why animal welfare matters to investors and what to do


WHY ANIMAL WELFARE MATTERS TO INVESTORS AND WHAT TO DO ABOUT IT RIAA MEMBER ONLY WEBINAR 26 June 2018 Presenters: Nicolette Boele - RIAA Tim Vasudeva - Animals Australia Ben Pearson - World Animal Protection Responsible Investment

  1. WHY ANIMAL WELFARE MATTERS TO INVESTORS AND WHAT TO DO ABOUT IT RIAA MEMBER ONLY WEBINAR 26 June 2018 Presenters: Nicolette Boele - RIAA Tim Vasudeva - Animals Australia Ben Pearson - World Animal Protection Responsible Investment Association Australasia

  2. What issues do people care about?

  3. The top 3 things Australians want to avoid investing in are: § animal cruelty (69%) § human rights violations (62%) § pornography (56%)

  4. RIAA WEBINAR 26 JUNE 2018: Animal Welfare – a Core ESG Risk Tim Vasudeva Director of Corporate Affairs Animals Australia

  5. Live Sheep Export - background Animals Australia - History Formed in 1980. Over 2 million individual supporters. AA & RSPCA - government consultation. Animals Australia - Investigations Live export, Greyhound racing, Puppy farming, Duck shooting, Factory farming (dairy, chickens, pigs). ESCAS–Export Supply Chain Assurance System Introduced in 2011 following AA exposé re Indonesian abattoir abuse of Australian cattle. Live Export Licences and Permits Department of Agriculture and Water Resources. Export Control Act 1982. Australian Meat and Live-stock Industry Act 1997.

  6. Emanuel Exports History 37 shipments since 2005 > 1,000 animals died p.s. Whistleblower Footage Awassi Express (Kuwaiti owned). 5 separate shipments to Middle East May - Nov 2017. Over 4,000 sheep died across these 5 voyages. Federal and State Criminal Investigations Federal: potential breaches of Aust Standards for Export of Livestock (ASEL). WA: potential breaches of Animal Welfare Act. Export Licence Suspension Applies to 1 of 3 Emanuel Export Group companies. DAWR advise suspension relates to potential documentation & ASEL breaches pre 2017. Federal Court Proceedings Initiated by Animals Australia June 2018 re Export Control (Animals) Order 2004.

  7. Australia – Sheep Export Industry Trade Stats 2017 export volume 1.9 million sheep. Decline from 6.0 million sheep p.a. in 2002. Major destinations: Kuwait (35%), Qatar (33%), UAE (9%) and Jordan (8%). Major Exporters from Australia Emanuel Exports Group (WA): 65-70% of trade. Livestock Shipping Services (Jordan): 25-30%. McCarthy Review Heat Stress Risk Assessment model from July 2018. Bills Presented to Parliament Lower House – Sussan Ley (Liberal MP) Ban northern summer shipments from 2019. Phase-out all Middle East shipments by 2023. Upper House – Senators Rhiannon, Hinch & Storer Ban northern summer shipments from 2018. Phase-out all Middle East shipments by 2023.

  8. Financial Risks to Stakeholders Implications for Industry Industry participants who are not proactive on animal welfare issues will find themselves working to a timetable for change outside of their control. Regulatory environment will shift underneath them. Business models will need to change involuntarily. Lessons for Stakeholders Importantly – ongoing animal cruelty scandals erode confidence in the meat industries, and ag generally, if not genuinely addressed. AA received > 100,000 VSK requests past 2 months. Anyone with an existing investment in sheep in WA or SA would be concerned about the profitability and value of their investment. ESG risk methodologies which do not adequately consider or capture animal welfare related risks inherent in animal agriculture will to lead to poor risk management and mispricing of transactions.

