Build Bank Better - for Animals response to the Consultation on the European Investment Bank Group's Environmental and Social Sustainability Framework

1. European Investment Bank Group as a standard setter

We welcome the commitment of the European Investment Bank Group to develop their Environmental and Social Standards fit for the future and equip their staff and promoters in criteria to assess environmental, climate and social impacts and risks throughout EIB-financed projects to make economies more sustainable. Yet, we strongly believe that including animal welfare within the scope of the future EIB Group’s Environmental and Social Sustainability Framework is necessary to achieve this goal.

As the biggest multilateral financial institution, the EIB is a standard setter and a guide for a number of financial institutions. As the EU’s bank, it is important for its activity and impact to reflect the current and future EU policies, as well as the global drive towards funding sustainable and forward looking projects and investments. This is of particular importance taking into account the European and worldwide scope of the EIB financial activities in question.

The new EIB’s Group Environmental and Social Policy and Standards must comply not only with the Group's vision, but also with the up-to-date ’s objectives and policies, which should be equally reflected in the activities where the EIB and the European Commission are a majority shareholder.

At the moment, the draft Policy and Standards are not ambitious enough and do not sufficiently cover the links between the sectors, taking more a mitigating and segmented than proactive and comprehensive approach. Furthermore, we strongly believe that the link between sustainability and animal welfare should be better recognised in this document, in particular in Chapters A, D-G, I, L, N (Standards 1-4, 6, 9 and 11).

The reasons to include animal welfare as a dimension of the EIB’s new Environmental and Social Policy and Standards are two-fold: ● First, there is an increasing recognition of the inherent links between animal welfare, environment and sustainable development, as recognised by the EU’s Farm to Fork Strategy; ● Second, doing so would not be inconsistent with practices of other international institutions, such as the OECD, the International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD).

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2. The connection between animal welfare and sustainability

Studies and reports12 confirmed the links between sustainability and animal welfare. Production systems with the potential to provide higher animal welfare conditions are more likely to have less negative impacts on the environment, the climate and livelihoods. The reason to move away from funding intensive farming projects, beyond the EU’s own commitments, is self-evident:

● Intensive farming, through highly industrialised animal production systems, has devastating effects on the welfare of the animals and the environment, as it leads to high levels of water, air and ground pollution and to deforestation due to the growing need for animal feed (Sustainable Development Goal (SDG) 6 - Clean Water and Sanitation, SDG 14 - Life below Water, SDG 15 - Life on Land).

● The livestock supply chain accounts for 14.5% of global greenhouse gas (GHG) emissions. According to the Intergovernmental Science-Policy Platform on and Ecosystem Services (IPBES), “approximately 25% of the globe’s GHG emissions come from land clearing, crop production and fertilization, with animal-based food contributing 75% of that. Intensive agriculture has increased food production at the cost of regulating and non-material contributions from nature”. In addition to potentially allowing for higher animal welfare standards, grass-based and mixed-farm systems, less dependent on additional feed, also have better capacities for carbon sequestration.3

● Improving animal welfare benefits human health by helping to reduce the risk of food-borne diseases and zoonoses, as well as to lessen the use of antibiotics in animal productions (SDG 3 - Healthy Lives). In addition to being intrinsically detrimental to animal welfare, the intensification of animal agriculture has also fuelled these health-related issues:

○ The change in land-use – notably linked to the spread of animal agriculture and to the production of animal feed – and the subsequent loss of habitat have made encounters between animals (wild and farmed), humans and ecosystems closer and much more frequent. This pressure on biodiversity has been a major cause of the spread of zoonoses.4 In addition, farmed animals kept by the billions (trillions, if we consider fish in aquaculture) are reservoirs and pathways for diseases that can be dangerous or devastating to humans.

1 Linda Keeling et al. (2019) “Animal Welfare and the Sustainable Development Goals”. 2 Eurogroup for Animals, “Policy Brief: Animal Welfare, Trade And Sustainable Development Goals” (2019) & Eurogroup for Animals, “What could the and achieve for Animals” (2020). 3 Canu & Forabosco (UNEP DTU 2018), Greenhouse gas emissions of livestock raised in a harsh environment, International Journal of Global Warming, 2018 Vol.15 No.4, pp. 431-446. 4 IPBES, “Executive Summary of the IPBES Pandemics Workshop Report”(2020).

