COVID-19 shedding new light on meatpacking industry problemsJuly 1, 2020By Reed MontagueESG Research Analyst, Calvert Research and Management Washington - The COVID-19 pandemic is exposing inherent weaknesses and vulnerabilities across industries, and the meatpacking industry has been particularly hard hit. Worker safety has been a major challenge for decades, dating back to Sinclair Lewis' "The Jungle," but the pandemic has greatly exacerbated present-day risks for workers. Multiple outbreaks of COVID-19 have occurred among meat and poultry processing facility workers, and particular working conditions add to the risk of the virus spreading. Workers often are unable to maintain the recommended six feet of distance on the processing floor, have prolonged close contact with co-workers during what can be 10-12 hour shifts and risk exposure to the virus through respiratory droplets in the air.1 Despite the risks, President Trump signed an executive order April 28 that compels meatpacking plants to stay open under the Defense Production Act, which designates meatpacking workers as essential. Since then, COVID-19 cases have continued to rise. Before the executive order went into effect, almost three dozen meatpacking plants closed temporarily due to COVID-19 exposure. In the following five weeks, another 13 closed at least once. All now appear to have reopened. Yet, coronavirus cases continue to rise, having more than doubled over the last five weeks across all meatpacking plants. By early June, there were 20,400 infections in 216 plants in 33 states, with 74 worker deaths.2 Keeping plants running forces companies to face considerable risks. In addition to the dangers to workers' physical health and their trust in their employer, mismanagement could lead to reputational, financial, legal and regulatory harm. As Calvert believes all workers deserve a safe and healthy workspace, we are engaging with companies in this industry to manage these risks.What we're looking atCompanies now have an opportunity to build confidence among workers, investors and other stakeholders in how they handle worker safety, both in the immediate crisis and over the long term. They can do this by describing safety protocols and their plans for governance, oversight and incentives to ensure that worker safety is a short- and long-term priority for the company. The decisions a company makes now about worker health, safety and support may have long-term ramifications.As investors, we recognize and appreciate the steps taken by some companies to date to address issues related to COVID-19 and we are engaging certain companies Calvert holds in our portfolios to learn more about their progress and plans, including:Strategies to protect worker health and safety at all plants, including a discussion of official standards and guidance that serve as the basis of that policy and how companies are addressing protections for contractors and subcontractors.Standards for new safety procedures and details about how the implementation of such efforts could affect production and food safety, including balancing worker safety with the production line and meat processing.Policies to ensure management accountability for safety, including the proactive steps taken each time a worker tests positive for the virus and under what circumstances the company will close a plant.Mechanisms in place for workers to voice concerns to management such as when decisions are being made about the policies, structures and incentives that impact them directly.Changes a company has considered or implemented regarding the workspace design and meatpacking processes to improve safety, including the strategies executed to keep workers safe when social distancing is not possible.Options available to workers who become sick or may have exposure to COVID-19, as well as for those that need to care for themselves, their family members or dependents. This may include increasing child care or elder care so that workers have safe options for family members while working.Information related to bonuses or extra pay during the pandemic.Full range of actions the company is taking to ensure all workers, even those who are less fluent in English, understand all policies and what they can do to remain safe during COVID-19. When a company fails to take or disclose such steps, Calvert will seek to engage it on the above topics and encourage improvements. By asking penetrating questions and urging companies to consider thoughtfully how they can maintain productivity while supporting worker health and safety, everybody can win. Companies willing to take positive steps now may leave a lasting legacy on safety in the months and years to come.Bottom line: We expect companies in the meatpacking industry to implement appropriate steps to protect their workers and build a resilient culture that provides consumers the products they want, keeps workers safe and develops a successful corporate strategy to see it through this crisis. Robust ESG policies, particularly around worker health and safety, can help signal to the market that a company is effectively managing these concerns.