Super Risks.
Key performance indicators
FAIRR developed a set of key performance indicators (KPIs) for the eight sustainability risks to broadly assess corporate policy, disclosure and performance. We used a top-down and bottom-up approach to develop the indicators, and analysed company annual and sustainability reports, as well as other materials to understand the range of disclosure. Each company was assigned a risk colour and rated on a scale of 0-5 based on their commitments, policies and disclosure against relevant KPIs. The final company score is an average of scores across all KPIs and risk factors (out of 100). For this iteration of the pilot Index, all risk factors and KPIs were weighted equally. Where available we prioritized 2017 CDP reports as our main source. Other sources included company websites and annual and sustainability reports, as of 31 December, 2017.In some cases, supplemental information, including high-profile controversies, are reflected in our scoring.
Risk factor colours:
- Yellow (“low risk”) signifies basic management of the risk.
- Orange (“medium risk”) signifies that some steps have been taken towards basic management of the risk.
- Red (“high risk”) signifies little or no action or disclosure.
The full list of KPIs for each risk factor is available here.
The assessment and scoring methodology are available in the full report.
The methodology and all information used by The Coller FAIRR Protein Producer Index relies on public information disclosed by companies on their websites and other platforms. FAIRR uses that public information in its assessments to produce a transparent benchmark as a public good. The methodology is grounded in international and industry-specific standards and in the expectations of investors who are members of the FAIRR Initiative. It focuses on companies’ levels of disclosure, policies and practices across nine risk factors. The May 2018 benchmark is the first FAIRR Protein Producer Index to be produced, and all feedback on the methodology and production of the Index is welcome. Please email us at [email protected] if you would like to offer comments. We will take all feedback into consideration for the next iteration of the Index.