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A study found that “since 1940, agricultural drivers were associated with >25% of all – and >50% of zoonotic — infectious diseases that emerged in humans, proportions that will likely increase as agriculture expands and intensifies”.5

○ The overuse of antimicrobials in livestock production is the primary cause of the surge in antimicrobial resistance (AMR),6 which the World Health Organization (WHO) has described as “one of the biggest threats to global health, food security, and development today”. This phenomenon is not due to small-scale productions, but due to the spread of intensive farming systems, in which antimicrobial products are used routinely and increasingly. The EU’s One Health Action Plan against AMR already recognises the link between this issue and poor farm welfare practices, underlining the importance to address this concern.7

● Industrialised systems typically employ fewer people than traditional ones, as many tasks become automated. Wages are low, and the seasonal nature of the work creates prolonged job insecurity. The sector also employs many migrant workers who are especially vulnerable due to their precarious legal status and who are particularly likely to experience poor working conditions, unfair wages and limited access to public services (SDG 8 - Decent Work and Economic Growth).8

● Animal welfare tends to be connected to human rights, as animal cruelty is often linked to violence against humans. In certain countries, the agricultural industry has been connected to human rights violations against their workers.

3. EU legislation and international standards linking animal welfare with sustainability

Because of the interconnections described in section 2, animal welfare has been recognised as an important element of sustainable production systems in several EU policy documents. This is the main reason why it should be reflected in the updated EIB Group Environment and Social Policy and Standards.

● In 2018, the Commission acknowledged for the first time the close connection between improved animal welfare and sustainability of food production systems, in proposals made by the Directorate-General for Trade in the context of trade negotiations with and New Zealand.9 Such recognition has also been included in the trade

5 https://www.nature.com/articles/s41893-019-0293-3#Ack1 6 https://www.cddep.org/wp-content/uploads/2017/10/science.0929PolicyForum-1.pdf 7 https://ec.europa.eu/health/sites/health/files/antimicrobial_resistance/docs/amr_2017_action-plan.pdf 8 HLPE. 2016. Sustainable agricultural development for food security and nutrition: what roles for livestock? A report by the High-Level Panel of Experts on Food Security and Nutrition of the Committee on World Food Security, Rome. 9 Article X.17(1) of the FTA proposal to New Zealand quotes: “The Parties recognise that animals are sentient beings. They also recognize the connection between improved welfare of animals and sustainable food production systems”.

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and cooperation agreement between the EU and the following .10

● The EU’s Farm to Fork Strategy11 (2020) emphasized the need for a more environmentally friendly food system, which depends on resilient and sustainable agricultural supply chains. It stressed the “urgent need to improve animal welfare”, which it deemed essential to achieve a fair transition towards sustainable food systems; to help preserve biodiversity and reduce the need to use antibiotics on farms.12

● The EU Code of Conduct for responsible businesses and marketing practices, launched in July 2021 and one of the first deliverables of the Farm to Fork strategy, recognises improved animal welfare as central in improving the sustainability of the food value chain. Improved animal welfare is one of the aspirational targets of the Code and is also featured as an indicative action both for stimulating sustainable production and for reducing the environmental footprint of food.

4. Animal welfare under international sustainable corporate governance standards

Including animal welfare in the EIB’s new Environmental and Social Policy and Standards would not be a first in the world of international finance. Indeed, the European Bank for Reconstruction and Development (EBRD) has included animal welfare in the scope of its Environmental and Social Governance as of 2014. It is, at the moment, still the only international financial institution to do so. According to EBRD rules, the applicant must respect EU-equivalent animal welfare standards in order to receive funding13.

Among OECD’s several guidelines, the guidance applicable to agricultural supply chains and to the garment and footwear sector, already addresses animal welfare:

● The OECD/FAO Guidance for Responsible Agricultural Supply Chains14, which lays down a globally applicable benchmark that companies active in the food sector should follow when carrying out their due diligence, suggests a “model enterprise policy” providing that business should strive “to ensure that the ‘five freedoms’ for animal welfare are implemented” and ensure “high standards of management and stockmanship for animal production, that are appropriate to the scale of our operations, in accordance with or exceeding OIE’s principles”15.

● The OECD Guidance for Responsible Supply Chains in the Garment and Footwear Sector16 while not expressly including animal welfare in the common risks,

10 Chapter 3, Article SPS16.1 of the Trade and Cooperation Agreement between the EU and the UK. 11 European Commission, Farm to Fork Strategy (2020). 12 ibid., p. 5 and 7. 13 https://www.hsi.org/wp-content/uploads/assets/pdfs/international-finance-institutions.pdf 14 OECD/FAO (2016), OECD‐FAO Guidance for Responsible Agricultural Supply Chains, OECD Publishing, Paris. 15 ibid. p. 28. 16 OECD, OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector (2017).

