Factory farming has been flagged up as risky business for food industry investors.

The Farm Animal Investment Risk & Return (FAIRR) report, published last week by the Jeremy Coller Foundation, warned businesses engaged with animal livestock farming, including retailers, were exposed to “at least” 28 environmental, social and governance issues.

Diseases like bird and swine flu, rising antibiotic resistance, global warming, animal welfare abuse and water shortages were all mentioned as problems that could damage the long and short-term value of investments.

The report claimed many of these issues were being “hidden” from investors and there was a big knowledge gap within the investment community about how to manage the risks.

“Despite the evidence of its potential impacts on areas such as public health, the environment and food safety, animal factory farming has not historically received meaningful attention from the responsible investment community,” it said.

Warning the problems with factory farming were only set to get worse as developing countries with “less robust corporate governance” started adopting intensive animal agriculture, the report urged food industry investors to do more research before investing.

Some leading investors have already started taking animal factory farming risks into account as part of the investment process.

The Jeremy Coller Foundation - set up in 2002 as the “philanthropic vehicle of private equity entrepreneur Jeremy Coller - believes investors have a “vital role” to play in highlighting and challenging the “unsustainable practices” of factory farming and supporting the development of alternative methods.