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Animal welfare concerns grow for food industry investors

By Rod Addy , 10-May-2012

Food processors across the globe face increasing pressure from investors to improve poor animal welfare standards, a leading financial expert and Compassion in World Farming (CIWF) have warned.

Rory Sullivan, who worked in finance for 10 years in London and is now a researcher and consultant on ethical investment, told FoodNavigator that the issue was reaching a tipping point. “It’s a new issue. There has been very little investment interest outside of ethical investors, but we are on the cusp of a change. Three to five years out we will see a sea change.

“We have seen EU regulation on battery caged hens and sow stalls in the headlines recently. Many companies are managing the situation quite well, but investors are becoming more sensitised to the issues.”

Risk management

“I don’t think that investors [outside the ethical sphere] are caring about animal welfare in the same way as non-governmental organisations (NGOs) are. But they are seeing it as a meaningful indication of a company’s quality of management and ability to manage risk.

“The end point for investors is that they will see animal welfare as a risk issue and then use their influence with companies to encourage them to manage the issue better.”

A spokeswoman for CIWF said animal welfare standards were rising in prominence and could easily assume the same importance to food industry investors as environmental concerns within a few years.

Ethical business benchmark

The CIWF is working with the World Society for the Protection of Animals to create an ethical business benchmark, which will record the relative animal welfare performance of companies. The tool is being launched globally in November.

“Farm animal welfare is becoming an issue for companies looking to invest in the food industry,” the CIWF spokeswoman told FoodNavigator. “This project is going global. If companies are steadfastly ignoring advice on welfare issues, the risk for these companies is that ethical investment concerns look elsewhere with their investment.

“If this is not something you are already tackling, you should definitely be taking a look at it.” She also encouraged firms to operate more transparent practices. Even where companies were acting reputably, consumers and even those in the industry could become suspicious if they were not as open as they could be, she said.

Opportunity to improve standards

“This is an opportunity for companies to take their impact seriously and improve animal welfare across the supply chain.”

While animal welfare had not yet reached a point where it would prevent investors from supporting food businesses, financial backers would become more concerned about it, she added.

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