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acknowledges that some sub-sectors, such as luxury goods, sports apparel, or work apparel, face risks related to animal welfare. It therefore refers to the due diligence guidance on this issue17, provided by the OECD-FAO Guidance for Responsible Agricultural Supply Chains.

Likewise, it is also worth mentioning the International Finance Corporation (IFC) Sustainability Framework18 also refers to animal welfare. Indeed, one of the “Performance Standards” - which are part of the framework and define the responsibilities of the IFC clients for managing their environmental and social risks19 - provides that clients engaged in the production of living resources will manage them “in a sustainable manner, through the application of industry-specific good management practices”20. This Performance Standard is complemented21 by a “Good Practice Note Improving Animal Welfare in Livestock Operations”, which specifies these good practices by providing an approach to animal welfare as part of IFC’s approach to due diligence22,23. The IFC later engaged in a project to detail these good practices and issued a set of Guiding Manuals24 providing more practical and technical information.

Facing growing awareness and consumer demand, many companies have also started to cover animal welfare in their Environmental and Social Governance, as visible in the Business Benchmark on Farm Animal Welfare (BBFAW) results.25 The clear increase in the number of companies that integrate animal welfare in ESG is also demonstrated across sector, from producers and manufacturers to retailers and food services (BBFAW, 2019)26.

The 2018 BBFAW Report shows that many companies have adopted formal animal welfare policies. For example, 71% of the companies had published formal improvement objectives for farm animal welfare, compared to 26% in 2012.27 The 2019 report showed that 80% of the top leading 150 food businesses have at least recognised the importance to consider animal welfare in their due diligence efforts28. A report directed by the OECD on the implementation of the Guidance for Responsible Agricultural Supply Chains shows that 72%

17 ibid., p. 48 and fn 14. 18 See https://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/sustainability-at- ifc/policies-standards/sustainability+framework 19 IFC Performance Standards (2012). Not only the IFC clients have to adhere to and comply with them, but these standards are now given authoritative value, as they tend to be used outside the framework of IFC’s operations and referred to as good practices, such as in some investment contracts between states and . 20 Performance Standard 6, para. 26. 21 See https://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/sustainability-at- ifc/publications/publications_gpn_animalwelfare_2014 22 IFC, Good Practice Note – Improving Animal Welfare in Livestock Operations (2014), p.1. 23 ibid., p.21. 24 See R.J. Hatton and L.P. Mousseau, “Animal Welfare in emerging markets – IFC’s perspective”, abstract of the presentation delivered at the OIE 4th conference, http://www.oie.int/eng/animalwelfare-conf2016/Abstracts/3.6.%20Hatton.pdf 25 https://www.agrociwf.fr/media/7435685/bbfaw_report_2018.pdf. 26 https://bbfaw.com/news-and-events/events/briefing-2019-bbfaw-report-launch/ 27 ibid., p. 33. 28 https://bbfaw.com/news-and-events/events/briefing-2019-bbfaw-report-launch/

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of the participating companies or industrial groups have set farm animal welfare objectives and targets.29

This trend can be explained by a growing awareness and interests by consumers but also by investors. Indeed, animal welfare is described by observers as an “increasingly important, albeit emerging issue, for investors”.30 According to the FAIRR Initiative, animal welfare is considered a high risk factor for the main global animal protein producers.31 Their 2016 report concluded that “the magnitude of risks generated by animal factory farming is set to increase through rising capital costs, the shifting gravity of production to developing countries with less robust regulation, the impacts of climate change and increasing social concerns over animal welfare and sustainability.”32 Yet, the risk is not only for farmed animals, as demonstrated by the case of SeaWorld Florida presented in the report. The company saw long-term damages in terms of share values and reputation, as well as a regulatory backlash, after denunciations of bad treatment of animals. Animal welfare is thus seen not only as a potential regulatory risk, but also as an issue that can affect the public sentiment and that is connected to other important dimensions such as public health.

In sum, existing international standards already recommend companies faced with animal welfare risks to address animal welfare in their ESG. Subsequently, the private sector has started to grasp the issue of animal welfare.

