Three-quarters of the world’s 60 largest meat, fish and dairy companies are at high risk of fostering future pandemics that involve diseases that spread from animals to humans, a new report has found.
The report, by global collaborative investor network FAIRR—established by the philanthropic foundation of British private equity entrepreneur Jeremy Coller—comes as the Covid-19 coronavirus continues to upend the world economy and weaken food supply chains. FAIRR stands for Farm Animal Investment Risk and Return.
According to FAIRR’s pandemic ranking, 44 of the 60 biggest animal protein companies fare poorly on seven criteria that are relevant in preventing future zoonotic pandemics. The criteria include worker safety, food safety, deforestation and biodiversity management, animal welfare and antibiotic stewardship.
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This demonstrates that factory farming is both vulnerable to zoonotic outbreaks, and guilty of creating them, Coller said in the report, An industry infected: Animal agriculture in a post-Covid world.
Disconnect between ranking and reality
What was surprising about FAIRR’s pandemic ranking, however, was the relatively high scores of some companies that have been hammered by the pandemic and slammed for treating their workers like “modern-day slaves”.
United States meat processing giant Tyson Foods, for instance, was deemed “medium risk” but some of its plants have been Covid-19 hotspots. Tyson Foods is reinstating its policy of penalising workers for missing shifts even as new Covid-19 outbreaks surfaced at its meat plants in the state of Iowa, the Des Moines Register, an Iowa news outlet, reported on 4 June.
Other “medium-risk” companies that have seen coronavirus outbreaks at their plants include Brazilian meat processor BRF, Britain’s Cranswick and Canada’s Maple Leaf Foods. Some infected workers have died, and their family members have spoken about the lack of personal protective equipment provided in work environments that did not allow social distancing.
At times ESG data is simply unsuitable to accurately capture risks materialising in real time.
FAIRR in the report, An industry infected: Animal agriculture in a post-Covid world
Noting the disconnect between some scores and reality, the report said: “Better disclosure across key ESG (environmental, social and governance) metrics has not guaranteed better performance. This is partly due to the backwards-looking nature of ESG data. At times ESG data is simply unsuitable to accurately capture risks materialising in real time.”
FAIRR outreach analyst Elliot Teperman said the disconnect “further reinforces the need for companies to go beyond simple box-ticking policy statements or support of sustainability standards and think about the resilience of their supply chains on a more strategic practical level”.
Investor engagement also needs to improve in the sector across a range of ESG factors, he said.
The pandemic ranking used data from the 2019 edition of the Coller FAIRR Protein Producer Index, which aims to support investors making decisions on the protein sector, and serve as a tool to help food companies work with their suppliers to minimise reputational and operational risks.
Aquaculture and seafood companies fared better on the pandemic ranking, but none were considered “low-risk”.
Sixteen of the 60 companies were “medium risk”, and Norway’s seafood giant Mowi, Faroe Islands salmon producer Bakkafrost and Norway’s Lerøy Seafood Group emerged as the top three firms.
Companies in other protein categories—beef, dairy, pork, poultry and eggs, as well as multiple proteins—were generally high-risk, and Asian companies fared poorly, as they did in the 2019 Protein Producer Index due to lack of disclosure and commitments on deforestation and biodiversity loss, greenhouse gas emissions, animal welfare standards and use of antibiotics.
Asked if companies’ actual response to the Covid-19 pandemic would be taken into account for future editions of the Protein Producer Index, Teperman said it was too early to say. Doing so may “create a score that is too heavily based on the idiosyncrasies of the current crisis… rather than a company’s exposure to global shocks and future pandemics in general”, he added.
How precarious is the livestock industry?
FAIRR’s report follows investment bank Goldman Sachs’ proclamation last month that livestock, as a commodity, was “looking as precarious as oil” in 2021. This is due to the time it takes to rear animals and rebuild supply after disruptions such as a shortage of labour due to movement restrictions, Covid-19 outbreaks in meat plants, and logistical challenges. Farmers have had to cull their animals and dump milk, leading to financial losses.
“While the Covid-19 pandemic did not come from livestock, the next one may,” the FAIRR report noted. Three in four emerging infectious diseases in humans are passed on from animals, and those that have come from livestock include strains of swine flu and avian flu.
Intensive production systems pack stressed and immuno-compromised animals densely together indoors, and involves live transport. These factors create the perfect environment for deadly diseases to mutate and spread.
“Zoonotic diseases can spread to humans through direct contact with infected animals or indirectly through animal waste or animal products. If a highly deadly strain of avian or swine flu were to become highly transmissible between humans, we would be facing the next pandemic,” the report stated.
Looking ahead, it said a shift to plant-based protein would help to manage supply chain risks. In some countries, there have been calls for regulatory changes to the livestock industry although outcomes remain to be seen. Two US senators have asked the Federal Trade Commission to investigate consolidation in the American meatpacking and processing industry, for example.
On whether investors should pull out from highly consolidated companies, Teperman told Eco-Business: “For some investors that screen out stocks, or integrate research into fundamental analysis, this could include not investing in overly consolidated companies. For other investors, it could be a matter of actively engaging with companies, whether that be on worker safety, or breaking up consolidation.”
Biosecurity, or measures to prevent the spread or introduction of pathogens, must also become a priority, the report said. These include effective manure, nutrient and wastewater management, as well as worker protection.