singaporeen
SI Opener: The meat supply chain is a major threat to global health

SI Opener: The meat supply chain is a major threat to global health

25-02-2021 | SI Opener
It’s not only ‘wet animal markets’ that are causing health risks, as we have seen with Covid-19. The whole meat supply chain poses a threat to global health. We have seen this in the past with swine flu and mad cow disease, and we will most likely see it in the future with other diseases and bacterial resistance due to excessive antibiotic use. There is also the contribution the meat supply chain makes to climate change through deforestation, along with problems of animal welfare, and wage and health and safety issues in factories. These problems also came to the fore during the Covid-19 crisis, but were not new, and are reasons why Robeco has engaged with companies in the meat supply chain for many years now.
  • Masja Zandbergen - Albers
    Masja
    Zandbergen - Albers
    Head of sustainability Integration
  • Peter van der Werf
    Peter
    van der Werf
    Engagement Specialist

Speed read

  • Meat supply chain has problems from animal welfare to emissions
  • Engagement program focused on four main areas for improvement
  • Standards have risen over three years but some areas disappointing

Such issues are not only posing problems in a societal or environmental context, but have a real business impact if not managed well. Their business impacts not only come to the fore during crises, as we have seen with the meat packing factories that had to be closed after Covid-19 infections skyrocketed. The high environmental impact of industrial livestock production is also likely to create a negative financial impact, as the industry is one of the main contributors to climate change, and is likely to be subject to more regulatory and financial scrutiny.

It is not all doom and gloom – we also see companies that are profiting from the opportunities that new ways of farming offer. But innovation needs to be encouraged though in an industry which is over 11,000 years old, going back to when the first sheep and goats were domesticated.

Stay informed on our latest insights with monthly mail updates
Stay informed on our latest insights with monthly mail updates
Subscribe

An overview of our 3-year engagement on the meat supply chain

Meat consumption has grown exponentially since the 1960s

Food consumption and production patterns determine both our health and the health of the planet. Growing populations, increasing wealth and climate change are just some of the factors that will significantly influence the global food system in the years to come. The production of meat has grown almost exponentially since the 1960s, with the majority of the rise attributed to poultry, pork and beef.

As of 2014, the average person annually consumed around 43 kg of meat per year. For European and North Americans, this is more than double, with consumers eating 80 kg to 110 kg of meat respectively. This global average is likely to increase, since similar changes in population, incomes and urbanization rates have led to growing demand for meat and animal products.

It is estimated that the agricultural sector is the world’s second-largest greenhouse gas emitter. On average, one cow produces 85 kg of methane a year. In order to reduce emissions, improve health and feed more people, urgent and radical change is needed to meet the UN Sustainable Development Goals and the Paris Agreement by 2030.

The main challenges and our expectations

The meat production sector faces great challenges, such as constraints from finite natural resources, the environmental impact of large-scale production, and the impact on consumer health via the spreading of animal-born human diseases from livestock resistance to antibiotics. Ultimately there are health concerns regarding the over-consumption of meat by consumers generally.

For our engagement program, we developed an indicator framework that was comprised of the following objectives: animal welfare, labor standards, product quality and safety management, and innovation management.

Animal welfare: a company’s animal welfare policy should cover various issues, such as routine mutilation, high stock densities, pre-slaughter stunning, long-distance live transportation and the use of antibiotics during the growth phase. The policy should also cover all geographic areas, supplier relations and subcontractors. We evaluated companies’ performance on three broad parameters – governance and management, leadership and innovation, and performance reporting and impact.

Labor standards: we research companies to see if they have a policy that respects fair labor conditions. We examine coverage of the policy in terms of the company’s own operations and those of its suppliers, along with its coverage in terms of various labor issues and processes to ensure compliance with it. We also look into a company’s monitoring and health and safety initiatives to ensure the better health of employees.

Product quality and safety: we evaluate how meat processors and retailers ensure that their products meet the high quality and safety expectations of customers. We want companies to have a traceability system in place where they can trace back the origin of the meat products, and also to adopt detailed food labelling. Certified and organic products are preferred. We also expect companies to follow Good Manufacturing Practices and any other relevant standards for processes. Finally, we want to see companies take part in customer education on the health impact of eating meat, with a view to reducing their meat intake.