5. Animal welfare standards that should be included in EIB’s new Environmental and Social Policy and Standards

Considering the EIB is the EU’s bank, it should not fall short of achieving the revolution the EBRD went through in 2014. The EIB should impose the respect of EU-equivalent standards as a requirement to apply for funding. To go further, the bank could also consider the following set of verifiable standards, especially where EU legislation is lagging behind, for example where the EU has no detailed species-specific welfare legislation as is the case with dairy cows and farmed fish:

○ In aquaculture: the OIE Aquatic Animal Health Code standards on transport and slaughter,33 and the EU Platform on Animal Welfare Fish Welfare Guidelines on handling and water quality;34

○ In terrestrial farms: the FARMS Initiative (builds on a number of global frameworks) and Better Chicken Commitment;

29 OECD (2018), https://mneguidelines.oecd.org/Baseline-Report-on-OECD-FAO-Guidance-For-Responsible-Agricultural- Supply-Chains.pdf, p. 21. The list of participants is available at page 11 of the Report. For an illustration, see e.g. Allianz policy, https://www.allianz.com/en/sustainability/articles/human-rights.html. Animal welfare is also listed as a requirement by the European Bank for Reconstruction and Development in its ESG policy. 30 See https://www.ampcapital.com/nz/en/insights-hub/articles/2019/june/animal-welfare-an-emerging--issue 31 https://www.fairr.org/index/risk-opportunity-factors/animal-welfare/ 32 https://www.fairr.org/article/factory-farming-assessing-investment-risks/#key-findings-and-implications-for-investors 33 https://www.oie.int/en/standard-setting/aquatic-code/ 34 https://ec.europa.eu/food/animals/welfare/eu-platform-animal-welfare/platform_conclusions_en

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○ In terms of monitoring: BBFAW, Business Benchmark on Farm Animal Welfare and the Coller FAIRR Protein Producer Index.

Detailed feedback to the Questionnaire

Chapter A

In a framework of supporting sustainable projects, the proposed Policy and Standards must take into account the EU’s most recent commitments related to animal welfare such as the End the Cage Age (phasing out the use of cages in the farming systems), EU’s desire to extending animal welfare standards globally, as well as the EU Biodiversity Strategy. Regardless the inherent links between animals, environment, public health and sustainable development, as acknowledged by the latest EU Farm to Fork Strategy and EU Biodiversity Strategy, as well as Article 13 of the TFEU expressly recognising animals as sentient beings, the proposed Policy and Standards do not recognise the above which is in contradiction with the EU’s fundamental values, policies and with the financial trends set up by international organisations. We believe the Framework must include a reference to the above as relevant climate and environment related EU policies. Moreover, similarly to the OECD’s definition of “Responsible Business Conduct” (RBC), International Finance Corporation (IFC) Sustainability Framework or EBRD commitment of no funding to projects compromising animal welfare, the EIB, as a standard setter, should strive for even higher commitment.

In contributing to ensure a high level of protection of the environment, the EIB Group shall take note not only of the EU Environment Action Programme but also of the EU Strategy for the Protection and Welfare of Animals, as regularly updated, and the relevant EU environment- related thematic strategies and policies.

We welcome the commitment of the EIB Group to equip their staff with relevant skills to evaluate the projects. Similar efforts should be undertaken by the promoters (financial institutions distributing EIB funding). FAIRR, Beyond Investing or Triodos Bank, just to name a few, offer tools and solutions for project evaluation which include animal welfare. We believe as well that project evaluation should not only take into account maximising positive effects, but also minimising the negative effects and strive for financing projects that contribute to reducing GHG emissions and protection of the environment and ecosystems. In terms of upcoming EIB’s Good Practice Note (GPN) we strongly advise to base it on the FARMS Initiative’s Responsible Minimum Standards, as elaborated from the IFC’s Good Practice Note, the EU Platform on Animal Welfare Fish Welfare Guidelines on handling and water quality and Better Chicken Commitment.

Regarding the EIB Group Climate Bank Roadmap, which serves as a reference point, the role of the current farming sector should be put in context. The increasing demand for food by

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up to 50% is only relevant if we assume business-as-usual which is in contradiction with the EU objectives in EU Farm to Fork (exemplified with the recent initiatives to End the Cage Age). Furthermore, in the Climate Bank Roadmap the EIB commits to addressing agricultural emissions (meat and dairy) to reduce the contribution of the sector to GHG emissions, hence, climate change. This important link is missing in the proposed Policy and Standards.

