NH Foods Ltd

The company mentions in its CDP Climate Report 2022 that it has not set a science-based target yet and does not anticipate setting one in the next two years.

The company targets reducing Scope 1 and 2 emissions by 46% by FY2030 compared to FY2013. The target only covers operations in Japan. It owns farms in 118 locations in Japan and 27 locations overseas. Hence, the coverage is 3/4 of the company's operations. It discloses its Scope 3 emissions data in the Non-financial Data 2022 and CDP Climate Change 2022 disclosure. In the Sustainability Report, the company's director oversees Sustainability issues and recognises that rearing livestock contributes to greenhouse gas emissions. However, it needs to disclose whether it has set targets to reduce GHG emissions from Scope 3. It has a vertically integrated system encompasses all stages, from production and breeding to meat packing and processing for cattle, poultry and pork. Therefore, Scope 3 emissions from agriculture, such as manure, are relevant to the company. The coverage of Scope 3 emissions, as stated in the ESG Databook, is limited (domestic sites of the NH Foods Group in Japan).

The company does not report engaging with suppliers to reduce emissions from agriculture.

The company does not engage in innovative projects to reduce or mitigate emissions from feed farming

The company discloses that its Australian cattle business recognises that reducing greenhouse gas emissions from livestock, such as methane, is a significant issue. It conducts joint research with universities and producer groups in "controlling methane generation" and "capturing and utilising emitted methane". It also discloses that it is promoting Japan's first chicken manure power generation business, and its capacity is 76,662 MWh/year.

The company discloses in the 2022 Environmental Report that the total Scope 1 emission is 492 thousand t - CO2 (Japan & Overseas), the Scope 2 emission is 359 thousand t - CO2 (Japan & Overseas), and the Scope 3 emission is 10,503 t - CO2 (Japan). The Scope 1 emission includes CO2, Methane and Nitrous Oxide.

The company has disclosed Scope 1 and 2 emissions from livestock breeding facilities and feedlots and Fresh meat processing and plants. It discloses the business activities and environmental impact in the 2022 Environmental Report. The total GHG emission generated by business activities such as "feed including corn and wheat" is 615 thousand t-CO2

The company has responded to CDP Climate Change 2022 for their sites located in Japan. In its Non-financial Data Book 2022, it states that they are subject to third-party audits by SGS Japan Inc.

The total GHG emissions for FY2020 stood at 11,182 thousand t-CO2. For FY2021, the total GHG emissions stand at 11,111 thousand t-CO2. Thus, there is a decrease of approximately 0.63%. It discloses the GHG emissions generated from several business activities, which include feed (corn and wheat), and there is a decrease compared to the previous year. However, it does not mention the quantitative reduction of emissions from feed specifically.

The company has conducted a climate-related scenario analysis considering the 1.5°/2°C warming scenario and the 4°C scenario.

The company recognises climate change will impact feed availability and prices due to increased droughts. It has analysed water stress levels in its feed-producing regions. As countermeasures, it will improve the feed conversion ratio and develop technologies to improve it. It mentions that it will also enhance in-house feed formulation and collaborate with feed companies to build a mechanism to secure a stable and low-cost feed supply. It discusses the potential impacts of increased heat stress and how that can affect the growth of livestock. It mentions installing cooling facilities at some livestock housings as a countermeasure. It discusses the increased price of fossil fuels and the financial impact of increased electricity prices. It has implemented some measures to reduce CO2 emissions and mitigate the increased electricity and energy demand. It discloses that introducing the carbon tax will lead to an increase in energy costs, which is a crucial transition risk. The mitigation measures are also included in the TCFD report.

The company does not disclose its commitment to align capital expenditures with its GHG targets.

The NH Foods Group is a vertically integrated company that raises cattle, hogs and poultry. The company states that the volume of soy it uses as well as the sourcing locations are proprietary information and as such, the company does not disclose this. Further the company does not disclose information related to how it manages deforestation risks linked to soy.

The company does not disclose having a deforestation/conversion-free target for soy.

The company responded to the CDP Forests Questionnaire.

The company has cattle operations in Australia that handle the production, breeding and processing of cattle. However, the company does not undertake a forest-related risk assessment for cattle products. The company states in its CDP disclosure that is does not undertake a forests-related risk assessment of cattle due to a lack of resources.

The company discloses that it is not considering policies relating to cattle commodities.

