Relevant Issues (10 of 26)
- GHG Emissions The category addresses direct (Scope 1) greenhouse gas (GHG) emissions that a company generates through its operations. This includes GHG emissions from stationary (e.g., factories, power plants) and mobile sources (e.g., trucks, delivery vehicles, planes), whether a result of combustion of fuel or non-combusted direct releases during activities such as natural resource extraction, power generation, land use, or biogenic processes. The category further includes management of regulatory risks, environmental compliance, and reputational risks and opportunities, as they related to direct GHG emissions. The seven GHGs covered under the Kyoto Protocol are included within the category—carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6), and nitrogen trifluoride (NF3).
- Air Quality
- Energy Management The category addresses environmental impacts associated with energy consumption. It addresses the company’s management of energy in manufacturing and/or for provision of products and services derived from utility providers (grid energy) not owned or controlled by the company. More specifically, it includes management of energy efficiency and intensity, energy mix, as well as grid reliance. Upstream (e.g., suppliers) and downstream (e.g., product use) energy use is not included in the scope.
- Water & Wastewater Management The category addresses a company’s water use, water consumption, wastewater generation, and other impacts of operations on water resources, which may be influenced by regional differences in the availability and quality of and competition for water resources. More specifically, it addresses management strategies including, but not limited to, water efficiency, intensity, and recycling. Lastly, the category also addresses management of wastewater treatment and discharge, including groundwater and aquifer pollution.
- Waste & Hazardous Materials Management
- Ecological Impacts The category addresses management of the company’s impacts on ecosystems and biodiversity through activities including, but not limited to, land use for exploration, natural resource extraction, and cultivation, as well as project development, construction, and siting. The impacts include, but are not limited to, biodiversity loss, habitat destruction, and deforestation at all stages – planning, land acquisition, permitting, development, operations, and site remediation. The category does not cover impacts of climate change on ecosystems and biodiversity.
- Human Rights & Community Relations
- Customer Privacy
- Data Security
- Access & Affordability
- Product Quality & Safety The category addresses issues involving unintended characteristics of products sold or services provided that may create health or safety risks to end-users. It addresses a company’s ability to offer manufactured products and/or services that meet customer expectations with respect to their health and safety characteristics. It includes, but is not limited to, issues involving liability, management of recalls and market withdrawals, product testing, and chemicals/content/ingredient management in products.
- Customer Welfare The category addresses customer welfare concerns over issues including, but not limited to, health and nutrition of foods and beverages, antibiotic use in animal production, and management of controlled substances. The category addresses the company’s ability to provide consumers with manufactured products and services that are aligned with societal expectations. It does not include issues directly related to quality and safety malfunctions of manufactured products and services, but instead addresses qualities inherent to the design and delivery of products and services where customer welfare may be in question. The scope of the category also captures companies’ ability to prevent counterfeit products.
- Selling Practices & Product Labeling
- Labor Practices
- Employee Health & Safety The category addresses a company’s ability to create and maintain a safe and healthy workplace environment that is free of injuries, fatalities, and illness (both chronic and acute). It is traditionally accomplished through implementing safety management plans, developing training requirements for employees and contractors, and conducting regular audits of their own practices as well as those of their subcontractors. The category further captures how companies ensure physical and mental health of workforce through technology, training, corporate culture, regulatory compliance, monitoring and testing, and personal protective equipment.
- Employee Engagement, Diversity & Inclusion
Business Model & Innovation
- Product Design & Lifecycle Management The category addresses incorporation of environmental, social, and governance (ESG) considerations in characteristics of products and services provided or sold by the company. It includes, but is not limited to, managing the lifecycle impacts of products and services, such as those related to packaging, distribution, use-phase resource intensity, and other environmental and social externalities that may occur during their use-phase or at the end of life. The category captures a company’s ability to address customer and societal demand for more sustainable products and services as well as to meet evolving environmental and social regulation. It does not address direct environmental or social impacts of the company’s operations nor does it address health and safety risks to consumers from product use, which are covered in other categories.
