WHEREAS: Meat production is the leading source of water pollution in the U.S., exposing 5.6 million Americans to nitrates in drinking water and toxic algal blooms.1 Cultivation of feed ingredients for the 45 million chickens2 produced weekly by Pilgrim's is a source of water pollution from fertilizer washing off fields if improperly managed. Manure from over 4,900 poultry farms supplying Pilgrim's3 may contain nutrients, antibiotic-resistant bacteria, and pathogens which can pollute waterways, endangering public health and the environment. Pilgrim's is therefore vulnerable to regulatory actions to mitigate these pollution streams.
Several states where Pilgrim's has processing operations4 have tightened requirements related to nutrient management, manure disposal, field application of manure, and groundwater monitoring for animal agriculture.5 At the federal level, the Farm System Reform Act would pose significant operational challenges to vertically integrated meat processors. Introduced in May 2020, the law is motivated by concerns pertaining to the health and environmental externalities associated with meat production.6
Pilgrim's disclosures and policies lag those of its peers. Tyson Foods has committed to support improved fertilizer practices on two million acres of corn.7 Sanderson Farms now uses SASB standards to report its plans to manage risks specifically associated with supply chain water pollution.8 Sanderson's disclosure renders Pilgrim's the sole remaining large, publicly-traded poultry processor failing to report to shareholders how it intends to manage these risks.
Additionally, many of Pilgrim's largest customers increasingly expect their meat suppliers to improve mitigation of pollution streams.9 Failing to address this risk may harm Pilgrim's position as a competitive supplier.
Pilgrim's is working to reduce the quantity of the water it uses and has a policy requiring "vendors" to comply with applicable environmental laws and regulations, encouraging them to "use best efforts to meet industry best practices and standards and responsibly manage the environmental impact of their operations."10 However, neither Pilgrim's disclosures nor its policies specifically address the primary drivers of the company's water pollution footprint, including manure from contracted facilities and nutrient runoff from feed crops. Pilgrim's disclosures lack sufficient detail to assure investors that it is adequately managing the risks associated with water pollution within its supply chain.