Why sustainability governance in protein producers matters 

Sustainability Governance is an all-encompassing factor reflecting the awareness of ESG risks and their materiality at the executive and director levels. FAIRR’s research reveals that the strength of a company’s sustainability governance is often a key indicator of how a company performs across the most material ESG issues facing the business.

How we evaluate sustainability governance in animal protein producers 

To evaluate a company’s sustainability governance, FAIRR assesses whether its board of directors is formally mandated to oversee sustainability/ESG issues, conducts a materiality assessment, has board members with sustainability expertise and whether any executive monetary remuneration is linked with sustainability performance. FAIRR also looks for a discussion on the company’s strategic approach to innovation and policy engagement on ESG issues, as well as memberships with trade associations, alliances and coalitions.

Note: FAIRR does not assess general corporate governance factors (such as board independence and diversity) in the Index but focus on sustainability governance specifically, i.e., governance related to a company’s ESG activities.

Governance as an indicator of overall risk level 

All the top 15 ranked companies on the Index have a formal mandate for the board of directors to discuss the ESG issues covered by the Index, compared to just 47% of the bottom 15.

Moreover, nine companies in the top 15 have set executive variable remuneration linked to sustainability goals compared to only one company in the bottom 15. According to the World Economic Forum, linking monetary compensation to sustainability performance sends a strong signal to the market and stakeholders that a company fully embeds ESG issues into its business strategy and provides a greater incentive for executives and upper management to pursue goals that contribute to long-term value creation.^[1]