Issue Brief: Animal Welfare
If the sign of an enlightened society is how we treat all creatures great and small, then our society falls far short. Every day, headlines about company boycotts over animal testing, documentaries about appalling and unsanitary livestock conditions, and media campaigns about deforestation and the extermination of endangered species illuminate the unnecessarily poor treatment of animals in corporate operations around the world.
Animal welfare concerns reflect not only the absence of cruelty but also the physical and mental well-being of animals, including their care or mistreatment. Poor practices continue to spark passion and controversy among consumers, investors, and businesses across a range of industries. Yet, the laws that do exist, such as the Animal Welfare Act in the United States, provide few real protections or detailed guidance to ensure the humane treatment of animals within the corporate world.
At Calvert, we recognize it is neither possible nor desirable to completely eliminate animals from commerce. Instead, our aim is to reduce the unnecessary use of animals and improve animal care. We look at a range of environmental, social, and governance factors related to humane animal treatment, ranging from animal testing, to farm animal care, to impacts on wild animals and endangered species. While the moral imperative for the humane treatment of animals is strong, we believe a proactive approach to managing these issues clearly helps companies avoid negative publicity, business disruptions, regulatory problems, product safety problems, and lost sales—all of which can depress shareholder value.
Key Animal Welfare Challenges
“Pawprints”—a term Calvert coined to represent a company’s exposure to animal products and testing—exist in many industries. However, the greatest concerns are in the pharmaceutical, personal care and household products, food, pet, and agricultural industries.
The typical consumer or even investor would have a hard time discerning exactly what a company’s practices are. Unlike many food claims such as the term “low-fat,” which has been defined as 3 grams of fat or less per serving, there are no clear regulatory definitions for many animal welfare-related terms. In addition, a term may sound ideal, such as “free range” eggs, but confer minimal protections to animals and require no third-party audit. As a result, transparent corporate disclosure is critical to an effective company evaluation. Calvert relies on corporate sustainability reports, company dialogues, and conversations with groups like the Humane Society of the United States to help gauge corporate conduct. In addition, we look for any adverse events reported in the media.
Animal Testing in Product Development
While products certainly need vetting for human safety, U.S. law does not require animal testing for most non-medical products. Often, established ingredients and alternate testing methods can be used instead. Animal testing remains unpopular too—the majority of US consumers oppose its use for cosmetics and personal care products.1 But some manufacturers still conduct crude, decades-old, and often unreliable animal tests on new chemicals used in household cleaners, food additives, industrial, personal care and other products.
Regardless of legal requirements, Calvert asks companies to follow high standards of care based on the "3Rs":
- Replacement of animal testing with methods that do not disturb or kill animals
- Reduction in the number of animals used as much as possible
- Refinement of the process to minimize animal distress and suffering
More specifically, Calvert evaluates a company’s animal testing policies and procedures, and where possible, those of its contractors and suppliers as well. We evaluate the types of animal tests conducted, the types of animals used, and any procedures used to reduce animal suffering. We also review a company’s efforts to develop testing alternatives, encouraging them to develop cost-effective, animal-free tests. We applaud companies that work with reputable animal welfare scientists to challenge existing legal requirements for animal testing and that share their test data with regulatory agencies, such as the Environmental Protection Agency (EPA), to help develop non-animal, predictive toxicity tests that satisfy EPA standards.
We’ve had a number of successes in working with pharmaceutical companies to develop alternatives to animal testing. Calvert and the Humane Society worked for three years to persuade a leading pharmaceutical company to develop an alternative to animal testing for its Botox® applications. The result was a groundbreaking, FDA-approved, non-animal test that was also cost-neutral and offers potentially greater precision and consistency as well.
We have also held discussions with companies to dissuade them from using chimpanzees for testing and pushed companies toward using alternative in-vitro, human cell-based testing methods, where possible.
Animal Husbandry in Food Production
In contrast to idyllic images of traditional family farms, most farms today are large factory-style operations churning out more food faster than ever before. And in the crush for bigger, faster results, animals raised for meat, eggs, and dairy products are often treated as units of production rather than sentient creatures.
In the U.S. food production and agriculture industries, some practices for feeding, confinement, and slaughter are often not legal, or are viewed as inhumane in other countries like the U.K. In addition, animal welfare and animal rights groups have demonstrated through undercover videos that some farms resort to extremely inhumane practices. That’s why Calvert seeks companies whose farm suppliers adhere to strict, company-wide policies that ensure animals have a good quality of life, and are transported and slaughtered humanely.
Responsible farms reflect a commitment to the “five freedoms” developed by the United Kingdom’s Farm Animal Welfare Council in 1967, which guides general farm animal welfare policies worldwide:
- Freedom from hunger and thirst
- Freedom from discomfort
- Freedom from pain, injury, and disease
- Freedom to express normal behavior
- Freedom from fear and distress
Calvert also presses companies to disclose their use of solid animal welfare policies and commitments to progressive programs—such as the phase-out of gestational crates for sows and battery cages for hens. We ask that companies verify these changes through third-party audits, and that companies engage with stakeholders as well.
Some of the industries are getting on board. United Egg Producers (UEP), the biggest egg farmers’ group in the country, is now working with the Humane Society to pass national legislation requiring larger cages on chicken farms. One farmer who adopted the new cages explained, “What was a surprise is that the hens are producing just as many eggs, if not more, and they’re living better. In fact, there’s less mortality.”2
Markers of Success
Another strong indicator of responsible animal welfare practices is transparency. We consider it a best practice for companies to disclose animal welfare policies and progress reports on their websites so investors and consumers can make more informed decisions, although few companies currently do this.
Since it’s important that animal welfare standards are implemented throughout the sourcing and production cycles, we review codes of conduct for suppliers and contractors where available—asking that these be published—as well as the company’s monitoring systems. Of course, we also consider how companies handle violations and any reported abuses.
Whenever possible, we rely on data from credible third parties to assess the risks and impacts. One resource is credentials, such as Animal Welfare Approved for farm animals and the Leaping Bunny certification for animal-free testing. We also consider the company’s participation in best-practice initiatives.
Widening the Circle of Success
Overall, we believe that animal welfare issues are vital to risk management and impact the bottom line for companies and investors. Many companies now seem to agree, as more and more restaurant chains, for example, commit to phasing out the use of gestation crates for sows or eliminating the use of battery cages for hens.
Companies that adopt and enforce humane treatment policies reduce their legal and regulatory risks and costs, protect their good name, and generate valuable goodwill among consumers and investors. Since 58% of consumers say they would spend an additional 10% or more for meat, poultry, eggs, or dairy products labeled as “humanely raised,”3 a company can gain a competitive advantage from implementing the industry-leading animal care practices.
1 “Opinion Research on Animal Experimentation: Areas of Support and Concern,” Scott Plous, Ph.D., Proceedings for Pain Management and Human Endpoints, November 2 – 3, 1998. www.altweb.jhsph.edu/pubs/proceedings/pain/proceedings.html
2 Steve Baragona, Voice of America, “Animal Welfare Drives Changes on U.S. Farms,” www.voanews.com/english/news/usa/Humane-Society-Pushes-to-Ban-Confining-Chicken-Pens---142500955.html
3 2007 survey by Public Opinion Strategies cited in Animal Welfare Institute’s, Consumer Perceptions of Farm Animal Welfare, www.awionline.org/sites/default/files/uploads/documents/fa-consumer_perceptionsoffarmwelfare_-112511.pdf
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