Waste such as animal by-products may contain damaging pollutants and requires careful disposal to avoid harm to waterways and the wider environment. In New Zealand, for example, the rapid growth of the dairy industry has damaged many of the countries lakes. Poor waste management leaves animal protein producers are exposed to potential financial, regulatory and/or social backlashes.
Recent lawsuits and fines illustrate this point. In 2017, WH Group-subsidiary Smithfield in North Carolina entered in legal proceeding about the impact of waste from its hog farms on the local community’s quality of life. Similarly, US poultry giant Tyson Foods received a financial penalty for dumping wastewater from its facilities in Missouri.
Other findings include:
- Around a quarter of the terrestrial companies specifically referenced their management of animal waste – including several China-based companies.
- 58% of companies said that they did not incur any fines for non-compliance on waste issues. (Although investors should be wary that industry regulation and monitoring differ significantly across markets).
- Only two companies (Sanderson Farms and Hormel) of the 26 classified as ‘low risk’ were based in the US. In general, US-based companies did not address their animal waste product adequately.
*Companies with ‘multiple’ proteins derive significant revenues from more than one protein source.