The Impact of Corporate Social Responsibility on Animal Welfare Standards: Evidence from the Cage-free Egg Industry

Abstract

Corporate social responsibility initiatives have become increasingly popular to address animal welfare issues. Over the last decade, hundreds of companies globally have committed to source cage-free eggs to improve welfare for laying hens. In many cases, these commitments were made following public pressure campaigns by advocates for farmed animals, representing a large portion of all spending on advocacy for farmed animals. The effect of these commitments to improve the issues that they target is not well known, and a better understanding of the impact may affect millions of dollars of animal advocacy funding. This study uses panel data from 44 countries over 13 years to estimate the effect of commitments on the proportion of hens in cage-free housing, while controlling for legislation and bird deaths from avian influenza. We use a correlated random effects model to account for unobserved heterogeneity between countries and unobserved correlation over time within individual countries. We test for potential endogeneity due to a feedback loop between commitments and housing using a control function test with pressure campaigns as an instrument for commitments. We estimate that one additional commitment in a country leads to an average 0.035 percentage point increase in cage-free housing in that country. Similarly, the average effect of an additional year under cage-free legislation is a 0.04 percentage point increase, although not statistically significant. We discuss implications of these results and comment on limitations and future extensions of this research.

Keywords: corporate social responsibility initiatives, corporate commitments, animal welfare standards, correlated random effects

JEL Classification: D20, D62, M14