Innovation management: areas in which we are seeing opportunities for innovation in this industry are:

  • Specialty chemicals (animal feed producers) that, for example, provide innovative solutions such as probiotics instead of antibiotics added to the food
  • Automation of food facilities, thereby reducing the risk of operational health and safety issues
  • For quick-service restaurants and retailers, the market is changing as consumer demand changes. We expect companies to actively work on diversifying their product portfolios and to engage in consumer awareness programs in their stores and franchises.

Combatting deforestation was not an official objective in these engagement efforts. However, in the last few years, we have engaged with companies and even with countries (Brazil) on this topic. This remains an issue to be concerned about and engaged with.

Helpful initiatives to assess corporate performance

In 2016, when we started this engagement theme, we held a roundtable with the UK-based investor research group Farm Animal Investment Risk and Return (FAIRR), and with the Business Benchmark for Farm Animal Welfare (BBFAW), to discuss the risks and opportunities seen through changes in the meat and fish supply chain.

We found these two initiatives very helpful in guiding our research. This roundtable helped in our development of a robust indicator framework which guided dialogues with companies. Furthermore, the Access to Nutrition Index and the PRI Deforestation Benchmark aided our research into how companies are addressing the various issues in the meat supply chain.

Our conclusion on the engagement

Our engagement focused on companies across the food supply chain, from bioscience companies, (meat) processors and food products to retailers. Companies that performed the best included those from northern Europe and Scandinavia, plus American companies in the fast food industry.

Their actions and disclosures, especially those around participation in the Carbon Disclosure Project, along with their engagement with the Cerrado Manifesto, and their establishment of science-based targets and others, highlight their commitment to sustainability, and the steps they have taken to continuously improve over the last three years.

Our engagement programs with Brazilian companies, on the other hand, were closed as being non-effective, given their significant lags compared to peers across most objectives. We want these companies to do well on this topic and we remain involved as long as we are invested in them.

SI Opener
SI Opener
Seeing is believing.
Read all articles

Important information

This information is for informational purposes only and should not be construed as an offer to sell or an invitation to buy any securities or products, nor as investment advice or recommendation.
The contents of this document have not been reviewed by the Monetary Authority of Singapore (“MAS”). Robeco Singapore Private Limited holds a capital markets services license for fund management issued by the MAS and is subject to certain clientele restrictions under such license.
An investment will involve a high degree of risk, and you should consider carefully whether an investment is suitable for you.

Logo

Important Information

Warning/Important note: This website contains information which is only available to qualified investors as defined below. If you are not a qualified investor, please click “I Disagree” to leave the website.

By clicking on "I agree", I declare that: 

  • I am a qualified investor as defined under 1
  • I have read and understood the Terms and Conditions and Disclaimers as described under 2

1 - This website may only be accessed directly or indirectly by the following persons in Singapore:

