RCC – which represents more than 45,000 storefront retail businesses, including major grocery chains Loblaws, Walmart and Sobeys – had in 2013 pledged to phase out gestation crates for pregnant pigs by 2022, and in 2016 declared it would source only cage-free eggs by 2025. In the recent announcement, RCC stated it was “renewing [its] focus on animal welfare” and planned to “pursue and make commitments solely through NFACC [the National Farm Animal Care Council] thus removing previous commitments on sow housing and cage-free eggs.” Meaning, RCC grocery members will no longer be endeavouring to source only cage-free eggs and crate-free pork in the near future.

According to the Loblaws website, since the commitment was made the company has “worked with our suppliers to achieve these targets. Unfortunately, it has become clear that our farmer partners are unable to meet these timelines.”

Kaitlyn Mitchell, an animal rights lawyer with Canadian organization Animal Justice, says “RCC’s decision to backtrack on its commitments will make a bad situation even worse for farmed animals in Canada.”

“Farmed animals in Canada are subjected to cruel practices that would not be allowed in many other jurisdictions, including confining pregnant pigs in tiny gestation crates and keeping egg laying hens in crowded battery cages.” Battery cages are banned in the EU, New Zealand and several U.S. states. However, Humane Canada reports that approximately 90% of egg-laying hens are currently held in battery cages in Canada. Gestation crates, which keep pregnant sows in cages so small they’re unable to turn around, have also been banned in several U.S. states, as well as in the U.K. and Sweden. NFACC recently announced a delay in its commitment to phase out gestation crates, slated for 2024, now pushed to 2029.

Polling shows Canadians are increasingly concerned about the welfare of animals raised for meat, eggs and dairy, with many consumers willing to pay more for products if it means reducing animal suffering. A 2013 survey conducted by Humane Society International Canada found that 82% of respondents wanted to see clearer labels on meat, dairy and egg products that indicate how animals are treated. A 2020 public trust survey conducted by the Canadian Centre for Food Integrity found that 39% of respondents identified humane treatment of farmed animals as an issue of “extreme” concern.

This concern is also evident in the market, with consumer demand for cage-free eggs increasing in recent years and a growing number of food companies making public promises to fully phase out cage confinement of egg-laying hens in their supply chains. Tim Hortons and Burger King, for example, have both committed to going cage-free in North America by 2025, and in the EU, McDonald’s has already reportedly gone 100% cage-free. Though A&W Canada stated in 2016 it planned to source only cage-free eggs by 2018, there is no mention of housing at all on the current “Eggs” section of A&W’s website.

Pig gestation crates have also come under mounting public scrutiny, leading to the world’s largest pork producer, American company Smithfield Foods, declaring in 2007 that it would phase out the practice. Nearly 15 years later, however, the company has yet to fulfill that commitment.

In a statement to Corporate Knights, Loblaws says it is proud of the progress the company has made regarding animal welfare, “including converting all President’s Choice shell eggs to cage-free and converting approximately 30% of fresh PC Free From pork to group housing for gestating sows,” but is also disappointed that previously made cage-free goals will not be reached “by the original target dates.”

Empty animal-welfare promises are not a good look for the food industry, says Sylvain Charlebois, a professor in food distribution and policy at Dalhousie University. “I don’t think the [RCC announcement] will support the industry well,” he says. “It will position the industry as not delivering on a promise” and could lead to consumers being skeptical of such commitments in the future. He adds that one Ontario hog producer informed him that not all hog farmers were on board with the crate-free commitment in the first place. But, he adds, “more and more people believe that we need to raise and produce food responsibly. That’s a fact and we need to respect that.”

Pigs and chickens are “intelligent, curious, social creatures … often forced to spend their entire lives in caged housing where they cannot even turn around,” said World Animal Protection in a statement. Colin Saravanamuttoo, executive director of the organization, added that RCC’s past commitment to phase out these concerning farming practices “signalled meaningful progress to how animals are raised in Canada, and reflect consumer expectations for humane farm animal treatment.” He said retailers should be leading the way and “pushing for positive change within the industry.”

The RCC said that since 2014, “the proportion of sows housed in group housing has more than tripled,” and since 2017, “the proportion of hens housed in alternative methods of egg production has more than doubled.” However, confining hens and pigs in small cages is permitted under the NFACC codes that RCC members will be focusing on going forward. NFACC codes are not laws, but rather voluntary codes of practice created and overseen by a variety of mainly industry stakeholders, including the Canadian Pork Council, Canadian Hatching Egg Producers, the Canadian Poultry and Egg Processors Council, and Restaurants Canada.

