Moneyworks uses the Mindful Money research database to calculate our clients’ exposures to nasties, so that our clients can understand what $ and % allocation they have in their portfolio, but also what kind of companies are associated with that ‘nasty’.
Mindful Money are continually updating their categories and definitions and from July 2023, the category name has changed from Animal Welfare to Animal Cruelty.
The core research input for Mindful Money’s analysis is the Sustainalytics research. Sustainalytics have up to 60,000 news sources that they continually monitor, and have algorithms that are searching for factors in these news sources that will identify an issue. In addition to Sustainalytics Mindful Money uses a wide range of other sources, with three in particular that influence the final list of ‘nasties’ for Animal Cruelty:
1. The Norges Bank (the Norwegian Superannuation Fund, which is one of the leading ethical investors in the world). https://www.nbim.no/en/responsible-investment/ethical-exclusions/exclusion-of-companies/
2. PETA [People for the Ethical Treatment of Animals] https://www.peta.org/
3. Cruelty Free Investing. http://crueltyfreeinvesting.org/
The specific definition for identification of a company as a ‘nasty’ under the Animal Cruelty category is:
Any involvement in:
1. Animal testing for non-pharmaceutical products [Note that this excludes animal testing for pharmaceutical and biotechnology purposes]. Animal Testing for food and agricultural testing is included on a case by case basis [eg includes pesticide toxicity testing but excludes pet food palatability testing and human food product safety testing.]
2. Harmful factory farming – production of intensive poultry
3. Livestock exports
4. Whale Meat (production and/or retail)
5. Animal welfare controversies: Past or ongoing cases of cruel treatment of animals (based on information provided by credible institutes or a high ranking on Sustainalytics.)
6. Animal entertainment (eg rodeo’s, marine parks)
7. Fur and specialty leather production (no exposure) and retailer (>10% of revenue)
8. Use of animals for entertainment
The way that the Sustainalytics research works, is that if a company has stated that they don’t engage in animal testing, if they operate in an industry that is known to carry out animal testing, the company will be tagged as a nasty.
Therefore, it is important that at Moneyworks we understand what companies our clients are exposed to in the Animal Cruelty category.
We discuss with each fund manager why they hold that company - even though it has been tagged and we glean good insights from the fund managers knowledge. We research the company ourselves and look at their code of conduct and their approach to animal cruelty/welfare and testing.
Because of the nature of the cosmetics and food production industries (and their profitability), all of our clients have exposure to animal testing in their portfolio and/or KiwiSaver.
This is generally through exposure to the large consumer goods companies, which distribute products in China. China currently has legislation that requires animal testing on non-pharmaceutical products as a requirement of distribution in China, although the requirements are slowly reducing.
While our clients have exposure within their portfolio’s we have identified that a number of companies are pro-actively working to reduce or eliminate animal testing on non-pharmaceutical products.
Some examples are
1. Symrise – a ‘Taste, Nutrition, Health, Food & Beverage and Scent and Care’ company worked with PETA in 2021 to challenge legislation requiring animal testing on cosmetic ingredients (for sunscreen) under the European Union REACH Regulations.
While Symrise and PETA did not win their case and appeal, it is good to see the companies that we recommend fighting against the practice. These cases were the first ones since the EU banned cosmetic animal testing in 2013. https://www.cosmeticsdesign-europe.com/Article/2020/12/04/European-Commission-stands-by-ECHA-Board-of-Appeal-Symrise-rulings-for-animal-data-under-REACH
2. Unilever (who have recently become a B-Corp). Unilever’s policy states ‘We don’t agree that animal testing is necessary to assure the safety of our products or the ingredients in them and support calls for a worldwide animal testing ban on cosmetics by 2023, working with government authorities, NGOs and our suppliers across the world to increase the use of non-animal approaches for regulatory compliance purposes.’
3. L’Oreal – the cosmetics company, which has been undertaking research into alternatives to animal testing for over 40 years. L’Oreal now produces one of two ‘grown’ human skins called Epi-Skin that it sells internationally for companies to use instead of testing on animals.
The companies that we have investigated have codes of conducts, often outsource the animal testing to accredited third parties and regularly apply the Three R’s to their animal testing regime.
The team at Moneyworks is continually reviewing the companies that are flagged as ‘nasties’ so that we can understand where our clients are investing their money, and what the implications are.
The unique and proprietary ethical investment analysis process that Moneyworks provides for all of our clients means that we can tell you to the dollar what exposure you had to each nasty and each associated company at a particular point in time, to help your understanding.
