The Coller FAIRR Protein Producer Index methodology is being refined to better reflect industry disclosure trends and developments that have emerged since the Index was launched in 2018. The updates detailed below, intended to improve investor usability, capture a larger range of issues and advanced practices, and enhance year-on-year comparisons, will be implemented for the 2025 assessment cycle.

How will the methodology be refined?

Fixed methodology for three years

The updated methodology will be fixed for the next three years, creating a robust, stable dataset that makes year-on-year company comparisons easier for investors.

Commitment, practice and outcome: New question categories

The revised methodology will categorise questions into three pillars: Commitment, Practice and Outcome, with two sub-groups - Disclosure and Performance – within the Outcome pillar.

In addition to the final company score, calculated using the FAIRR Initiative’s company assessments, Index constituents will be scored on these pillars. Further detail on what these pillars include are outlined in the table below.

These refinements will allow investors to customise which company assessment results they view, according to their needs. For example, in comparing two companies with advanced ESG disclosures, investors can view the granular scores provided within the Practice pillar to determine which of the two takes further steps beyond disclosure.

Focusing on company practices and outcomes makes the methodology more robust, by incorporating more advanced practices, improving year-on-year comparison of factor and company performance, and including niche topics and themes that are important in the sector.

Ultimately, these refinements will help investors to better understand their exposure to ESG risks in livestock and fish farming.

Risk and opportunity factor changes

There will be several changes to the 10 risk and opportunity factors.

A new factor – Land & Sea Management– will be introduced to assess ecosystem and biodiversity impacts, incorporating relevant questions from Deforestation & Biodiversity and new questions on soil health.

Deforestation & Biodiversity will be renamed Deforestation & Land Conversion to focus on high-risk commodities.

Working Conditions will be split into Social Risks and Human Capital Management to better reflect the range of sub-topics that investors are increasingly interested in. For example, Social Risks will evaluate individual practices related to forced labour, child labour, freedom of association, modern slavery and harassment.

Human Capital Management will expand beyond traditional occupational health and safety to include mental health and will increase expectations on sick pay and fair wages while introducing questions related to diversity, equity and inclusion (DEI).

Food Safety will no longer be a standalone factor. As food safety certifications and product recalls are mandated in many countries, compliance with these and other elements of food safety will be captured under Governance.

Alternative Proteins will be renamed Protein Diversification to align with other FAIRR workstreams, while new topics and themes will also be added to most factors, aligning with frameworks and standards such as the Taskforce on Nature-related Financial Disclosures and the Science-based Targets initiative.

Further changes on all factors can be found below.

The Index was launched as a unique and innovative disclosure benchmark in 2018, when transparency in ESG reporting was still lacking in this sector.

While the methodology has been regularly updated, the structure has largely remained the same. At the same time, ESG-related disclosures have improved since 2018, driven by several developments:

• The concept of sustainable, resilient food systems has gained significant attention globally. Food has emerged as a key topic in climate-related discussions since COP26 under the Food and Climate Declaration, while the Declaration on Food and Agriculture at COP28 recognised the threat of climate impacts on food systems.

• The Taskforce on Nature-related Financial Disclosures was launched in 2023 to help investors and companies integrate nature-related risks and opportunities into their decision making.

• The Science-based Targets initiative's guidance on forest, land, and agriculture (FLAG) now requires companies in the food and agriculture sector to disclose relevant emissions and targets – this is also key to aligning with the goals of the Paris Agreement.

Consequently, the ability of investors to scrutinise the ESG practices and performance of companies across the sector has increased, while the changing disclosure landscape is prompting companies to work towards reporting the outcomes of their practices.

Refining and updating the Index methodology to reflect these developments in disclosure regulation and policy will ensure the Index continues to be robust, challenging companies and aligning with investors' expectations. The updates should also help investors to better evaluate material ESG risks and corporate practices.

For further questions, please contact:

Thalia Vounaki, Senior Manager – Research & Data, thalia.vounaki@fairr.org

Kiyomi Ran, Senior Analyst Index, kiyomi.ran@fairr.org