World Animal Protection and Humane Canada also have seats at the NFACC table; both have publicly called for RCC to reinstate its cage-free commitments.

NFACC codes also permit practices such as chick debeaking, culling live male chicks (a by-product of the egg industry) via macerator, euthanizing piglets by slamming their skulls into the ground, and the use of electric prods.

“Our current voluntary system is broken and is failing farmed animals as well as the Canadian public,” says Mitchell, who believes Canada needs “strong, proactively enforced laws to promote transparency and accountability.” She says RCC’s decision to backpedal on its cage and crate-free commitments “shows why we cannot rely on industries and consumer organizations to voluntarily take steps to protect farmed animals.”

RCC did not respond to requests for comment.

Jessica Scott-Reid is a freelance writer and animal advocate. She writes for major media across Canada and the U.S. She is also a co-host of Canada’s animal law podcast, Paw & Order, produced by Animal Justice.

The post Empty animal welfare promises a bad look for the food industry appeared first on Corporate Knights.

It’s too early to predict how COVID-19 will reshape the future. The travel, entertainment, hospitality and personal-services sectors have already been devastated. A Canadian Federation of Independent Business survey found that 32% of owners who had shut down their businesses in March were unsure if they would ever reopen.

The media has also identified the first winners of this global reckoning. Setting aside for a moment the immeasurable personal tragedies caused by the virus, here are some preliminary results:

• Greater concern for the environment could be COVID’s legacy, wrote columnist Gwynne Dyer. “The clean air over China’s cities in the past month, thanks to an almost total shutdown of the big sources of pollution, has saved 20 times as many Chinese lives as COVID-19 has taken . . . People will remember this when the filthy air comes back and want something done about it.”

• Movements for social change may be empowered by governments’ rapid moves to restrict behaviour and unleash financial support. At TheConversation.com, U.K. economist Simon Mair said the virus “is expanding the economic imagination. As governments and citizens take steps that three months ago seemed impossible, our ideas about how the world works could change rapidly.”

• Retail and food workers are finally getting some respect, with companies such as Maple Leaf Foods, Loblaw, Sobeys, Metro and Walmart granting raises to frontline staff, introducing the concept of “hero pay.” Though Corporate Knights asks whether $2 extra an hour is enough for the grocery employees putting their lives on the line. Canadian banks are giving frontline employees an extra $50 a day and additional paid time off; TD Bank Group is giving bonuses of up to $1,000.

• Tycoons such as Bill Gates, Mark Zuckerberg, Jack Ma and Elon Musk, in most cases, polished their reputations by funding hospitals, medical supplies and research. But the Canadian billionaire community, wrote the Toronto Star’s David Olive, “has hardly been heard from on arguably the greatest crisis Canada has ever faced.”

• Manufacturers of everything from hockey skates to gin began retooling to deliver personal protective equipment to those who need it most. Heavyweights that have stepped up include H&M, Ford, GM, Dyson and Gucci’s parent company, Kering. Several companies have been saluted for establishing COVID relief funds, including Facebook, which set up a US$100 million relief fund for businesses in 30 countries, and meal-delivery companies, whose services helped thousands of restaurants stay open. Facebook also set up an additional US$100 million fund to support news media. Sony, Netflix and Amazon created their own US$100 million global relief funds — though striking Amazon employees say not enough is being done to keep them safe.

And then there are the hidden heroes: the workers delivering essential services across dozens of sectors, as well as anyone who is stepping up to support aging relatives during the crisis, check up on their neighbours, shop for the quarantined, donate money or haul canned goods to food banks. We’re banging on our pots and pans in thanks for you, too.

The post COVID response: Who rode first wave in new culture of conscience? appeared first on Corporate Knights.

If the pilot goes well, McDonald’s will join the growing ranks of restaurants and meat producers that are betting the farm on plant-based meats. And none too soon, by the looks of the latest research from Coller FAIRR, a $16-trillion investor network that raises awareness of the environmental, social and governance (ESG) risks and opportunities caused by intensive livestock production.

The Index assesses 60 publicly listed animal protein producers with a combined market cap of $324 billion. FAIRR’s key findings?

• Suppliers to McDonald’s, Tesco, Nestlé and Walmart ranked as worst offenders in areas such as greenhouse gases, antibiotics and deforestation, despite pledges.

• 77% of major meat, fish and dairy producers don’t measure all greenhouse gas (GHG) emissions and don’t have meaningful targets to reduce them, undermining the climate commitments of major brands.