- Business Model Resilience
- Supply Chain Management The category addresses management of environmental, social, and governance (ESG) risks within a company’s supply chain. It addresses issues associated with environmental and social externalities created by suppliers through their operational activities. Such issues include, but are not limited to, environmental responsibility, human rights, labor practices, and ethics and corruption. Management may involve screening, selection, monitoring, and engagement with suppliers on their environmental and social impacts. The category does not address the impacts of external factors – such as climate change and other environmental and social factors – on suppliers’ operations and/or on the availability and pricing of key resources, which is covered in a separate category.
- Materials Sourcing & Efficiency The category addresses issues related to the resilience of materials supply chains to impacts of climate change and other external environmental and social factors. It captures the impacts of such external factors on operational activity of suppliers, which can further affect availability and pricing of key resources. It addresses a company’s ability to manage these risks through product design, manufacturing, and end-of-life management, such as by using of recycled and renewable materials, reducing the use of key materials (dematerialization), maximizing resource efficiency in manufacturing, and making R&D investments in substitute materials. Additionally, companies can manage these issues by screening, selection, monitoring, and engagement with suppliers to ensure their resilience to external risks. It does not address issues associated with environmental and social externalities created by operational activity of individual suppliers, which is covered in a separate category.
- Physical Impacts of Climate Change
Leadership & Governance
- Business Ethics
- Competitive Behavior
- Management of the Legal & Regulatory Environment
- Critical Incident Risk Management
- Systemic Risk Management
Disclosure Topics (industry specific) for:
Meat, Poultry & Dairy
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Greenhouse Gas Emissions
The Meat, Poultry & Dairy industry generates significant Scope 1 greenhouse gas (GHG) emissions from both livestock and energy-intensive industrial processes. GHG emissions contribute to climate change and create additional regulatory compliance costs and risks for meat, poultry, and dairy companies due to climate change mitigation policies. The majority of the industry’s emissions stem directly from the animals themselves through the release of methane during enteric fermentation, and from manure storage and processing. The direct emissions from raising and producing livestock represent a significant portion of total GHG emissions released among all sources, both in the U.S. and globally. These emissions sources are currently not widely regulated, which presents uncertainties as to the future of GHG regulations for the industry. Companies in this industry also use large quantities of fossil fuels to meet energy needs, generating additional direct GHG emissions and increasing exposure to regulatory risks. Future emission regulations could result in additional operating and/or compliance costs. By implementing new technologies to capture animal emissions and focusing on energy efficiency, companies can mitigate regulatory risk and volatile energy costs while also limiting their GHG emissions.
The Meat, Poultry & Dairy industry relies heavily on purchased electricity and fuel as critical inputs for value creation. Companies’ use of electricity and fossil fuels in their operations results in direct and indirect greenhouse gas (GHG) emissions, which contribute to environmental impacts, including climate change and pollution. Purchased electricity is a significant operating cost for meat, poultry, and dairy companies. Efficient energy usage is essential to maintain a competitive advantage in this industry, as purchased fuels and electricity account for a significant portion of total production costs. Decisions regarding the use of alternative fuels, renewable energy, and on-site generation of electricity versus purchasing from the grid can play an important role in influencing both the costs and the reliability of the energy supply.
Water & Wastewater Management
The Meat, Poultry & Dairy industry is water-intensive both in raising livestock and industrial processing. Additionally, companies in the industry typically generate wastewater, or effluent, from both animal production and processing activities. As water scarcity becomes an issue of growing importance due to population growth, increasing consumption per capita, poor water management, and climate change, companies in the industry may face higher operational costs or lost revenues due to water shortages and/or regulations resulting in production reduction. Companies can manage water-related risks and opportunities through capital investments and assessment of facility locations relative to water scarcity risks, improvements to operational efficiency, and partnerships with regulators and communities on issues related to water access and effluent.
Land Use & Ecological Impacts
Meat, Poultry & Dairy industry operations have diverse ecological impacts, primarily because of significant land-use needs to raise livestock and the contamination of the air, land, and groundwater by animal waste. While the impacts are different, both traditional and Concentrated Animal Feeding Operations (CAFO) lead to significant ecological impacts. The primary concern from CAFOs and animal-product processing facilities is the generation of large and concentrated amounts of waste and pollutants into the environment. Treating effluent and waste from facilities involves significant costs. Non-CAFO animal farming, which requires large tracts of pastureland, can lead to physical degradation of land resources. Land use and ecological impacts pose legal and regulatory risks in the form of fines, litigation, and difficulties obtaining permits for facility expansions or waste discharges.