  9. Ongoing Welfare Issues of Concern The Next Big Thing Live export is not a “one off” welfare issue. Animal agriculture participants continue to poorly manage issues of serious concern including: - Pain relief - Antibiotics - Cage systems (eg layer hens, pigs) - Meat chicken stocking densities - Live cattle export - Intensive fish farming. Consultation We have met with the main banks supporting sheep exporters: CBA, NAB, Rabobank, Bendigo & Adelaide. Scheduled to meet with ANZ, yet to meet with HSBC. Have spoken to Elders, Ruralco & Landmark.

  10. Outcomes What We Are Looking For Formal integration of animal welfare risks into the ESG risk assessment and due diligence methodologies of banks, fund managers and super funds. Development of formal animal welfare policies, to provide transparency and public assurances that these issues are taken seriously – refer Rabobank, ABN Amro and ING. Of note: Industry Super Australia 2017 report “Driving Super Fund Investment in Agriculture”. 70 pages – one mention of live export, no other mention of animal welfare as a risk.

  11. Questions

  12. Business Benchmark on Farm Animal Welfare Started in 2012, the first global measure of • farm animal welfare management, policy commitment, performance and disclosure in food retailers and wholesalers, restaurants and bars, and food producers and manufacturers. Sponsored by Compassion in World Farming, • World Animal Protection and Coller Capital. Managed through an independent • secretariat, with expert input from a Technical Working Group. 110 companies participated in 2017, up from • 99 in 2016. 2018 survey will cover 150 companies.

  13. Benchmark aims To improve corporate reporting on farm animal welfare, management and performance and, over time, contribute to tangible improvements to the welfare of animals reared for food within company supply chains. This is achieved through: Encouraging greater transparency, and in turn improved • performance, from companies on how they manage farm animal welfare; Signalling what NGOs and other stakeholders expect; • an ‘off the shelf’ tool for investors who want to include farm • animal welfare in their decision making which provides a basis for investors to engage with companies.

  14. Key BBFAW welfare issues Close confinement; • The use of genetically modified or • cloned animals; The use of growth promoting • substances; The use of antibiotics for • prophylactic purposes; Routine mutilations; • Pre-slaughter stunning; and • Long-distance live transportation. •

  15. Methodology The Benchmark assesses companies’ published information on farm animal welfare in four core areas: Management commitment & policy • (70 points) Governance and management (75 • points) Innovation & leadership (30 points) • Performance reporting (35 points) • (Max score: 210 points) •

  16. The rankings

  17. Key outputs and publications Annual Report Company Summaries Interactive Website

  18. Global Investor Statement on farm animal welfare Launched in 2016. • Signatories commit to taking • account of farm animal welfare in their analysis of food companies and when engaging with these companies. Has been signed by 23 • institutional investors representing almost Aus$3.38trillion in assets under management.

  19. Progress achieved Highlights from the 2017 BBFAW report. Of the 110 companies: 52 (47%) of companies have explicit • Board or Senior Management oversight of farm animal welfare; Companies that have farm animal welfare • as an integral part of their business strategy (ie Tier 1 or 2) has grown significantly since 2012, from 3 to 17; 87 companies (79%) have made • commitments to the avoidance of close confinement in one or more of the major markets in which they operate. The most common corporate commitments relate to the elimination of cages for laying hens and the elimination of sow stalls.

  20. What is driving change? In a recent BBFAW survey of the companies covered by the Benchmark: 78% of respondents identified customer and • client interest as the most important influences on their approaches to farm animal welfare. The survey identified the other important • drivers of action as media interest (49%), NGO pressure (46%) and investor pressure (46%). Respondents also pointed to investor support • for the Global Investor Statement on Farm Animal Welfare as a tangible example of investor interest in the issue of farm animal welfare.

  21. Australia and New Zealand Only two companies in Australia are ranked by BBFAW: • Coles (Tier 5) and Woolworths (Tier 3). Aldi participates in the Aldi Süd assessment (Tier 3). Only one company in NZ: Fonterra (Tier 5). • We’d like to see other supermarkets and food companies • engage, and would like to see Aldi Australia engage as a separate corporate entity.

  22. Thank you

  23. Q & A Responsible Investment Association Australasia


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