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2023/24 Key Findings

The Coller FAIRR Protein Producer Index: Driving Positive Change

The Coller FAIRR Protein Producer Index was established in 2018 to address the knowledge gap in the environmental, social and governance (ESG) risks associated with the food sector. Recognition of its value has increasingly grown, as has its impact in driving engagement with leading protein producers and supporting investors in the sector. 

The Index assesses 60 of the largest listed global meat, dairy and aquaculture companies on ten ESG factors: greenhouse gas emissions, deforestation and biodiversity, water use and scarcity, waste and pollution, antibiotics, working conditions, animal welfare, food safety, governance and alternative proteins. Some 50% of companies provided feedback to their assessments this year, demonstrating an encouraging level of engagement as companies actively try to understand their assessments. 

It has been a notably busy year for the industry, with various significant environment-related developments shaping the agenda. The publication of the Science Based Target initiative’s (SBTi) Forest, Land and Agriculture (FLAG) guidance and the commitment to protect at least 30% of land and seas by 2030 (30 by 30) in the wake of the COP15 Biodiversity Summit have elevated the Index’s themes within ESG debates. Media focus has simultaneously kept the spotlight on social risks, such as safe working conditions, freedom of association and fair wages within the industry. 

Against this backdrop, there is encouraging evidence of progress: 

  •  Index companies improved by 5% overall this year.  

  • The only risk factor not to record an increase was antibiotics, which saw a minimal decrease – although seven companies, compared with five last year, now have a Best Practice rating in this category.   

  • There has been a year-on-year decrease in Index companies rated High Risk – from 55% in 2022 to 45% in 2023 – despite methodology changes that have raised expectations of what constitutes best practice.  

  • The largest improvements were seen in alternative proteins, waste and pollution and water use. The top quartile of companies assessed recorded improvements in every category. However, the gap between the best-performing and worst-performing companies is still growing. The worst-performing companies made limited progress in all but one risk factor, but an overall improvement of 8% in their scores for working conditions is notable.  

  • No company has yet achieved a Best Practice score across all risk factors, but more companies are securing a Low Risk rating across multiple factors. 

  • Beef producers saw a notable increase of 11%, largely driven by a rise in governance performance. However, many of these producers also saw a decrease in relation to working conditions. 

During the past year, 18 companies have met with FAIRR to develop a better understanding of their performance, and companies continue to use the Index to assess and develop their sustainability strategies. 

In tandem, FAIRR’s reach as an investor network has grown substantially – from 125 members representing $US14 trillion in 2019 to more than 390 members representing US$71.5 trillion in 2023. FAIRR’s latest investor survey found 79% of responding members use FAIRR research, including the Index, to inform direct company engagement and 85% use it as part of their sectoral and thematic analyses. 

This report focuses on four topics that are increasingly attracting the most interest of stakeholders of all types, including companies, investors and policymakers. These are discussed in brief below, for the full findings download the report below. 

FAIRR-Coller FAIRR Protein Producer Index Company Feedback Responce 2018-2023

SBTi FLAG: More Accountability for Land-Intensive Companies 

Last year’s report highlighted the demands of a 1.5°C-aligned pathway, including the need to account for land-based emissions. There is still only limited improvement in this respect, despite pressure for more precise disclosure and looming deadlines for companies to reveal their validated science-based targets.  

While there has been a steady year-on-year increase in companies that have validated science-based targets or are committed to setting them, only one Index company – Danone – discloses its FLAG-related targets and emissions. This includes methane emissions disclosure and a zero-deforestation target by 2025. The hope is that more companies will disclose in future reports as SBTi disclosure becomes more widely understood. 

In the wake of the Global Methane Pledge announced at COP26, methane emissions disclosure has been increasingly subject to investor scrutiny. With national governments ramping up related regulations, comprehensive disclosure can prepare companies for potential regulatory changes. There has been an increase in the proportion of companies disclosing partial methane emissions – from 18% in 2021 to 28% in 2023 – yet only five companies currently disclose methane emissions as a standalone metric, and only three have targets for methane reduction. 

In addition, only two of the 14 Index companies with validated science-based targets have a 2025 deforestation commitment in line with SBTi FLAG guidance. More companies are disclosing targets, but many of these are set for 2030. 

While the above points raise concerns about how targets will be disclosed and met, there are elements of mitigation measures that many companies have implemented. For example, more than half of all Index companies now have an alternative protein portfolio – including plant-based, fermentation-enabled and cultivated meat, seafood, eggs and dairy – which contributes to diet shift. Nonetheless, progress on many other measures is still lacking. 

As the FLAG sector also has potential for carbon removals, focusing on more regenerative approaches offers another means of contributing to better practices. Although only 20% of Index companies currently discuss ways of promoting improved soil health, there has been progress in this regard. For example, Thai Union has become the first company in Asia to have both a validated science-based target and a zero-deforestation target by 2030. China Mengniu Dairy has also introduced a similar deforestation target. Meanwhile, more companies are providing a full inventory of greenhouse gas (GHG) emissions. 

As highlighted by FAIRR's Regenerative Agriculture report, which was published earlier this year, there is still much work to be done to understand how and which regenerative approaches offer the most impactful mitigation. Although regenerative agriculture is a deliberately flexible movement, FAIRR's baseline analysis of the growing number of commitments in the agri-food sector found soil health and carbon reductions and removals (including sequestration) to be the most commonly cited sustainability outcomes. 

These outcomes are tightly interconnected. This is because most regenerative practices aimed at improving soil health do so through preserving and building organic matter, which helps store carbon in soils. 

