ESG and Sustainability are two buzzwords doing the rounds in all segments across industry domains. While sustainability needs no introduction or explanation, ESG needs a bit of clarification.
ESG, or environmental, social, and governance, is a set of criteria that investors and other stakeholders use to assess the sustainability and ethical performance of companies. Sustainability is the key for any industry to grow and survive, and ESG provides an excellent pathway to build systems and processes to get there.
In the subsequent sections, we will try to examine the issues and opportunities from an ESG perspective. However as we progress you will find the the Social and Governance needs are more or less the same, the only difference being in the Environmental clause.
1. INTRODUCTION TO ESG
ESG, or environmental, social, and governance, is a set of criteria that investors and other stakeholders use to assess the sustainability and ethical performance of companies. ESG factors are becoming increasingly important in the business world, as investors and consumers seek to support companies that are committed to responsible practices.
- Environmental factors that are relevant to ESG include:
- Climate change and greenhouse gas emissions
- Pollution and waste management
- Resource conservation and biodiversity protection
- Social factors that are relevant to ESG include:
- Labor practices and working conditions
- Human rights and community relations
- Diversity and inclusion
- Product safety and consumer protection
- Governance factors that are relevant to ESG include:
- Board composition and independence
- Risk management and internal controls
- Transparency and accountability
- Anti-corruption and bribery prevention
Companies with strong ESG performance are often more attractive to investors, as they are seen as being less risky and more likely to generate long-term value. ESG performance can also have a positive impact on a company’s brand reputation, employee engagement, and customer loyalty.
There are a number of ways that companies can improve their ESG performance. For example, companies can reduce their environmental impact by investing in renewable energy and energy efficiency measures. They can improve their social performance by ensuring that their workers are treated fairly and that they have a positive impact on the communities in which they operate. And they can strengthen their governance practices by adopting independent board leadership and implementing robust risk management and internal controls.
A number of organizations are working to promote ESG in the business world. For example, the Global Reporting Initiative (GRI) has developed a set of sustainability reporting standards that are widely used by companies around the world. And the Sustainable Stock Exchanges (SSE) initiative is a global network of stock exchanges that are working to promote sustainable investment.
ESG is a complex and evolving topic, but it is one that is becoming increasingly important for businesses of all sizes. By adopting ESG principles, companies can reduce their environmental and social impact, improve their governance practices, and become more attractive to investors and consumers.
IN THE CONTEXT OF ANIMAL HUSBANDRY AND REARING ACTIVITIES
ESG (Environmental, Social, and Governance) factors are increasingly significant in the animal husbandry industry, including poultry, aquaculture, and dairy sectors. Here’s why ESG is important in these industries:
1. Environmental (E):
Sustainable Practices: Consumers are becoming more conscious of how their food is produced. Sustainable farming practices, reduced carbon emissions, and responsible resource management are essential to meet environmental concerns.
Biodiversity: Protecting biodiversity is crucial, especially in aquaculture, where maintaining the health of aquatic ecosystems is vital. The impact of poultry and dairy farming on local ecosystems is also a concern.
Eco friendly and biodegradable components in formulation: This is by far a most important consideration in the E pillar. Often we use synthetic components which are specific but do not get degraded. It is important to use phytogenic components delivering the same, which not only reduce the carbon footprint being natural but also gets degraded by themselves. We need to recall that before industrial productions, all livestocks used to feed in naturally available substances – while that is not possible anymore we must try to strike a balance between synthetic and natural components in the formulation.
2. Social (S):
Animal Welfare: The treatment of animals is under scrutiny. Implementing humane and ethical practices, such as providing adequate space and access to natural behaviors, is essential for consumer and investor trust.
Community Impact: Animal husbandry operations can have social impacts on nearby communities. Ensuring fair labor practices, community engagement, and minimizing negative impacts on local populations are essential.
Food Safety and Quality: Consumers demand safe and high-quality food products. Adherence to health and safety regulations is paramount in all three sectors.
3. Governance (G):
Transparency: Investors and consumers seek transparency in the animal husbandry industry. Companies that disclose information about their governance practices, including financial management and decision-making, are more attractive to stakeholders.
Regulatory Compliance: Compliance with industry regulations and standards is crucial to ensure the sustainability and reputation of businesses in these sectors.