The company submitted its 2022 CDP Forest Questionnaire and receive a score of C for cattle products.

The company does not disclose information related to how it engages soy suppliers on deforestation risks.

The company does not disclose how compliance in monitored or what actions are taken if non-compliance occurs. Further, the company does no disclose the level of traceability it has of its soy supply chain.

The company does not discuss innovations and/or practices to move towards sustainable feed sources.

The company states that it maintains detailed records of its beef cattle in order to produce traceable beef, but there is no reference to deforestation risks. The company also mentions that it is still in the process of planning how it can engage with suppliers to pursue the goal of sustainable ingredient procurement. The company states that it has not mapped its cattle value chain and discloses that it does not plan to do this in the next two years.

The company states that it has traceability of its direct cattle suppliers to the farm level in Australia.

The company does not disclose information regarding innovative & sustainable farming practices implemented to improve biodiversity and soil health.

The company discloses from its assessment of water scarcity, that of its overseas sites, 10 sites under a 1.5‚ÑÉ/2‚ÑÉ increase scenario and 9 sites under the 4‚ÑÉ increase scenario have been identified as being exposed to high water stress. The company plans on identifying which of its business sites in both Japan and Overseas operated in regions with high levels of water risk as part of its Medium-to-long-term targets up to 2030. The company has so far assessed 233 sites both in Japan and overseas. The company mentions the results show that the risk of impact from water stress is low at all domestic sites and there is a high risk of water stress for 10 overseas sites, but the company does not disclose these locations. It discloses water consumption for FY2021.

The company disclosed water consumption targets as part of its Medium-Term Management Plan 2023. The company has set a water consumption reduction target of 5% by 2030 compared to a baseline of FY2019 for Japanese facilities and a 5% reduction by 2030 compared to a 2021 baseline for overseas operations. The company discloses that its water consumption increased by 1.3% in Japanese operations and 3.7% in overseas operations in 2022.

The company discloses its total water consumption by source. It discloses that 1-10% of its water is withdrawn from areas of high water stress. However, it does not disclose the volumes of water withdrawn from areas of differing stress. NH Foods provides no disclosure regarding water-related CAPEX by % or amount, nor does it provide disclosure regarding water-related OPEX by % or amount. It mentions that the water consumption results have been subjected to third-party verification by SGS Japan Inc. since FY2018. Data is disclosed in the CDP Water Security 2022 responses. The company's water consumption decreased in FY21. However, it does not disclose the total water withdrawals.

The company does not address water usage in its feed supply chain. It does not discuss comprehensive guidance, support and/or incentives offered to suppliers/growers on water usage and has not established a partnership with third party to input into sourcing/farming strategy.

The company does not disclose feed water intensity, or the proportion of feed sourced from water stresses areas. Further, the company does not provide evidence that it is investing in sustainable feed production from a water use perspective.

The company discloses that 1-10% of the protein it produces is located in water stressed areas, but does not provide the proportion of sourced animal protein that comes from water-stressed areas. It does not address water scarcity risk directly in its reporting.

The company has not established partnerships with third parties to input into sourcing/farming strategy, including water use.

The company discloses zero fines or penalties for water-related regulatory violations in the reporting year for its Japanese operations. The company does not state whether it has identified processing facilities that operate in locations with high water stress (from a quality perspective). It has set a medium to long-term target of reducing its wastewater discharge by 5% by 2030 compared to FY2019.

The company discloses total wastewater discharged in FY2021. It mentions that water consumption data has been subjected to third-party verification by SGS Japan Inc. since FY2018. However, it does not explicitly mention whether data on water discharge is also audited. The data is disclosed in the CDP Water Security 2022.

The company discloses using food processing by-products from its manufacturing operations as a fertiliser for tree planting sites. However, it does not disclose the quantity of waste processed in this way. The company's water discharge volumes increased in FY2021.

The company does not address nutrient management in its code of conduct. It does not disclose a requirement for feed suppliers to have a nutrient management plan in place, nor does it provide guidance, support and/or incentives to suppliers/growers on nutrient management/fertiliser use in crop production.

The company states that it converts pig manure to fertiliser and that the company has started cultivating feed crops using this. However, the scale of this project is unclear, along with whether the company uses these crops in its own feed supply, and if the company favours using feed crops grown with its own manure.