FAIRR-GHG Emissions Disclosure of Index Companies

Circularity: Going Further than Footprints 

The concept of circularity in the animal protein production industry has emerged as a promising path towards sustainability and resource optimisation. One of its core components involves converting manure and effluents into biogas through anaerobic digestion – a process that not only reduces waste but captures emissions for power generation. 

Globally, around 55% of Index companies have embraced this approach. Some choose to sell biogas for additional revenue, while others deploy it within their operations to mitigate emissions and reduce reliance on fossil fuels. 

Companies have also found value in repurposing manure and animal by-products by turning them into fertilisers – effectively creating usable resources and reducing carbon footprints. However, such practices highlight the complexity of achieving true circularity, as some resources still find their way outside the system. 

Adopting manure as organic fertiliser is essential for circular agriculture, but it is not without risks. Issues such as the spread of antimicrobial resistance (AMR) demand careful consideration. Advanced manure-processing techniques, such as anaerobic fermentation and aerobic composting, offer solutions by mitigating transmission, preserving soil nutrients and generating renewable energy. Companies must prioritise the management of these risks and develop effective nutrient management plans to prevent potential environmental harm. 

In addition, the role of feed suppliers in the animal protein production ecosystem cannot be overstated. They are vital in mitigating material risks related to nutrient management in feed farming and alternative feeds. Their investments in sustainable value chains and collaboration with protein producers are critical elements for nurturing circularity in feed production. 

Promising trends are emerging in the sphere of nutrient management within feed farming. More organisations are demonstrating a commitment to this area, offering guidance, support and incentives to feed suppliers. These initiatives aim to enhance nutrient management in crop production, encompassing the reduction of fertiliser use and curbing nutrient pollution. 

Improvements in how companies approach the issue of water circularity are less evident. Despite the manifest risks associated with water scarcity, 45% of Index companies have not conducted risk assessments to identify processing facilities operating in areas with a medium or high risk of water stress. This poses a concern for investors and hampers the implementation of meaningful action plans. 

Numerous companies have initiated efforts to reduce water consumption at their facilities, but only some have set targets for reducing water withdrawals. The number of companies successfully decreasing both consumption and withdrawals remains limited. 

Circularity represents a pivotal avenue for enhancing sustainability and resource efficiency in the animal protein production industry. Embracing circular practices, mitigating risks and addressing resource vulnerabilities must therefore be recognised as imperative steps for all companies.

FAIRR-Circular Measure in Fertiliser Production and Biogas Production

Antibiotics and Animal Welfare: a Vital Link 

Antimicrobial resistance (AMR) poses a global threat, with a significant proportion of antibiotics used in livestock production – often for non-therapeutic purposes. While some countries have banned the use of antibiotics for growth promotion, routine use for prevention remains common. Stewardship involves phasing out the non-therapeutic use of antibiotics and adopting better animal welfare practices, biosecurity measures, vaccines and responsible treatment protocols. 

Various regions, including the European Union (EU) and the UK, are increasingly integrating animal welfare concerns into their AMR action plans. However, some countries, such as China and the US, have plans that do not directly link to animal welfare.  

Notably, the EU is leading the charge in revising animal welfare legislation, with a specific focus on housing conditions for various species. Other regions are also taking steps to improve standards, particularly in relation to practices such as chick culling. 

Antibiotics and animal welfare go hand in hand. Companies with stringent antibiotic policies tend to uphold superior animal welfare practices, underlining the need for a holistic evaluation of both aspects. However, only 12% of Index companies currently have a Low Risk rating for both factors – while 42% are considered High Risk in both. 

Companies that have sound commitments and measures in place for both these areas are recognised as industry leaders in sustainability and are well-positioned to align with expected regulatory changes. By contrast, those with high antibiotic performance but low animal welfare scores face potential regulatory and reputational risks.  

Investors should therefore adopt a comprehensive approach in assessing risks and opportunities in the protein production sector by considering the interplay between antibiotic stewardship and animal welfare. Companies that prioritise responsible practices benefit from enhanced brand value, consumer loyalty and resilience in a tightening regulatory landscape.

FAIRR-Companies Performance for Antibiotics & Animal Welfare Risk Factors

Human Capital Risks: Mounting Pressure to Demonstrate Transparency and Equitability 

With social risks in this sector increasingly earning the attention of all stakeholders, there is a growing need to assess trends related to human capital management. Companies do not always have a standardised approach to disclosing relevant metrics, meaning direct comparisons can be difficult, but it is nonetheless possible to discern overall shifts and to identify key correlations. 

The Index’s findings suggest companies with improved injury rates are more likely to disclose improvements in turnover rates. In addition, companies that support freedom of association are more likely to disclose improvements in injury rates. These findings align with the existing literature on the topic and underscore the argument for companies to better manage employee relationships. 

Relatedly, the issue of fair wages is becoming increasingly material, not least given its impact on employee wellbeing. Better wages can lead to a more productive workforce, yet the lowest-paid workers –as often found in this sector – have been most negatively affected by recent inflationary pressures. 

This year just seven Index companies were found to have directly mentioned a commitment to paying a living wage (defined by the UN Global Compact as one that allows employees and their families to meet their basic needs). Moreover, it is unclear whether this signifies pay above the minimum wage. Some companies use external living wage benchmarks to conduct their fair wage assessments, which is considered a more advanced practice, but the outcomes of these analyses are not always publicly available.  

A focus on improving human capital metrics over time can help deliver a variety of meaningful insights into corporate performance. Going forward, it is imperative that companies commit to transparent and equitable human capital management practices that are entirely open to scrutiny and assessment.