WH Group Ltd

In 2022, Smithfield Foods completed a watershed analysis across its vertically integrated supply chain, including U.S. company-owned locations, contracted hog farms and grain suppliers.The company mentions that Smithfield Foods used the Global Environmental Management Initiative (GEMI) Local Water Tool, and the WRI Aqueduct tool. In China, the company mentions that it regularly tracks and identifies water use risks. However, it´s not clear what risk factors are considered specifically.

The company mentions that in China, it monitors chemical oxygen demand (COD), phosphorus, nitrogen and suspended solids in wastewater. However, it does not disclose the figures. Smithfield Foods discloses that in the reporting year there were 41 notices of violations at their US Facilities and International sites. The respective fines levied are also disclosed. However, it is unclear whether this is related to non-compliance with water quality permits, standards, and regulations. The company does not disclose information about its operations in China. The company discloses it has increased its water-related CAPEX by 10% in the reporting year. The company also mentions a $45 million investment in 2023 in a new waterwater treatment plant in one facility in South Dakota. The company mentions that the upgraded system converts ammonia-nitrogen in wastewater to nitrate-nitrogen and further removes nitrate-nitrogen from wastewater. The company says this process has helped the company to reduce Smithfield¢â‚¬â„¢s overall nitrogen load to the Big Sioux River by two-thirds.

Smithfield Foods discloses that it does no longer have US locations in high biodiverse value areas after exiting a facility that operated in California in early 2023. It’s not clear the methodology or parameters the company uses to classify areas as high biodiversity value. It does not provide information about other biomes or watersheds and the impact of nutrient pollution on these areas. WH Group has included biodiversity and waste in its materiality assessment matrix. The company mentions it has made a commitment to promoting biodiversity conservation and it works with suppliers and contractors to uphold biodiversity conservation in various aspects. The company mentions a couple of initiatives to promote biodiversity and how it complies with pollution regulations in the different geographies it operates in, recognising the link between biodiversity loss and pollution. However, it’s not clear how biodiversity drives the company’s risk assessment for water quality and pollution.

In 2022, the company commissioned a study undertaking a water analysis to better understand current and future groundwater demands across its U.S operations, including contracted hog farms and grain suppliers. It’s not clear to what extent water quality risks are included in this assessment. The company does not disclose information about its operations in China.

The company mentions its Chinese operations promote circular economy by featuring regional crop production and farming, using the manure produced from farms as an organic fertiliser. However, it’s not clear whether the manure is used by the company’s feed suppliers or third-party arable farmers.

The company does not disclose information on this.

The company mentions that it has standardised internal auditing systems for its farms in the US to ensure consistent environmental compliance across all its operations. However, it is unclear whether non- compliance on pollution is also included. Smithfield Foods discloses that in the reporting year there were 41 notices of violations at their US Facilities and International sites. The respective fines levied are also disclosed. However, it is unclear whether this is related to non-compliance with water quality permits, standards, and regulations. Although the values of fines collected have been reported, no further detail is provided on the reasons for the NOV's or fines collected. The company is encouraged to provide this information. The company does not disclose information for its operations in China.

The company discloses the volume of wastewater that has undergone different levels of treatment for its operations in the US. The company mentions 5829 megaliters/year are discharged by land irrigation on its company farms in the US. The company does not disclose information about the different levels of treatment for its operations in China. In the US, the company mentions it generates 4.3 million metric tons of manure. The company produces biogas, and it currently operates 118 covered lagoons.In the US, the company has a target to install biogas systems on 90% of its finishing farms and contract locations by 2030. It also mentions another project by which sludge is dried using drying beds in the desert to produce 30,000 tons of dry organic fertiliser per year, which the company mentions is easier to handle. In China, the company mentions it started a biomass natural gas project, by which it processes 400 metric tons of chicken manure per day. It also mentions that 100% of the manure produced in farms is converted to organic fertiliser. The company mentions it operates 118 covered lagoons in the US. In China, the company mentions the amount of manure used to produce natural gas, but it is unclear the % of sites with covered lagoons.

For its operations in China, the company has internal water management mechanisms at different levels to monitor and manage water risks. In the US, the company mentions that the assessment completed in 2022 helped the company to develop water conservation strategies, inform updates to our water use policies and set performance targets. However, it’s not clear whether the company has targets for each area identified as high or medium-risk beyond meeting regulatory requirements.

In China, the company mentions that it promotes circular economy featuring regional crop production and farming, using manure as organic fertiliser. The company does not disclose information about supporting third-party arable farmers with sustainable use of manure to minimise pollution risks. In the US, the company runs the SmithfieldGro project, by which it works with upstream farmers to reduce pesticide pollution to water resources. The company also focuses on nitrogen management tools to optimise nutrient absorption and reduce the use of chemical fertilisers. It is unclear the percentage of farmers that are part of this project. The company mentions it operates 118 covered lagoons in the US and the company has a target to install biogas systems on 90% of its finishing farms and contract locations by 2030 in the US. However, it is unclear the % of suppliers with covered lagoons. In China, it is unclear whether suppliers have covered lagoons.

Smithfield Foods had partnered with Anuvia Plant Nutrients to develop and market bio-based fertiliser products from hog manure. However, Anuvia Plant’s finished its operations in 2023. The company still discloses this partnership in its report.

The company does not disclose information about this.

The company does not disclose information about this.

The company did not provide a response to the investor letter and did not respond to the engagement questions. The company met with FAIRR but declined the meeting with investors. The company did not acknowledge the FAIRR’s assessment and did not provide feedback.