The company discloses that in the United States, one of the major countries for livestock procurement for the group, water stress is expected to worsen. However, it does not disclose how many sites operate in these areas.

The company does not make site-specific nutrient management plans a part of its supplier's contractual agreement and/or own farms management. Nor does it provides technical and/or financial support to suppliers and/or own farms to develop nutrient management plans and improve manure storage.

The company does not integrate nutrient management performance into incentive schemes for farmers. It does not discuss innovation in manure or provide evidence of a community engagement plan in relation to pollution.

The company does not provide any disclosure regarding its antibiotics policy or practices.

The company does not disclose the quantity of antibiotics used.

The company commits to promoting the Five Freedoms principles through its Animal Welfare Code of Conduct, established in November 2021. It provides employee training to uphold these commitments. Research and development programs, including PIG LABO utilising AI and IoT, are in place, though primarily aimed at efficiency and supply stability. However, the company does not disclose actions for policy breaches or confirm if welfare initiatives are globally implemented.

The company is working to reduce stress in pigs by eliminating gestation crates to enhance productivity. It has measures to ensure animal welfare during long-haul transport, including proper feeding, water supply, and rest. The company's Animal Welfare Code of Conduct includes provisions for equipping holding pens to prevent pathogen and pest infestation. However, it does not explicitly extend the commitment to eliminate gestation crates across all operations or close confinement for all animals. It also does not commit to avoiding long-distance transportation and needs more details on providing animals with an enriched environment.

The company previously reported a designated Animal Welfare Officer (AWO) overseeing and conducting regular internal inspections at the Whyalla feedlot. This information needs to be disclosed in the current reporting period.

The company does not disclose information in relation to animal welfare certifications or assurance programs for its beef operations.

The company commits to low-stress rearing environments in its Whyalla Beef operation in Australia, including sunshades, sanitary water and feed provisions. It also aims to eliminate gestation crates in all Japanese farms, implemented only in Oshamambe Chirai and Oshamambe Ayame Farms. However, it needs more specific data on cattle transportation times stunning and dehorning practices. It does not disclose information on routine tail docking, surgical castration, suitable environments for pigs, maximum stocking density, water-bath stunning, or higher welfare breeds for chickens.

The company commits in writing to respect human rights per the International Bill of Human Rights and the ILO's Declaration on Fundamental Principles and Rights at Work.

The company mentions developing and implementing a human rights due diligence system. It says that to implement this system, it has carried out a human rights assessment of each group company and found health and safety, harassment, and working hours to be high-risk areas. The company has also begun monitoring human rights risks and identifying the next steps for action in its operations through its environmental/social section meeting, which comprises heads of business, HR, and sustainability. Discussions with relevant stakeholders and interviews with workers at business sites are used to improve human rights measures and education. However, the company does not provide more information regarding how it identifies the next steps of action it would take if it identified risks. Moreover, the company must disclose how it continuously tracks human rights risks in its supply chain or identify appropriate action measures. To mitigate risk, the company undertakes human rights awareness activities throughout its operations.

The company does not disclose whether it has identified any human rights risks in its operations through human rights due diligence

The company commits in writing to prohibit abuse, discrimination, forced labour and child labour. The company states that the Audit and Compliance department investigates human rights issues during their site visits. Still, it does not explicitly discuss if the selected policy areas are included in these investigations. The company's procurement policy prohibits inhumane treatment, discrimination, harassment, child labour and forced labour in its supply chain. The company does not disclose sick pay information or whether it promotes fair wages.

No audits are currently in place for monitoring human rights policy compliance in the supply chain. The company has set up two internal and two external desk consultations for its employees to report grievances with the option of anonymity. However, the codoes notes not disclose if these grievance channels were designed in consultation with stakeholders or if a grievance mechanism is also in place for its supply chain. In the reporting year, the company received 249 consultations through the consultation desks. However, the company does not sufficiently categorise the grievances it received. The data reflects cases in Japan only.

The company commits in writing to ensuring the health and safety of its employees. It has introduced an occupational health and safety management system and received ISO45001 certification at eight business sites. However, only 1.4% of all company sites are certified, meaning that the scope of the accreditation is limited. The company has a health and safety committee that works to prevent accidents through regular meetings. However, the company does not disclose the number and/or percentage of facilities with a health and safety committee specifically composed of worker representatives.

