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Our ethical criteria when investing in food production

Food is vital, but commercial food production can be harmful. We explain how we make ethical decisions about food.
Published 29 Apr 2019   |   6 min read

Enjoying a delicious meal with friends is one of the building blocks of human society. What could be more positive than good friends, good food and good conversation? However, the food we eat inevitably brings with it a range of ethical issues. As an ethical fund manager we must consider factors like health, environmental sustainability and animal cruelty before we can invest in companies that produce food.

Our Ethical Charter directs us to make investments that support the development of sustainable land use and food production. The charter also states we must avoid investments which unnecessarily harm humans, animals or the environment. Applying these principles, food has to meet three criteria to be investable under our charter. Specifically, food must:

  1. Form part of a healthy diet;
  2. Be produced in an environmentally sustainable way; and
  3. Avoid unnecessary harm to humans and animals.

Let’s take a look at all three.

Healthy diet criteria

Food must be nutritious before we can invest in its production. In assessing whether a food can form part of a balanced and healthy diet we take into account credible sources like the World Health Organisation’s (WHO) healthy diet guidelines. In practice, this means we are unlikely to invest in producers of food that is overconsumed (eg, sugar) and look more favourably on producers of fruits, vegetables, legumes, nuts and whole grains. On the processing side, we avoid foods that are high in trans-fats, sugar or salt (in line with the WHO guidelines).

Environmental sustainability

Food production has a high environmental impact including deforestation, greenhouse gas emissions and impacts to threatened species. Development of sustainable ways to feed the world’s growing population is therefore critical. Food producers will not be considered environmentally sustainable unless they are aligned with limiting global warming to below 2°C (this takes into account production, feed, transport and land clearing). Ecological landclearing, inappropriate use of pesticides, wasteful water use and mismanagement of effluent will also rule out food producers. At this stage we avoid companies which create genetically modified (GM) organisms for food, but with increasing regulation of GM food we may invest in agricultural companies which grow, use or sell food grown from GM seeds in the future. When we consider the environmental sustainability of food processors we will also ensure their use of animal-derived ingredients is below our threshold and any palm oil used is certified sustainable.

Harm to people and animals

We closely monitor the labour practices and human rights risks within all of our investments. Food production is susceptible to human rights breaches because it is labour intensive and workforces are often seasonal and isolated. We will avoid investment if there is systemic disregard for human rights in a food producer. Food processors must be taking steps to manage the human rights risks in their supply chain and they should have an ethical sourcing policy as an absolute minimum.

Current commercial meat production causes great suffering to animals. The majority of animal products consumed today are produced in intensive systems with high density stocking and accelerated fattening. Over-use of antibiotics within intensive factory farming also leads to dangerous antibiotic-resistant bacteria. When it comes to wild fisheries, overfishing has led to enormous damage to ocean ecosystems. We do not believe aquaculture is a sustainable alternative because it relies on wild fisheries (rather than plants) for feed. This was borne out in our decision to divest from salmon producer Tassal in March 2017.

We assess the harm to animals and the environment (including climate) caused by current large-scale commercial animal agriculture as unnecessary because balanced plant-based diets can sustain healthy human life. The Australian Dietary Guidelines state “appropriately planned vegetarian diets, including total vegetarian or vegan diets, are healthy and nutritionally adequate”. As a result, we exclude investment in current systems of commercial animal agriculture including meat, dairy, eggs and seafood.

How we support sustainable food

Our in-house ethics team puts a lot of thought into how we apply the Australian Ethical Charter to our investment strategies. At present we are invested in Costa Group, which grows, packs and markets fresh fruit and vegetables including blueberries, tomatoes, avocadoes and mushrooms in Australia and overseas. We also provide a multi-year grant to Food Frontier, which is a think tank and advocate for the alternative meat sector in Australia. If you want to make sure your super fund is supporting sustainable food production and restricting+ harm to people and animals you should consider joining Australian Ethical today.^

Australian Ethical acknowledges the Traditional Owners of the country on which we work, the Gadigal people of the Eora Nation, and recognise and celebrate their continuing connection to land, waters and culture. We pay our respects to Elders past and present and thank them for protecting Country since time immemorial.

See our Reconciliation Action Plan