WH Group Ltd
288:HK KYG960071028
Key Information
HQ:
China
Market Cap:
$7.78bn
Primary Markets:
North America, Asia, Europe & Russia
Waste & Pollution Engagement
Analysis Overview
Risk Assessment Value Chain Coverage Risk Mitigation Circularity Company Engagement
Analysis Breakdown
Risk Assessment
Poor
Coverage of water quality risk assessment
The company monitors water quality risks in the US, Europe and China.
The company mentions that its US subsidiary, Smithfield Foods, uses the Global Environmental Management Initiative (GEMI) Local Water Tool and the WRI Aqueduct tool to assess its water impact. In its response to CDP, Smithfield discloses that the issues considered in the risk assessment include water availability and the status of ecosystems and habitats. The company mentions that the results showed that its operations faced little to no risk.
For its operations in China, the company has internal water management mechanisms at different levels to monitor and manage water risks. However, it´s not clear what risk factors are explicitly considered. The company discloses that its audit and inspection departments lead water audits on each operation site, report relevant issues and supervise the factories concerned to rectify them.
Transparency and disclosure of water quality indicators
The company mentions that in China, it monitors chemical oxygen demand (COD), phosphorus, nitrogen and suspended solids in wastewater. In the previous reporting period, WH Group disclosed Chemical Oxygen Demand figures. However, the same information was not found in this reporting period.
Smithfield Foods discloses that in the reporting year, there were 55 notices of violations at their US Facilities and International sites. However, whether this is related to non-compliance with water quality permits, standards, and regulations is unclear. Although the values of fines collected have been reported, no further detail is provided on the reasons for the NOV's or fines collected. The company is encouraged to provide this information.
Recognition of nutrient pollution risk on biodiversity
WH Group has included biodiversity, waste, and air quality management in its materiality assessment matrix. The company mentions that it has committed to promoting biodiversity conservation and works with suppliers and contractors to uphold biodiversity conservation in various aspects.
The company mentions a couple of initiatives to promote biodiversity, such as planting prairies to provide ecological services and wildlife habitat to monarch butterflies in the US. However, it´s not clear how biodiversity drives the company´s risk assessment for water quality and pollution.
Smithfield Foods discloses that it no longer has US locations in high biodiverse value areas after exiting a facility that operated in California in early 2023. It´s not clear the methodology or parameters the company uses to classify sites as having high biodiversity value. It does not provide information about other biomes or watersheds and the impact of nutrient pollution on these areas.
Value Chain Coverage
Poor
Inclusion of upstream feed and livestock suppliers in risk assessment
In 2022, the company commissioned a study undertaking a water analysis to understand better current and future groundwater demands across its US operations, including contracted hog farms and grain suppliers. This analysis helped the company develop water conservation strategies and set performance targets. It´s unclear to what extent water quality or biodiversity risks were included in this assessment.
The company does not disclose information about its Chinese operations.
Downstream use of manure by animal feed suppliers
The company mentions that its Chinese operations promote a circular economy by featuring regional crop production and farming, using the manure produced from farms as an organic fertiliser. However, it´s not clear whether the manure is used by the company´s feed suppliers or third-party arable farmers.
Acknowledgment of regulatory risks
The company does not disclose information.
Transparency on non-compliance from suppliers
Smithfield Foods discloses that in the reporting year, there were 55 notices of violations at their US Facilities and International sites, including owned and contracted farms. However, whether this is related to non-compliance with water quality permits, standards, and regulations is unclear. Although the values of fines collected have been reported, no further detail is provided on the reasons for the NOV's or fines collected. The company is encouraged to provide this information.
The company does not disclose information about its operations in China.
Risk Mitigation
Medium
Biogas generation and organic fertilisers from animal waste
The company does not produce biogas in China, but it discloses that manure is converted into organic fertiliser.
Smithfield Foods started adding anaerobic digesters in 2018 in its own operations. The company mentions that as of 2022, it operates more than 100 digesters. The company feeds Renewable Natural Gas pipelines in the US while heating hog barns with biogas in Mexico. In its response letter to the engagement, the company mentioned it is developing biogas projects which include contract growing operations.
The company mentions exploring developing a process to remove and dry sludge from the lagoons.
Target-setting for water quality
For its operations in China, the company has internal water management mechanisms at different levels to monitor and manage water risks. The company discloses that its audit and inspection departments lead water audits on each operation site, report relevant issues and, where necessary, supervise the factories concerned to carry out rectifications.
In the US, the company mentions that the assessment completed in 2022 helped it develop water conservation strategies, inform updates to its water use policies and set performance targets. However, it´s unclear whether the company has targets for each area identified as high-risk beyond meeting regulatory requirements.
Support to third-party suppliers
In China, the company mentions promoting a circular economy featuring regional crop production and farming, using manure as organic fertiliser. The company does not disclose information about supporting third-party arable farmers with sustainable use of manure to minimise pollution risks.
In its response letter to the engagement, the company disclosed that the company offers manure-free transportation services to customers in China. It´s unclear whether this will include transport to nutrient-poor areas.
Smithfield Foods works in partnership with Environment Defense Fund (EDF) and started an individual agronomics initiative -SmithfieldGro- which helps farmers across its grain supply chain to improve crop yield by using less fertiliser. The company mentions that at the end of 2020, it engaged approximately 530,000 acres on efficient fertiliser and soil health practices. The company had an initial target to achieve 75% of farmers engaged by 2018, which it claims has surpassed.
Circularity
Medium
Pilot projects around nutrient circularity
Smithfield Foods has partnered with Anuvia™ Plant Nutrients to develop and market bio-based fertiliser products from hog manure.
Disclosure of investment in circular solutions
The company does not disclose information.
Targets to increase share of manure under circular initiatives
The company does not disclose information.
Company Engagement
Good
Level of company engagement with the coalition
The company provided a timely response to the investor letter. It also responded to the engagement questions and met with investors outside the engagement period. The company acknowledged FAIRR´s assessment, but it did not provide feedback.
Workstream Information
2023 level
Poor
Index Waste & Pollution Score:
19/100
Assessed Proteins:
Pork
Last Updated:
28 June 2023
2023/24 Resources
Phase 1 | Key Findings Report Waste & Pollution Engagement