The world’s meat, fish and dairy industries are under serious threat from climate change impacts, said Jeremy Coller, founder of FAIRR and chief investment officer at Coller Capital. He added, “The weight of evidence highlighted by the Coller FAIRR Index has left investors concerned that the sector is failing to act. The Paris Agreement is impossible to achieve without tackling factory farm emissions. Coal is a stranded asset, and cows are the new coal.”

On the bright side, the Index found “plant-based investments booming”: 25% of animal protein producers (15 of 60 firms) now have some investments in alternative proteins such as plant-based meats, including Canada’s Maple Leaf Foods and Tyson Foods in the U.S..

And the Canadian Prairies just so happen to be at the heart of that boom, as veg-friendly companies like Beyond Meat turn to yellow peas for protein. Canada is the world’s largest grower and exporter of yellow peas, but most pea protein processing has happened offshore. That’s starting to change. Manitoba recently scored its second pea-protein processing facility, a $65-million plant near Winnipeg. The province is already in the process of building a $400-million pea-protein plant – the world’s largest.

In 2017, Avatar director and environmental advocate James Cameron (owner of Verdient Foods) opened a multimillion dollar pulse processing plant southwest of Saskatoon (the province is world’s leading exporter of lentils and dried peas).

Whether McDonald’s restaurants in Prairies will carry Beyond Burgers remains to be seen.

The post If cattle are the new coal, are Canadian peas the new solar? appeared first on Corporate Knights.

Ethical investors are starting to turn away from the largest gun and ammo manufacturers and retailers: Sturm, Ruger & Co., Inc. (RGR); Olin Corporation (OLN), American Outdoor Brands Corporation (AOBC), and Vista Outdoor Inc. (VSTO). It’s challenging to get the full list of holdings for mutual funds (they only publish a snapshot twice per year), but ETFs are much more transparent so it’s easy to verify whether they’re firearm free.

 What is the Canada Pension Plan packing?

Unfortunately, there’s no way for Canadians to completely avoid them since the Canada Pension Plan Investment Board (CPPIB) owns $US27 million in shares in three of these companies, according its most recent public disclosures. When contacted by Corporate Knights, CPPIB emphasized these investments were caught up in its passive holdings and are not part of a specific investment strategy to own guns, although the CPPIB along with the Public Sector Pension Plan Investment Board are the only two of Canada’s ten largest pension funds that continue to own any of these gun stocks. Considering the gun stocks comprise less than 0.02% of the pension’s equity investments, they’re not exactly critical to CPP profits and could easily be dumped, if enough Canadians complain.

Pressure mounts on retailers

Weapons makers aren’t the only ones facing scrutiny. There are growing calls for big retailers like Walmart (WMT) to stop selling guns in their stores after 22 people died in the El Paso Walmart shooting in early August. Although Walmart stopped selling assault rifles in 2015 and raised the age limit to buy a gun from 18 to 21, the retailer still accounts for about 20% of ammunition sales in the U.S. with no plans to stop. Additionally, Walmart allows customers to openly carry firearms in its stores in states where it’s legal to do so. Walmart has said that it won’t be making any policy changes and continues to support Republican lawmakers who tend to be against stricter gun controls.

Sustainable Stock Showdown: Walmart vs Dick’s

Investors looking to ditch their shares in Walmart and actively encourage a chain that’s moving away from guns should take a closer look at Dick’s Sporting Goods (DKS). Before last year, Dick’s Sporting Goods had a large hunting department that sold all kinds of guns, including assault rifles. But that changed after CEO Edward Stack learned that the school shooter that killed 17 people in Parkland, Florida had purchased a shotgun at Dick’s. Even though the shotgun wasn’t used in the mass killing, Stack took decisive action and followed Walmart by removing assault rifles from stores and raising the minimum age from 18 to 21.

Going further, Dick’s removed the entire hunting department in 10 stores as a pilot project and hired three Washington lobbyists to push for stricter gun controls. Sales in these stores actually improved, leading the company to pull the hunting department out of an additional 125 locations (roughly 20% of stores) last week. If current trends persist, it’s easy to imagine that Dick’s will stop selling guns altogether.

From a purely financial perspective, Walmart is tough to beat. It is, by far, the largest bricks and mortar retailer in the world with a market cap over 100 times larger than Dick’s Sporting Goods. Walmart has outperformed Dick’s over the last five years, so investors should be cautious in dumping it altogether. But if your goal is to own companies who are more progressive on gun issues, then Dick’s Sporting Goods is a more attractive purchase.

