Pet Food Industry ESG Thematic Report, 2023

Environmental, Social and Governance (ESG) in the Pet Food Industry

Integrating ESG into decision making and business strategies contributes to an effective due diligence and a better investment decision. The companies which fall under global pet food industry doesn’t specifically disclose ESG data, however few concerns growing among various stakeholders can be related to ESG.

This segment has been gaining attention, due to couple of factors like, increased pet adoption, urbanization, and better food nutrition.  Ensuring product qualitywith desired food nutrition depending on health condition of the pet has been prominent reason for growth of this sector which impacts social aspect of ESG as it is concerned with the United Nations Sustainable Development Goal (UN SDG) of Good Health and Wellbeing (UN SDG 3) and Life on Land (UN SDG 15). As the market touches areas such asanimal testing, products,and welfare, it has been critical area under which this segment has been questioned. Most of the companies do ensure Sustainable operations across the value chain to create a healthier planet. Companies also focuses of community involvement and development including disaster relief, child development and access to healthcare as well as education.  The companies are also giving emphasize in reducing wastes via packages introducing more sustainable procedures throughout value chain.

Impact of pandemic has been very significant; now-a-days pet food is available even in online grocery markets rather than normal pet food outlets. Commercialization is in fully fledge with prevailing condition along with a variety of options like Natural products, wet products for better digestion etc.

ESG Trends

Pet foods segment has both Environmental as well as social impacts, latter one is having more stakeholder or investor interest. Few of prevailing social impact is as discussed above, starting with product quality (SDG 12- Responsible Consumption and Production), alongside with a responsible market labelling as mentioned by various guidelines like European pet food organization (FEDIAF), American Pet Products Association (APPA) and National Research Council’s Nutrient Requirements of Dogs and Cats has been critically assessed by huge section of animal/pet lovers.  These standards basically cover nutrition depending on physical activities and metabolism of pets, any specific undergoing diseases etc. Since animal welfare (SDG 3- Good Health and wellbeing) is also an important factor as research proves accompanying a pet reduces psychological issues like loneliness, anxiety, and depression, which made many consumers to rethink on accompanying a pet which in turn increased Pet food intake. Animal testing (SDG 15- Life on Land) is also another crucial area of interest, there are animal welfare policies outlined by various companies which ensures ethical treatment of animals throughout value chain. In terms of philanthropy, employee volunteerism and community engagement (SDG 11- Sustainable cities and communities) have been mentioned as one of key CSR activities conducted by the company. One of the companies have mentioned reducing environmental impact from packages through improved sourcing, recyclability, infrastructure, and consumer education (SDG 12- Responsible production and consumption).

ESG Challenges

Main challenges faced by this segment lack of availability and adequate marketing strategies (SDG-12 Responsible production and consumption) that could reach every nook and corner of the world. Underlying Supply Chain has been not very sound in comparison with other food sector, and it can improve alongside e-commerce and online grocery market. Pet food cannot be affordable (SDG 10-reduced inequalities) to a lot of pet lovers in various section of society, which can be resolved with necessary government aid and subsidies.  There has been a lack of transparency in animal testing and guidelines in most of the companies which should be addressed. Even though there are amble enough of guidelines like FEDIAF, APPA, FSSAI etc. some of the companies doesn’t give clarity on guidelines or frameworks followed in the organization. 

Growth of the Pet Food Market

To put in a nutshell, there is a lot of scope for improvement in value chain operations, including sustainable packaging alongside growing e-commerce market. Introduction of natural, organic pet foods has also come to attention to many of the consumers.  Even though various guidelines are in place, company should be more transparent in disclosing these standards. In addition to this, pet food segment must focus on various economic sections of society not just a specific target audience who can afford. a global pet food market has been valued at 94.76 USD billion in 2021 and is expected to expand at CAGR of 4.4% to 2030.

Key Companies in this theme

    • The J.M. Smucker Company

    • The Hartz Mountain Corporation

    • Mars Incorporated

    • Hill’s Pet Nutrition, Inc

    • Nestlé Purina

    • Lupus Alimentos

    • Total Alimentos SA

    • Blue Buffalo Pet Products, Inc.

    • WellPet LLC

    • Diamond Pet Foods

Scope of the Pet Food Industry ESG Thematic Report

    • Macro-economic and ESG-variable analysis of the industry, including regulatory, policy, and innovation landscape

    • Key insights on infrastructure developments and ESG issues affecting the theme

    • Identify key initiatives and challenges within the industry

    • Identify ESG leaders within the industry

    • Understand key initiatives and the impact of companies within the sector to fuel an informed decision-making process.

    • Analysis of industry activities based on multi-media sources, including significant controversies and market sentiment

Key Benefits of the Pet Food Industry ESG Thematic Report

    • Developing a comprehensive understanding of macro-economic, Policies & Regulations and innovations affecting the industry, globally

    • Key insights into environmental developments and ESG issues affecting the theme

    • Identifying ESG risks and opportunities to business among leading players in the pet food sector

    • Obtaining a clear and relevant understanding of company actions, progress, and impact and find opportunities for investment into the sector