Product Quality & Safety
Meat, poultry, and dairy products are either sold directly to consumers (e.g., milk or eggs) or are further processed into a wide variety of foods. Maintaining product quality and safety is crucial, as contamination by pathogens, chemicals, or spoilage presents serious human and animal health risks. Food safety practices and procedures in the industry have recently been subject to more intense scrutiny and oversight, and future outbreaks of diseases among livestock could lead to further governmental regulation. Product recalls can harm brand reputation, result in costly fines, reduce revenues, and increase regulatory scrutiny including trade restrictions. Obtaining food safety certifications or ensuring suppliers meet food safety guidelines may help companies in the industry safeguard product safety and communicate the quality of their products to buyers.
Antibiotic Use in Animal Production
The use of antibiotics in livestock production is of increasing concern due to the potential impacts on public health. Prevalent use of antibiotics in livestock production that are also administered to humans may promote the development of antibiotic-resistant strains of bacteria. While the use of antibiotics in animal feed or water supplies can improve the output of animal production and enhance animal welfare in industrial farm settings, companies in the industry must balance these benefits with the potential for negative public health risks. The use of antibiotics in animal production presents reputational and regulatory risks, both of which can affect long-term profitability through impacts on demand and market share for meat, poultry, and dairy producers. Depending on the animal species, companies in the industry have differing levels of control over and management approaches to this issue, from having direct control over the feed and medicine administered by contract suppliers to more broadly setting requirements for suppliers.
Employee Health & Safety
Workforce Health & Safety
The Meat, Poultry & Dairy industry has relatively high injury rates compared with other industries given the prevalence of industrial machinery, chemicals, and a fast-paced, loud working environment. Common acute and chronic hazards include musculoskeletal disorders, exposure to chemicals and pathogens, and traumatic injuries from machines and tools. Worker injuries or fatalities can lead to reputational risks, high turnover, low worker morale and productivity, injury liability risks, and associated health care and workers’ compensation costs. Additionally, regulators may levy fines against companies for noncompliance with worker health and safety standards or require employee training to address preventable accidents. By developing a strong safety culture and reducing employees’ exposure to potentially harmful situations, a company can proactively guard against accidents and improve workforce health and safety.
Product Design & Lifecycle Management
Animal Care & Welfare
There is increasing public and regulatory scrutiny of meat, poultry, and dairy companies and their suppliers’ treatment of animals. While in the U.S., farm animals are largely excluded from federal and state animal welfare statutes, including the Animal Welfare Act, pressure from consumers and advocacy groups has caused the industry to improve the state of animal welfare for its livestock. Consumer demand has driven shifts in industry practices, such as eliminating the use of gestation crates in hog production and eliminating caged enclosures for poultry. Companies that are prepared to anticipate or adapt to these trends may be able to increase their market share by capturing this changing demand and being first to market with products that comply with new regulations.
Supply Chain Management
Environmental & Social Impacts of Animal Supply Chain
Companies in the Meat, Poultry & Dairy industry rely on a variety of contract farmers and suppliers. Environmental and social impacts within the industry’s supply chain include those related to deforestation, land use and waste management, water withdrawals, animal welfare, antibiotic usage, and food safety. Management of environmental and social risks within a company’s animal supply chain is critical to maintain the cost of capital, secure a steady source of animals at desired price points, and to prevent reputational damage, which may decrease revenue and market share.
Materials Sourcing & Efficiency
Animal & Feed Sourcing
Meat, poultry, and dairy companies source animal and animal feed from a range of suppliers depending on animal species. The industry’s ability to reliably source animals and animal feed at desired price points may be affected by climate change, water scarcity, land management, and other resource scarcity considerations. Companies that select and work with suppliers who are less resource-intensive and who actively manage adaptation to climate change and other resource scarcity risks, will be better protected from potential price volatility and supply disruptions. Additionally, such companies may improve their brand reputation and develop new market opportunities. Failure to effectively manage sourcing risks can lead to higher costs of capital, reduced margins, and constrained revenue growth.
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