Food chain alert for investors

An animal welfare benchmark has been published amid food companies being drawn into a horsemeat scandal across Europe.

Story highlights

  • New benchmark shows many big global food companies failing to adequately monitor farm animal welfare
  • Walmart, Auchan, Mars, and El Corte Inglés among worst offenders in ranking
  • Consumers, investors increasingly worried about risk management in food chain

Chewing the cud: animal welfare at suppliers is often overlooked

Investors will get a wake-up call on Monday when findings from a new benchmark reveal that many big global food companies in which they invest are failing to adequately monitor the welfare of farm animals used in the food chain.

The benchmark, which is the first of its kind, and supported by Compassion in World Farming and the World Society for the Protection of Animals, comes as a growing number of food companies are being drawn into the horsemeat scandal across Europe and consumers and investors are becoming increasingly worried about risk management in the food chain.

Among the worst offenders in the ranking are Walmart, Auchan, Mars, and El Corte Inglés, where no evidence of farm animal welfare was found on their business agendas.

Nestlé, Premier Foods, Starbucks and Carrefour also scored poorly. Farm animal welfare was found to be on the business agenda but there was limited evidence of implementation.

Out of 68 of the largest food retailers, producers and restaurants evaluated in the Business Benchmark on Farm Animal Welfare, fewer than half (46 per cent) publish a formal farm animal welfare policy; only 41 per cent describe how their board or senior management oversaw their approach to farm animal welfare in their supply chains; and just a quarter (26 per cent) publish objectives and targets.

Hilary Green, head of research and development communications at Nestlé, the world's number-one food producer, said the company had updated its farm animal welfare information and commitment statement since the evaluation was carried out last summer. She added that a report, Nestlé in Society, due out next month, would further outline its commitment to farm animal welfare.

Last week, Nestlé removed pasta meals from shelves in Italy and Spain and suspended deliveries of all processed products containing meat from a German supplier after tests revealed traces (above 1 per cent) of horse DNA.

The benchmark was constructed using an average company score, evaluated on management commitment, governance, policy implementation and innovation. Forty-two of the 68 companies ranked in the bottom two of six categories.

Managing and reporting farm animal welfare "is a risk issue few companies are on top of," said Rory Sullivan, an adviser to the business benchmark and independent consultant.

Some respondents said it was difficult to impose their animal welfare policies on suppliers, particularly where the supplier was more powerful than the purchaser or when the latter made up only a small part of the supplier's turnover.

The Co-operative Food (UK), Noble Foods and Unilever made it into the second tier of the ranking, where best practice was found to be integral to business strategy, while J Sainsbury, Marks and Spencer and McDonald's, the burger chain, were among those in tier three.

M&S agriculture and animal welfare manager Mark Atherton-Ranson said that animal welfare was at the heart of the business and that the company had recently gone further on the issue. "We added our animal welfare charter to our website just after the report was conducted, so we look forward to seeing this included in the next update later this year," he said.

Investors must "engage with companies to encourage better risk management and reporting," said Mr Sullivan.

That call is echoed by Neville White, senior analyst for socially responsible investment at Ecclesiastical Investment Management.

"The benchmark will bring to the forefront an issue that perhaps has not been on investors' radars hitherto but may increasingly feature as a key reputational and operational risk for food companies in the producer, processor, retail and catering service sectors," he said.

None of the companies assessed made it into the top tier.