1) “institutional investor” under section 304 of the Securities and Futures Act (Cap.289)(“SFA”), which means:
(i) the Government; (ii) a statutory board as may be prescribed by regulations made under section 341 of the SFA; (iii) an entity that is wholly and beneficially owned, whether directly or indirectly, by a central government of a country and whose principal activity is (A) to manage its own funds; (B) to manage the funds of the central government of that country (which may include the reserves of that central government and any pension or provident fund of that country); or (C) to manage the funds (which may include the reserves of that central government and any pension or provident fund of that country) of another entity that is wholly and beneficially owned, whether directly or indirectly, by the central government of that country; (iv) any entity (A) that is wholly and beneficially owned, whether directly or indirectly, by the central government of a country; and (B) whose funds are managed by an entity mentioned in sub-paragraph (iii); (v) a central bank in a jurisdiction other than Singapore; (vi) a central government in a country other than Singapore; (vii) an agency (of a central government in a country other than Singapore) that is incorporated or established in a country other than Singapore; (viii) a multilateral agency, international organisation or supranational agency as may be prescribed by regulations made under section 341 of the SFA; (ix) a bank that is licensed under the Banking Act (Cap.19); (x) a merchant bank that is approved as a financial institution under section 28 of the Monetary Authority of Singapore Act (Cap.186); (xi) a finance company that is licensed under the Finance Companies Act (Cap.108); (xii) a company or co-operative society that is licensed under the Insurance Act (Cap.142) to carry on insurance business in Singapore; (xiii) a company licensed under the Trust Companies Act (Cap.336); (xiv) a holder of a capital markets services licence; (xv) an approved exchange; (xvi) a recognised market operator; (xvii) an approved clearing house; (xviii) a recognised clearing house; (xix) a licensed trade repository; (xx) a licensed foreign trade repository; (xxi) an approved holding company; (xxii) a Depository as defined in section 81SF of the SFA; (xxiii) an entity or a trust formed or incorporated in a jurisdiction other than Singapore, which is regulated for the carrying on of any financial activity in that jurisdiction by a public authority of that jurisdiction that exercises a function that corresponds to a regulatory function of the Authority under this Act, the Banking Act (Cap.19), the Finance Companies Act (Cap.108), the Monetary Authority of Singapore Act (Cap.186), the Insurance Act (Cap.142), the Trust Companies Act (Cap.336) or such other Act as may be prescribed by regulations made under section 341 of the SFA; (xxiv) a pension fund, or collective investment scheme, whether constituted in Singapore or elsewhere; (xxv) a person (other than an individual) who carries on the business of dealing in bonds with accredited investors or expert investors; (xxvi) the trustee of such trust as the Authority may prescribe, when acting in that capacity; or; (xxvii) such other person as the Authority may prescribe.

2) “relevant person” under section 305(1) of the SFA, which means:
(i) An accredited investor; (ii) a corporation the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; (iii) a trustee of a trust the sole purpose of which is to hold investments and each beneficiary of which is an individual who is an accredited investor; (iv) an officer or equivalent person of the person making the offer (such person being an entity) or a spouse, parent, brother, sister, son or daughter of that officer or equivalent person; or (v) a spouse, parent, brother, sister, son or daughter of the person making the offer (such person being an individual).

3) any person who acquires the units [in a collective investment scheme] as principal if the offer is on terms that the units may only be required at a consideration of not less than $200,000 (or its equivalent in a foreign currency) for each transaction, whether such amount is to be paid for in cash or by exchange of units in a collective investment scheme, securities, securities-based derivatives contracts or other assets, and if the following condition is satisfied: (i) the offer is not accompanied by an advertisement making an offer or calling attention to the offer or intended offer; (ii) no selling or promotional expenses are paid or incurred in connection with the offer other than those incurred for administrative or professional services, or by way of commission or fee for services rendered by any of the persons specified in section 302B(1)(d)(i) to (vi) of the SFA; and (iii) no prospectus in respect of the offer has been registered by the Authority or, where a prospectus has been registered (A) the prospectus has eAccxpired pursuant to section 299 of the SFA; or (B) the person making the offer has before making the offer 1. informed the Authority by notice in writing of its intent to make the offer in reliance on the exemption under this subsection; and 2. taken reasonable steps to inform in writing the person to whom the offer is made that the offer is made in reliance on the exemption under this subsection.

4) Or otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

If you are not any of the types of persons described above, you are not authorized to enter this website and you should leave this website immediately.

