The fast food chain Subway is latest to join the backlash against antibiotic use in the farm sector. It has launched a new chicken sandwich in the U.S. made with meat from animals raised without antibiotics.

The move is a sign of the growing consumer and business interest in the welfare and environmental impact of animals reared for meat, dairy and eggs, with most of the blame directed at intensive, factory-style farms.

Hoping to echo the success of the fossil fuel divestment movement (which has seen more than 400 institutions commit to pulling money from coal, oil and gas companies to tackle climate change), campaigners are now urging investors to wake up to the financial risk of companies directly and indirectly exposed to harmful practices.

What is it All About?

Intensive or factory farming of livestock is characterised by a large number of the same species of animal raised in closed barns and with their movement restricted. In the U.S., any farm with more than 1,000 cattle, 2,500 pigs or 125,000 chickens is referred to as a Concentrated Animal Feeding Operations (CAFO). In the EU officials have defined intensive as a farm with more than 40,000 poultry or 2,000 pigs.

Such operations can be damaging for animal health and welfare, as well as our own health through problems such as water pollution and the overuse or misuse of antibiotics.

There are countless organizations working to highlight these issues and urging either government regulation or consumer boycotts. After half a century or more of campaigning, there have been improvements, especially in Europe, but globally, the model of intensive livestock production continues to grow.

At the turn of the century there were an estimated 15 billion livestock in the world, a figure that has now risen to around 24 billion with the majority of chicken, pork and eggs produced on intensive farms.

The emerging divestment movement targets investors who support factory farming either directly through the publicly-listed companies in which they hold stocks or indirectly through other companies that purchase animal-products. The aim is either to get them to engage with companies and pressure them to improve practices, or to move their money away from such companies for good.

Why Would Investors Care?

Companies engaged in factory farming face many risks that could affect their future profits, suggests the campaign group ShareAction. It highlights the increased risk of disease outbreak in intensive farming enterprises; the potential for litigation, bans or fines in relation to water pollution; its reliance on feed inputs with volatile pricing; concerns around staff health and welfare; and the potential for future legislation on methane emissions or antibiotic use.

As standards and expectations from society and regulators continue to rise (see EU legislation on animal welfare), the companies that fail to upgrade their facilities could find themselves stranded by the high cost of conversion. In the US, for example, it is estimated that the meat industry would face additional costs of more than $700 million if antibiotic rules similar to those in some parts of Europe were introduced.

Companies perceived to have poor welfare standards could face negative repercussions when these concerns are amplified by the media and civil society. A Guardian investigation last year, for example, found that pork sold by several leading British supermarkets had been contaminated with a strain of the superbug MRSA linked to the overuse of powerful antibiotics on factory farms.

Is Anyone Divesting Yet?

Well-known investors including Aviva, Allianz and Alliance Trust have gone public with their concerns about the risks of investing in factory farming operations, calling it a reputational and, potentially, financial concern. There are also investment funds which exclude factory farming companies.

“We had clients that were against factory farming so our guidelines are that we won’t invest in companies whose primary business is operating CAFO, such as Tyson Foods or Smithfield Foods,” said Steven Heim, director of ESG at Boston Common Asset Management, who cites the methane emissions and antibiotic-use as the biggest risks to investors.

UK-based EdenTree says it has been offering an ethical investment fund that excludes intensive farming companies since 2012. It does not explain how it defines intensive farming or which companies it excludes, but says most are based in the US. “We don’t want to invest in companies where the animals are not able to reflect their natural behaviors,” said Neville White, head of socially responsible investment at EdenTree, who has also written a briefing note on the issue.

What is the Reaction From Companies?

A number of food companies, including McDonalds, the sausage producer Noble Foods and Tyson Foods, the largest beef producer in the U.S., have started to engage in a scheme that rates them on animal welfare. The Business Benchmark on Farm Animal Welfare (BBFAW), set up in part by the NGO Compassion in World Farming, says more than half of the world’s leading food companies have now published targets on farm animal welfare.

Investors, such as EdenTree and Boston, say they are now using the ratings to judge and pressure companies to make improvements. “For the first time we are seeing global investors actively engage with companies to encourage them to improve their practices and reporting on farm animal welfare … [it] provides a strong incentive for companies to improve their disclosure and to account for their performance,” said Rory Sullivan from the BBFAW.

More public attempts to get companies to change, aside from recent moves on antibiotics, have had mixed success. In 2008 the celebrity chef Hugh Fearnley-Whittingstall tried and failed to get Tesco shareholders to back proposals to improve welfare standards for chickens. In February, shareholders at Tyson Foods voted against a resolution that would have forced it to adopt new rules to reduce risks of water contamination.

In response, Tyson Foods has said it will start disclosing more information about its water management efforts to the not-for-profit CDP that collects and distributes data on corporate environmental impacts. However, it does not yet report its climate data to CDP.

Will it be Successful?

The issue is still fairly low on the radar of most investors and certainly does not face the same level of scrutiny as climate change, says ShareAction, despite the links between the two on issues such as methane emissions from livestock.

However, there are other groups lobbying investors, including the Farm Animal Investment Risk and Return (FAIRR) initiative set up last year by the the private equity millionaire Jeremy Coller. Its report on investor risks in December 2015 received widespread coverage, with Coller suggesting companies that ignore the issue will become “the new coal” as they lose appeal with investors.

It is not clear how many investors are actively divesting from factory farming. Most signed up to the FAIRR initiative, including Allianz and Alliance Trust are only committed to engagement. As such, pointing to changes and improvements in ratings such as BBFAW may be the best indicator of success.

Food campaigners appear persuaded by this new investor-led approach.

Dan Crossley, director of the Food Ethics Council, called it a “potentially a powerful lever of change and much quicker than others” adding that only by translating ethical concerns into financial materiality would investors make a change.

Originally published on The Guardian