Risk Management: Effective governance helps identify and mitigate risks, such as disease outbreaks or supply chain disruptions, which can have significant impacts on these industries.
In summary, ESG factors have a growing significance in animal husbandry, as they impact the industry’s sustainability, reputation, and long-term viability. Companies that prioritize ESG considerations can better navigate the evolving landscape and meet the expectations of consumers and investors.
POULTRY INDUSTRY:
ESG factors are becoming increasingly relevant to the poultry industry, as investors and consumers seek to support companies that are committed to responsible practices.
Environmental factors that are relevant to the poultry industry include:
- Water quality and pollution management
- Air quality and emissions reduction
- Energy efficiency and greenhouse gas emissions reduction
- Land use and biodiversity conservation
- Waste management
- Social factors that are relevant to the poultry industry include:
- Labor practices and working conditions
- Human rights and community relations
- Animal welfare
- Food safety and traceability
- Governance factors that are relevant to the poultry industry include:
- Board composition and independence
- Risk management and internal controls
- Transparency and accountability
- Anti-corruption and bribery prevention
Poultry companies that are able to demonstrate strong ESG performance are likely to be more attractive to investors and consumers. They may also benefit from lower operating costs, increased employee engagement, and improved brand reputation.
Here are some examples of how poultry companies can improve their ESG performance:
Reduce their environmental impact by using less water, energy, and feed, and by managing their waste more effectively.
Improve their social performance by ensuring that their workers are treated fairly and that they have a positive impact on the communities in which they operate.
Strengthen their governance practices by adopting independent board leadership, implementing robust risk management and internal controls, and disclosing information about their ESG performance in a transparent and accountable manner.
A number of organizations are working to promote ESG in the poultry industry. For example, the Sustainable Poultry Partnership (SPP) is a collaborative effort between poultry companies, environmental groups, and other stakeholders to improve the sustainability of the poultry industry. The SPP has developed a set of standards for sustainable poultry production that cover a wide range of environmental and social issues.
Investors are increasingly looking to invest in poultry companies with strong ESG performance. For example, the FAIRR Initiative, a collaborative investor network that focuses on ESG issues in the food and agriculture sector, has published a Poultry Index that ranks poultry companies on their ESG performance.
DAIRY INDUSTRY
Like the other sectors, ESG factors are becoming increasingly important in the dairy industry due to the same reasons we discussed for poultry industry.
Environmental factors that are relevant to the dairy industry include:
- Water quality and pollution management
- Land use and biodiversity conservation
- Greenhouse gas emissions reduction
- Energy efficiency
- Waste management
- Social factors that are relevant to the dairy industry include:
- Labor practices and working conditions
- Human rights and community relations
- Animal welfare
- Food safety and traceability
- Governance factors that are relevant to the dairy industry include:
- Board composition and independence
- Risk management and internal controls
- Transparency and accountability
- Anti-corruption and bribery prevention
Dairy companies that are able to demonstrate strong ESG performance are likely to be more attractive to investors and consumers. They may also benefit from lower operating costs, increased employee engagement, and improved brand reputation.
Here are some examples of how dairy companies can improve their ESG performance:
Reduce their environmental impact by using less water and energy, reducing their reliance on fossil fuels, and managing their waste more effectively.
Improve their social performance by ensuring that their workers are treated fairly and that they have a positive impact on the communities in which they operate.
Strengthen their governance practices by adopting independent board leadership, implementing robust risk management and internal controls, and disclosing information about their ESG performance in a transparent and accountable manner.
A number of organizations are working to promote ESG in the dairy industry. For example, the Global Dairy Platform (GDP) has developed a set of guidelines for sustainable dairy production that cover a wide range of environmental and social issues. The GDP also offers a certification program for dairy farms that meet these guidelines.
Investors are increasingly looking to invest in dairy companies with strong ESG performance. The FAIRR Initiative, a collaborative investor network that focuses on ESG issues in the food and agriculture sector,as we mentioned in poultry, has published a Dairy Index that ranks dairy companies on their ESG performance.
AQUACULTURE:
Aquaculture industry is no exception to ESG implementation as the values which drive poultry and dairy drive this industry as well.