Beta is a measure of a stock’s volatility in relation to the market. By definition, the market has a beta of 1.0, and individual stocks are ranked according to how much they deviate from the market. A stock that swings more than the market over time has a beta above 1.0. Lower beta means less risk.

Have a company in your portfolio that you want to replace with a more sustainable option? Write us an email or send us a tweet.

Tim Nash blogs as The Sustainable Economist and is the founder of Good Investing.

The post Is it time for Canadian pension, Walmart to unload gun makers? appeared first on Corporate Knights.

On January 1, 2019, Jair Bolsonaro began his tenure as the president of Brazil. In Bolsonaro’s first eight months in office, his administration has had a profound impact on Brazil’s forests and its Indigenous population, and critics now link Bolsonaro’s anti-environment policies and rhetoric with the wildfires affecting Brazil’s Amazon rainforest. But Bolsonaro is not the only one fuelling the fire as agro-businesses expand into forested regions, driven by global demand for Brazilian commodities. Consumer goods like beef and soy are largely to blame for the need to clear land. Thus, food producers sourcing ingredients in Brazil, financial industries and trading governments all have a role in addressing deforestation and human rights issues in Brazil.

Bolsonaro’s destructive policies

Less than a year in power, Bolsonaro’s impact on the environment and Indigenous peoples has been far-reaching. Deforestation levels in Brazil between July 1 and 22 of this year alone were 111% higher than they were in all of 2018. Over 120 pesticides were authorized in 2019 to date, some of which have been classified by the U.S. Environmental Protection Agency as “dangerous” or “extremely dangerous” for humans and the environment. All this occurred under the auspices of the Brazilian Ministry of Agriculture, whose powers have increased at the expense of the Ministry of Environment. The MoE and its anti-deforestation agency, Ibama, have suffered drastic budget cuts since Bolsonaro came into power, lessening their ability to identify and penalize instances of illegal deforestation. The new Minister of Environment, Ricardo Salles, dismissed environmental fines as ‘ideological’, leading civil servants in the Ministry to distance themselves from the minister in an open letter in April.

The Bolsonaro administration has also proposed transferring the protection of Indigenous rights to the Ministry of Agriculture again after congress voted against the initial proposal. Because of his strong ties to Brazil’s agribusiness, many are concerned the Minister of Agriculture will further subordinate Indigenous land rights to agricultural industry interests. During his campaign, Bolsonaro swore “to not demarcate another centimetre of Indigenous land” for protected status. Roughly 12% of Brazil’s lands are Indigenous lands, spread over 700 territories, of which about a third is waiting for official recognition.

Corporate deforestation pledges 

Bolsanaro’s reputation as “the most environmentally dangerous head of state in the world,” as The Economist recently put it, doesn’t just affect Brazil’s forests and Indigenous communities. International firms will want to keep a watchful eye on exactly how they’re doing business in Brazil. The Brazilian beef and soy industry has been singled out for fuelling many of the roughly 26,000 fires recorded in the Amazon this month, as land is typically cleared by farmers and ranchers to grow crops and raise cattle. Brazil is the largest beef exporter in the world with around 25% of the global beef market. In the last year, it has also surpassed the U,S. as the world’s largest exporter of soy (much of that soy is used as animal feed). As well, global demand for Brazil’s timber exports is contributing to the deforestation. Chances are high that firms taking advantage of less rigorous regulations may be doing so on disputed or demarcated Indigenous territories.

Despite Brazil’s regulatory rollbacks, countries and companies importing from Brazil have their own commitments on deforestation and human rights to uphold. Given the misalignment of these commitments with Brazil’s policies and practices, continuing to buy commodities from Brazil could prove to be contentious and pose reputational risks. In May 2019, several UK food retailers were named and shamed in the media for continuing to purchase products from Brazil’s JBS (the world’s largest meat processing company) despite the fact that investigations found the company was sourcing cattle from illegally deforested areas in the Amazon.

Over 50 of the world’s biggest companies (including Cargill, McDonald’s, Walmart, and Lloyds Banking Group) have pledged to halve deforestation in their supply chains by 2020 under the 2014 New York Declaration on Forests. This after a 2010 alliance on deforestation driven by the Consumer Goods Forum (CGF) saw 400 international companies pledge to zero net deforestation supply chains for palm oil, soy, beef and pulp and paper by 2020. American agri-giant Cargill, one of the largest exporters of Brazilian soy, has been heavily criticized for recently announcing that it would not meet its 2010 pledge. It’s also facing a backlash for backtracking on its commitment to a soy moratorium in Brazil’s Cerrado region – known as the world’s most biodiverse savanna.

