Socially responsible investing is undoubtedly a rising trend. Globally, there is now more than $30 trillion invested in ways that take companies’ environmental, social and governance (ESG) records into consideration, including 25% of total assets under management in the U.S. alone. However, social responsibility can mean different things to different investors — and one sector of growing interest is animal welfare.
For investors with public pension funds who are concerned about animal welfare, knowing a fund’s involvement in potential animal cruelty is crucial, though not always easy to discern.
According to recent research from animal welfare experts, at least six top global pension funds have holdings in potentially cruel companies that slaughter animals for meat, produce other animal products or fall behind in animal welfare standards.
Norway’s pension at back of pack
At the top of the list of funds with holdings in potentially cruel companies is Norges Bank Investment Management (NBIM), with four holdings of concern worth US$159.7 million. Of that, $61 million is invested in Sanderson Farms, a Fortune 1000 company that, according to its website, has the capacity to “process more than 13.65 million chickens per week.” While the company does have an animal welfare policy of sorts, it refers only to antibiotics and does not address stocking density, painful procedures, breeding or other important animal welfare issues pertaining to chickens.
A 2017 report by the Animal Welfare Institute found that one Sanderson farm had been cited 20 times in the two preceding years for not complying with humane handling standards. One USDA inspector determined that the plant’s slaughtering process was “out of control.”
The other contentious NBIM holdings are Japan’s NH Foods (US$64 million), Mexico’s Industrias Bachoco ($US34.3 million) and Dean Foods in the U.S. (US$0.1 million).
An NBIM spokesperson states the fund has no specific policy regarding animal welfare.
Canada and California pension plans also clued out on cruelty
The Canada Pension Plan Investment Board holds a total of US$24 million in potentially cruel companies, including US$13.7 million in NH Foods, US$10.2 million in Sanderson Farms and US$0.1 million in Dean Foods. The fund takes no position on animal welfare and makes no mention of it in its 2017 or 2018 Sustainable Investing Reports.
The California State Teachers’ Retirement System and California Public Employees’ Retirement System both have holdings in Sanderson Farms, US$5.6 million and US$7.9 million respectively. Neither has a specific policy regarding animal welfare.
Some funds are starting to consider cruelty
A spokesperson for Caisse de dépôt et placement du Québec (CDPQ) says that animal-welfare issues are studied as part of their fund’s pre-investment ESG analysis, and “if concerns arise, we proactively engage in dialogue with companies we’re invested in.”
However, CDPQ has three holdings in potentially cruel companies, including US$9.2 million in Industrias Bachoco, US$1.7 million in NH Foods and US$18.5 million in JBS S.A., the largest meat-processing company in the world, which slaughters 13 million animals every day.
JBS S.A. has also not signed on to the Better Chicken Commitment, an initiative supported by major animal protection groups around the world. And according to the 2018 Business Benchmark on Farm Animal Welfare, though the company appears to have an established approach to animal welfare, it “has more work to do to ensure it is effectively implemented.”
New York’s pension fund claims to use more of a shareholder engagement rather than divestment approach. The proxy voting guidelines of the New York State Common Retirement Fund state that “the Fund will support proposals asking a company to report on its animal welfare standards.” In 2018, fund managers wrote to McDonald’s, requesting information on what the company was doing to align its chicken welfare policy with widely accepted best practices like those of the Royal Society for the Prevention of Cruelty to Animals and the Global Animal Partnership. However, it still holds US$3.6 million in Sanderson Farms.
Which financial institutions are taking the lead?
While pension funds may lag behind when it comes to animal welfare, other financial institutions are stepping up, providing examples of how to approach animal-friendly finances.
Bank Australia, for example, states on its website that it does not lend to “organizations that use intensive animal farming systems like battery caged hens and sow stalls, or organizations that export live animals.”
The Netherlands Development Finance Company (FMO) has a three-page position statement regarding animal welfare that includes recognizing animals as sentient beings capable of experiencing pain. FMO considers unacceptable farming practices to include “non-enriched battery cages for chickens, the tethering of sows, individual sow stall housing throughout the entire pregnancy, individual pen housing for veal calves beyond the age of eight weeks, forced feeding of geese and ducks.” The agency will not make investments “that substantially involve any of these systems or practices.”
Other financial institutions notable for making animal welfare a priority include Allianz, CDC Group (the UK’s development finance institution), Rabobank, Standard Chartered and Triodos Bank.
Australian Ethical wealth management outright excludes any investment “in current systems of commercial animal agriculture including meat, dairy, eggs and seafood.”
Another option for investors concerned with the treatment of animals: the VEGN ETF, managed by Beyond Investing and listed on the New York Stock Exchange. The fund “excludes from consideration companies that harm animals, screening out companies that are involved in animal testing, animal-derived products, as well as animals in sports or entertainment.” Top holdings aren’t so much in, say, plant protein companies like Beyond Meat, but in corporations like Apple, Microsoft and Mastercard that don’t engage in screened practices.
Investor network pushing for change
One global network of investors with $20 trillion in assets under management has been encouraging investors to consider the financial and climate risks of investing in animal cruelty. Jeremy Coller, executive chair of London-based Coller Capital and a well-known name in private equity, developed the Farm Animal Investment Risk & Return (FAIRR) initiative five years ago “to put animal welfare on the ESG agenda.” The Coller FAIRR Protein Producer Index assesses the 60 largest global meat producers for investors. FAIRR also pressures corporations like Kroger, Walmart and McDonald’s to consider the risks to investors of relying exclusively on animal proteins within their supply chains – and to consider alternatives.
With the widespread rise in interest in meatless products, veganism and animal welfare, the treatment of animals is quickly becoming an important issue in that realm of socially responsible investing. If large pension funds and financial institutions want to keep up with this trend, they will need to become more aware of their involvement in potentially cruel companies and take steps to keep cruelty out of their investments.
Jessica Scott-Reid is a freelance writer and animal advocate. She writes for major media across Canada and the U.S.