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What does ethical investment mean when it comes to farm animal welfare?

If you are a consumer who cares about the welfare of farm animals, you will probably be purchasing higher welfare food. But, if you are an investor, and interested in animal welfare, do you seek out businesses or farm animal production systems that aim to achieve high levels of animal welfare? Ethical, or responsible, investment has seen unprecedented growth in recent years, with a key driver being consumers wanting to support investments that align with their personal values (RIAA 2017). Responsible investment represents around half of all professionally managed assets in Australia with 9 in 10 Australians saying they do not want to invest in animal cruelty (RIAA 2017).

What is ethical or responsible investment?

Responsible investment is a strategy that considers environmental, social, and governance (ESG) factors as well as ethical issues to help manage the risk of investing in a particular business. For example, poor animal welfare is a risk to good business so responsible investors in farm animal production (raising animals for food) can choose to pull out or they can use their influence to help improve animal welfare.

What is in it for corporates and investors?

There is a competitive advantage to prioritising animal welfare. According to the International Finance Corporation (IFC 2014), a member of the World Bank Group, businesses that address animal welfare:

  • reduce losses and increase productivity: e.g. improved human-animal relationships and other welfare benefits can reduce costs and lead to increased productivity;
  • access new markets: e.g. market opportunities for food produced to higher welfare standards in certified systems; and/or
  • gain brand reputation: e.g. by becoming the producer of choice for retailers and consumers concerned with animal welfare.

Investors need company disclosure on animal welfare commitments

For businesses, it is important to disclose information on animal welfare and other ESG commitments as well as performance against those commitments. When companies are assessed for or by potential investors, a lack of information on animal welfare and other CSG commitments will result in a poor assessment and low ranking because it is assumed animal welfare and/or other ESG issues are not managed.

For example, the Business Benchmark on Farm Animal Welfare (BBFAW) is the leading global measure of how food companies manage corporate practice and performance on farm animal welfare. Using publicly available information, BBFAW reports annually on 150 of the world’s largest food companies, and provides investors with the information they need to understand company farm animal welfare policies, management systems, reporting, and performance. Assessment against a number of criteria in each of these four key areas allows companies to be ranked into one of six tiers. Tier 1 being the highest, where a company has taken a leadership position on farm animal welfare issues, and Tier 6 being the lowest where there is no publicly available evidence that a company sees farm animal welfare as a business issue.

Another example is the Coller FAIRR Protein Producer Index which assesses 60 of the largest animal protein producers on ESG issues. Animal welfare is one of the ten risk and opportunity factors the Index evaluates for both land-based and aquaculture systems. Companies are rated high risk, medium risk, low risk, or best practice giving investors a risk assessment based on progress over time and criteria relating to company animal welfare policies, participation in assurance or certification schemes, and performance on key material risks.

Initiatives like BBFAW and the Coller FAIRR Protein Producer Index are an opportunity for companies to present their animal welfare credentials and aim for continuous improvement while providing investors with key insights into company policies and performance that support higher welfare production.

What is the RSPCA doing to encourage investors to help improve the welfare of animals raised for food?

  • RSPCA Australia engages with corporations, banks and other investors to highlight material issues for each livestock industry.
  • We encourage investors to support businesses that include the aims of the Five Domains in their animal welfare commitments or policies:
    • Nutrition: To maximise eating as a pleasurable experience and to minimise thirst and hunger
    • Environment: To promote thermal, physical and other comforts and to minimise discomfort and exposure
    • Health: To promote the pleasures of robustness, vigour, strength and well-co-ordinated physical activity and to minimise breathlessness, nausea, pain and other aversive experiences
    • Behaviour: To promote engagement in rewarding activities and minimise threats and unpleasant restrictions on behaviour
    • Mental state: To promote various forms of comfort, pleasure, interest, confidence and a sense of control.
  • We encourage investors to support businesses that have animal welfare commitments or policies that cover key areas of livestock production (as described in IFC 2014): genetics and breeding, animal health, husbandry practices, stockmanship, feed and water, housing systems, transport and slaughter.
  • We provide investors with information regarding quality assurance programs that encompass animal welfare.
  • We highlight the importance of company disclosure of animal welfare commitments or policies.
  • We highlight the importance of management systems and assessment of performance against those systems; for example, how companies manage their supply chains to ensure they are meeting animal welfare policies (and specific animal welfare standards).
  • We provide and offer assistance in developing animal welfare protocols.
  • The RSPCA’s Responsible Sourcing information includes guidance on developing an animal welfare policy, procurement goals and species-specific information about production processes and how to analyse a business’ supply chain.

What can you do?

If you are an investor interested in animal welfare, we encourage you to seek out businesses or farm animal production systems that aim to achieve high levels of animal welfare and who meet their stated commitments to improve farm animal welfare. Wondering where to start? Find out more here.

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Updated on March 21, 2023
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