Forest-related commitments in agricultural supply chains

Being implicated in the deforestation of Brazil’s traditional Indigenous lands could also put companies at odds with their public commitments on human rights, which are aligned with the interests of the UN’s Office of the High Commissioner for Human Rights (OHCHR). The 2007 UN Declaration on the Rights of Indigenous Peoples was seen as a landmark development for the OHCHR. Providing mechanisms for Indigenous peoples to provide free, prior, and informed consent for projects in the Brazilian Amazon may be a way forward for companies looking to ease current tensions. In April, an Ecuadorian court suspended government plans to auction off Indigenous Waorani territories for oil exploration stating that the government didn’t receive the tribe’s consent.

Role of the Financial Sector

Multinational corporations aren’t alone in their exposure to Brazil’s Amazon and Cerrado. Banks play a central role as an intermediary between the financial markets and the consumer goods sector, including food and agricultural companies. Boycotts of Brazilian beef and byproducts overseas could lead to longer loan payback terms and negatively impact banks’ credit portfolios. Similarly, if improvements to environmental standards take priority in EU-Mercosur trade negotiations, banks operating within Brazil will be under increased exposure to ESG integration against financials risks.

Sustainalytics looked at the financing policies of 13 of the biggest domestic and foreign banks in Brazil by assets (10 domestic, 3 foreign).  Only three of the Brazilian banks (Banco do Brasil, Caixa Econômica Federal, and Itaú Unibanco Holding S.A.) have general environmental and social guidelines that mention or address deforestation, Indigenous peoples or cattle ranching practices. Notably, none of the banks in our research sample has a standalone policy addressing Indigenous peoples and rights. The three foreign banks (Barclays PLC, BNP Paribas SA, and JPMorgan Chase & Co.) had policies addressing deforestation and soft commodities (i.e., cattle ranching, timber products, soy, etc.).

In the absence of stronger environmental protections from the Brazilian government, bank financing policies can be influential in ensuring borrowers respect international norms and standards. Poor or non-existent policies can exacerbate the deforestation practices fueling Brazil’s fires.  Domestic and foreign banks operating within Brazil can manage their exposure to reputational and other ESG risks by establishing or improving social and environmental lending policies for sensitive sectors like agriculture and soft commodities.

For instance, French international banking group BNP Paribas encourages its agricultural commodities producers to have their crops or plantations certified against Round Table on Responsible Soy, Better Cotton Initiative, Bonsucro or UTZ principles and standards by 2020. It encourages cattle farmers to have their production systems certified by 2020 against the Standards for Sustainable Cattle Production Systems by the Sustainable Agriculture Network.

Banks could also work with NGOs that monitor the environmental and social impacts of deforestation and set up ESG funds that exclude poor performers with respect to deforestation practices. They could also introduce or bolster requirements for consultation with Indigenous Peoples.

Altamira, Brazil. Photo by Victor Moriyama/Greenpeace.

Call for a regulatory crackdown by Europe

While the EU has enforced legislation on illegal timber, illegal fishing and conflict minerals, there is no regulation on agricultural goods linked to deforestation. As a major trading bloc and a significant consumer of agricultural products associated with global deforestation, the EU holds some responsibility and has an opportunity to drive change and set best practice standards.

The European Commission has received numerous requests from academics and stakeholder initiatives, such as the Amsterdam Declaration, calling for regulations requiring proof that goods placed in the EU market don’t contribute to either global deforestation or human rights abuses. A 2017 motion by the European Parliament called for regulation of the EU’s footprint on the world’s forests and highlighted the need for effective protection of Indigenous peoples rights and forest-dependent communities.

We all have a role in making sure Brazil’s rainforest is safeguarded well into the future. Governments can regulate beef, soy, timber and other imports linked to deforestation. The financial sector can leverage its role and influence companies to reduce deforestation and improve relationships with Indigenous peoples. It’s also incumbent on the consumer goods industry to uphold its voluntary commitments in the face of weakened regulations and protections. Much will depend on the willingness of the actors involved, be they cattle farmers, multinationals, consumers, banks or investors, to recognize the power they hold, and to act on it.

Jean-François Obregón is a Senior Associate, Insurance, Real Estate and Asset Management Research at Sustainalytics and based in Toronto.

Jessica Grant is an Associate, Consumer Goods Research at Sustainalytics and based in Amsterdam.

Thijs Huurdeman is an Associate, Consumer Goods Research at Sustainalytics and based in Amsterdam.

A version of this story first appeared on Sustainalytics.com.

The post Beef, banks and the global context behind Brazil’s deforestation appeared first on Corporate Knights.