From a public health point of view, treating farmed animals against disease in intensive industrial conditions requires a massive use of antimicrobials, which contributes hugely to antimicrobial resistance, described by the World Health Organisation as “one of the biggest threats to global health, food security, and development today”. That is why antimicrobial resistance criteria should become a part of the project evaluation process in the EIB Group. The EIB Group should follow the position of the Regulation on Veterinary Medicines which comes into force in January 2022. Article 107.3 of the Regulation prohibits the prophylactic use of antimicrobials in groups of farm animals and Article 107.1 prohibits all routine use of antimicrobials.

In terms of definitions, it would be worthwhile to precise a definition of environment. According to Cambridge Dictionary, we define the environment as the air, water, and land in or on which people, animals, and plants live. In the context of the proposed Policy and Standards, the concept of environment is one dimensional and interpreted from an anthropocentric point of view disregarding the ecosystems, be it fauna or flora.

Regarding return on investments, in certain cases planned projects might have lower return on investment than if the ecosystem was allowed to operate without human intervention ( example: Polish government is currently paying for water retention (est. 50EUR=1m3), meanwhile one beaver (Castor fiber) can deliver the equivalent of 600m3 if allowed to build dams at no cost).

With the increasing scope of climate change related risks including industrial intensive farming systems, it is expected that the number of lawsuits will increase. Recent court cases regarding climate change related negligence against governments and corporates have shown how important it is for the project evaluators to consider all the risk elements3536. With animal welfare being recognised as a one of the key risks in relation to livestock farming, similar litigation procedures might occur. This should be reflected in the EIBs’ Policy and Standards.

Finally, when it comes to Transparency, we believe there is room for improvement in terms of information on approval procedures and access to information on submitted and ongoing projects. While the EIB Group must be equipped with resources and knowledge to review the projects, the Board of Directors should equally critically review its approval policy. It would be also valuable for the EIB to provide information on the rejection ratios by the EIB and by its Board of Directors as well as for the civil society to get clarity on the approval process.

Chapter B

35https://reliefweb.int/report/world/study-africa-s-agriculturally-dependent-nations-facing-highest-costs- climate-change-key 36 https://www.maplecroft.com/insights/analysis/

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The human right to a viable future and an unharmed environment (access to natural resources, clean air and water, biodiversity - fauna and flora) should be included in the Policy and Standards.

Chapter D

Standard 1: ratio between mitigation, remedial and compensation should be clearly defined (point 3e). The stage at which significant impacts and risks have to be taken into account should be predefined (4). The baseline studies required to understand the existing status of the environment shall not lead to lack of ambition among project promoters and concentration of activities in certain areas due to lower baseline. All that in order to prevent degradation or development of one area or zone in comparison to the others (21a). The promoter shall provide a list of stakeholders with a proof of their engagement to the EIB Group (27).

Chapter E

Standard 2: The Standard defines responsibilities of the promoter without defining the procedures in case of non compliance (point 3). We believe the latter should be defined. In terms of provision of information to stakeholders, the information should be disseminated electronically and via other means. Relying on electronic dissemination only might exclude vulnerable groups (11a). The concept of meaningful consultation should be clearly defined including the periods of consultation and promoter’s contact person (36, 42).

Chapter F

Standard 3: In terms of safe use of hazardous substances and pesticides, the range of substances should be expanded to the use of antibiotics in intensive farming systems due to risks it poses to human health (for more please check the One Health concept and the European Commission mission statement on AMR) (point 4). With regards to pollution, the concept should be expanded to olfactory pollution (odour) - for details please check D-NOSES project. (Annex 1, point 5).

Chapter G

Standard 4: the part on the Protection does not discourage projects in high value or critical habitat areas in any way (points 16, 18). Any project assessment (screening or appropriate) shall not only evaluate the insignificant impact on the site, but also precise what kind of impact it will have (25).

Chapter I

Standard 6: The concept of physical displacement should list a loss of access to nature as one of the reasons for involuntary resettlement (point 1). In the event of the latter, the affected person and promoter shall define the type of compensation in kind. Any monetary compensation should be a subject of independent evaluation based on the expertise by a selection of independent experts (25). The promoter shall provide information on the total impact of its portfolio on the environment.

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Chapter L

Standard 9: the obligation to minimise hazards shall extend to project workers, members of the public and ecosystems (point 40).

Chapter N

Standard 11: the list of excluded projects should be updated to include intensive farming production which would not comply with the European Commission’s standards, as well as any other relevant legislation.

-THE END-

Iwona Mertin

Eurogroup for Animals NGO

We agree for our full submission to be made public.

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