The company mentions that its injury frequency rate was 2.21 the previous year. However, the company provides no other disclosure on injury or fatality data.

The company states that it respects the freedom of association and the rights of collective bargaining as recognised in the Constitution of Japan. The unionisation rate in FY2021 was 100%. However, whether this applies to only Japanese operations or the entire group's operations is not explicitly mentioned. The company does not disclose measures taken to support the right to freely associate and bargain collectively. Furthermore, whilst the company has guidelines related to freedom of association and collective bargaining that it would like those in its supply chain to follow, it does not state that suppliers must adhere to them.

The company discloses that collective agreements in FY2021 cover 100% of employees. However, the company explains that some employees are excluded based on their contract type. The company has also reported the total number of employees and the average number of temporary employees. However, this data covers NH Foods Ltd and not NH Foods Group, so the geographic scope has been considered to represent 75% of the business's operations.

The company discloses that all its production facilities have obtained HACCP and ISO certification and maintain effective quality control regimes. These are essential food safety certifications. By FY2030, it plans to inform important primary and secondary suppliers of its policies and have 100% self-assessment questionnaire implementation. Furthermore, it is planning to improve traceability in the supply chain. However, as of now, suppliers are neither required nor expected to have GFSI certifications. Further, it does not disclose the portion of suppliers that do.

As part of its food safety initiative, the company discloses a policy that promotes the acquisition of third-party certification and training for employees. However, it does not report the number or frequency of food safety audits or disclose a corrective action rate. It seeks to develop and utilise new technologies, such as intelligent livestock farming. However, its application to food safety and whether technologies will be consumer-facing is unclear.

The company addresses product recall as a risk. However, it does not include it in material topics or describe its recall system. It does not provide information on recall incidents, and none were detected in the media screening for the reporting period.

The company does not disclose the number of market bans, and none were detected in the media screen for the reporting period.

The company has established a sustainability committee comprising the president and another director. The committee's discussions with the board include environmental targets, human rights policy and TCFD disclosures. In addition, the company has conducted a materiality assessment and identified five issues that are considered most material to the business. These include stable procurement and supply of proteins, food diversification and health, contributing to a sustainable environment, coexistence and co-prosperity with local communities and society through food and sports and respect for employee diversity. The material issues are discussed with the Sustainability committee before the board of directors finalises the topics. The company disclose board-level expertise in sustainability and innovation but not food safety.

The company provides performance-based compensation to its directors that is linked to the sustainability-related performance of the company. It also provides details of the percentage of executive remuneration linked with non-financial targets. In 2021, the company met with the director of Animal Rights Centre Japan. The company mentions regular meetings to exchange opinions on animal welfare. The company also partners with and is a member of the following initiatives: TCFD, RSPO, Japan Climate Initiative, ASSC and the CGF. However, it does not disclose a list of industry association memberships or discuss aligning its policy-engagement strategy to restrict global temperature rise to 1.5°C.

The company discusses its strategic approach to driving innovation to improve farm productivity through its Smart Pig Farming Project, which uses AI and IOT technologies. This technology will help farmers efficiently and accurately understand the health conditions of pigs and confirm that an appropriate rearing environment is being maintained. This will also lead to reduced employee workload and work-style reform on farms. Furthermore, the company is working with universities to advance joint research on the intestinal flora of pigs and its relationship to greenhouse gases. However, the company does not disclose how it benchmarks itself against peers in sustainability and innovation.

The company recognises that global population growth, climate change, and other factors are expected to make it increasingly difficult to supply proteins. One of its strategies is to offer consumers a greater choice of protein. It mentions that in response to lifestyle changes, it will promote expanding and selling plant-derived protein products and pursue new alternative proteins. It discloses its sales from plant-based proteins in FY2021 to be 230 million yen and has set a target to achieve 10 billion yen in plant-derived protein product sales by FY2030.

The company released a range of plant-derived products under the brand "NatuMeat". It is a series of alternative meat products made from soybeans, including processed foods such as ham, sausages and hamburgers, for both consumer and commercial use. Further, it discusses developing technologies that use cultivated animal cells to manufacture food. In 2019, it commenced joint research related to cultured meat with IntegriCulture Inc., a startup company engaged in cell cultivation, which it has invested in. Its R&D centre also takes up technological issues, such as cultivation methods and cell quality, to cultivate cells more efficiently.