Environmental factors that are relevant to aquaculture include:
- Water quality and pollution management
- Biodiversity conservation
- Energy efficiency and greenhouse gas emissions reduction
- Waste management
- Feed sourcing and sustainability
- Social factors that are relevant to aquaculture include:
- Labor practices and working conditions
- Human rights and community relations
- Animal welfare
- Food safety and traceability
- Governance factors that are relevant to aquaculture include:
- Board composition and independence
- Risk management and internal controls
- Transparency and accountability
- Anti-corruption and bribery prevention
Aquaculture companies that are able to demonstrate strong ESG performance are likely to be more attractive to investors and consumers. They may also benefit from lower operating costs, increased employee engagement, and improved brand reputation.
Here are some examples of how aquaculture companies can improve their ESG performance:
Reduce their environmental impact by using less water, energy, and feed, and by managing their waste more effectively.
Improve their social performance by ensuring that their workers are treated fairly and that they have a positive impact on the communities in which they operate.
Strengthen their governance practices by adopting independent board leadership, implementing robust risk management and internal controls, and disclosing information about their ESG performance in a transparent and accountable manner.
A number of organizations are working to promote ESG in the aquaculture sector. For example, the Global Seafood Alliance (GSA) has developed a certification program for aquaculture farms that meet certain standards for environmental and social responsibility. The Aquaculture Stewardship Council (ASC) also offers a certification program for aquaculture products that are responsibly farmed.
Investors are increasingly looking to invest in aquaculture companies with strong ESG performance. The FAIRR Initiative, as mentioned earlier , has an index for Aquaculture Index that ranks aquaculture companies on their ESG performance.
FEED MILLS:
Conservation of energy, ecology, and optimization of natural resources in feed mills are essential considerations for sustainable and responsible agricultural practices. No animal can survive without feeds and its market is only growing with each passing day.
Here are some key points to address these concerns:
1. Energy Efficiency: Implement energy-efficient equipment and processes in feed mills. This includes using energy-efficient motors, improving insulation, and optimizing heating and cooling systems to reduce energy consumption.
2. Renewable Energy: Consider integrating renewable energy sources like solar panels or wind turbines to generate clean energy for the feed mill. This can help reduce reliance on fossil fuels.
3. Waste Heat Recovery: Implement systems to capture and utilize waste heat generated during production processes to heat water or spaces within the facility, increasing overall energy efficiency.
4. Water Management: Implement efficient water management practices to minimize water waste. Reuse and recycle water wherever possible, and invest in water-saving technologies.
5. Raw Material Sourcing: Source raw materials sustainably, considering their environmental impact. Support responsible farming practices that minimize habitat destruction and reduce the use of pesticides and fertilizers.
6. Reducing Food Waste: Minimize food waste by carefully monitoring production processes and storage conditions. Donate excess or unsellable feed to reduce waste.
7. Environmental Impact Assessment: Conduct regular environmental impact assessments to identify areas for improvement and compliance with environmental regulations.
8. Biodiversity Conservation: Implement measures to protect local biodiversity, such as maintaining natural habitats on the feed mill’s premises and avoiding pollution of nearby ecosystems.
9. Optimized Transportation: Optimize transportation logistics to reduce fuel consumption and emissions. Consider using electric or hybrid vehicles for transportation when possible.
10. Employee Training: Educate employees about the importance of energy conservation and responsible resource management to foster a culture of sustainability within the feed mill.
11. Certifications and Standards: Seek certifications and adhere to industry standards related to sustainability and eco-friendly practices, such as ISO 14001 for environmental management.
12. Data Monitoring: Implement data monitoring systems to track energy and resource usage, allowing for continuous improvement and cost reduction.
By integrating these principles into the operations of feed mills, it is possible to reduce the environmental footprint, conserve natural resources, and contribute to more sustainable and ecologically responsible agricultural practices.
The poultry, dairy and aquaculture industries have a significant role to play in meeting the world’s growing demand for food in a sustainable way. By adopting ESG principles, players in these sectors can reduce their environmental and social impact, improve their governance practices, and become more attractive to investors and consumers. Add to that ESG in feed mills which is an essential component of all three we know exactly the areas of concern, challenges and how to address them. Another key area common in all aspects is training and awareness which will help the stakeholders – investors, producers, customers, vendors and employees as well as consumers to be aware of their role in making sure that the right way is followed.