2 Terms and Conditions
You acknowledge that you have read these Terms and Conditions (“Terms”) prior to accessing the website located at www.robeco.com/sg (“Website”) and you agree to be bound by the Terms.  If you do not agree to all of the Terms, you are not an authorised user and you should not use the Website. The Website is owned by Robeco Singapore Private Limited (company registration number: UEN. 201541306Z), which is licensed by the Monetary Authority of Singapore (“MAS”) pursuant to the Securities and Futures Act (Cap.289) (“SFA”) of Singapore, and is managed by Robeco Singapore Private Limited and/or its affiliates (collectively, as “Robeco”). The Website is intended for and should be accessed by institutional investors or accredited investors (as defined under Section 4A of the SFA) of Singapore.  The Website is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject the Robeco to any registration or licensing requirement within such jurisdiction.  It is your responsibility to observe all applicable laws, rules and regulations of any relevant jurisdiction. The content contained in the Website is owned by Robeco and/or its information providers and is protected by applicable copyrights, trademarks, service marks, and/or other intellectual property rights.  You may not copy, distribute, modify, post, frame or link the Website, including any text, graphics, video, audio, software code, user interface, design or logos.  You may not distribute, modify, transmit, reuse, repost, or use the content of the Website for public or commercial use, including all text, images, audio and/or video.  Robeco may terminate your access to the Website for any reason, without prior notice. Neither Robeco, nor any of its associates, nor any director, officer or employee accepts any liability whatsoever for any loss arising directly or indirectly from the access of the Website.  You agree to indemnity and hold Robeco, its associates, directors, officers or employees harmless against any and all claims, losses, liability, costs and expenses arising from your use of the Website due to violation of the Terms. Robeco reserves the right to change, modify, add or remove any parts of the Terms at any time and for any reason.  The Terms shall deemed to be effective immediately upon posting. The Terms shall be governed by, and shall be construed in accordance with, the law of Singapore.

Disclaimers
The Website has not been reviewed by the MAS. Accordingly, the Website may not be accessed directly or indirectly to persons in Singapore other than (i) to an institutional investor under Section 304 of the SFA, (ii) to a relevant person pursuant to Section 305(1), or any person pursuant to Section 305(2), and in accordance with the conditions specified in Section 305, of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. 

Nothing in the Website constitutes tax, accounting, regulatory, legal or investment advice.  The Website is for informational purposes only and should not be construed as an offer to sell or an invitation to buy any securities or products, nor as investment advice or recommendation or for the purpose of soliciting any action in relation to Robeco’s businesses, or solicitation by anyone in any jurisdiction in which such an offer or solicitation is not authorised or to any person to whom it is unlawful to make such an offer and solicitation. Any reproduction or distribution of information from the Website, in whole or in part, or the disclosure of its contents, without the prior written consent of Robeco, is prohibited.  By accessing to the Website, you agree to the foregoing.  

The funds referred to in the Website are for information only.  It is not a recommendation or investment advice, nor does it mean the funds is suitable for all investors.  The contents of the website is not reviewed by the MAS.  Any decision to participate in the funds should be made only after reviewing the sections regarding investment considerations, conflicts of interest, risk factors and the relevant Singapore selling restrictions.  You should consult your professional adviser if you are in doubt about the stringent restrictions applicable to the use of the Website, regulatory status of the funds, applicable regulatory protection, associated risks and suitability of the funds to your objectives.

Any decisions made based on the information contained in the Website are the sole responsibility of yours.  Any investments made or to be made shall be with your independent analyses based on your financial situation and objectives.  The investments and strategies contained in the Website may not be suitable for all investors and are not guaranteed by Robeco.  

Investment involves risks and may lose value.  Historical returns are provided for illustrative purposes only and do not necessarily reflect Robeco’s expectations for the future.  The value of your investments may fluctuate.  Past performance is no indication of current or future performance.  The Website may contain projections or other forward looking statements regarding future events or future financial performance of countries, markets or companies and such projection or forecast is not indicative of the future.  The information contained in the Website, including any data, projections and underlying assumptions are based upon certain assumptions, management forecasts and analysis of information available on an “as is” basis and without warranties of any kind, whether express or implied, and reflects prevailing conditions and Robeco’s views as of the date published or indicated, and maybe superseded by subsequent events or for other reasons.  The information contained in the Website are accordingly subject to change at any time without notice and Robeco are under no obligation to notify you of any of these changes.  Robeco expressly disclaims all liability for errors and omissions in the information presented in the Website and for the use or interpretation by others of information contained in the Website.

Robeco Singapore Private Limited holds a capital markets services licence for fund management issued by the MAS and is subject to certain clientele restrictions under such licence.  An investment will involve a high degree of risk, and you should consider carefully whether an investment is suitable for you.

I Disagree