Investors are urging fast food firms to take in hand their climate impacts
The investor coalition representing $11.4tr in assets wants several of the world’s biggest fast food companies to act to reduce their exposure to climate- and environment-related risk
An investor coalition calling on some of the world’s largest fast food chains to take concrete action to tackle their climate impact has succeeded in securing a series of emissions reduction and water quality commitments, it announced yesterday.
But the food and drink giants need to do far more to tackle escalating environmental impacts, the investor network added.
The coalition, which is facilitated by the global investor network FAIRR along with sustainability non-profit Ceres, launched in January 2019. At the time, it was worth $6.5tr, but has since almost doubled in size and now contains more than 90 investors representing $11.4tr in assets.
Shortly after forming, the coalition began engaging with six fast food companies with a combined market cap of over $260bn, urging them to minimise their exposure to climate- and water-related risks. It asked Chipotle Mexican Grill, Domino’s Pizza, McDonald’s, Burger King owners Restaurant Brands International, Wendy’s Co., and Yum! Brands, owners of KFC and Pizza Hut to set aggressive targets to reduce their greenhouse gas emissions, water usage, and water quality impacts of their meat and dairy supply chains. The six companies collectively manage over 120,000 restaurants worldwide.
One year into the initiative, new analysis released yesterday by Ceres and FAIRR evaluates the progress made through the investor engagement.
Two of the companies – McDonald’s and Yum Brands! – have since set or publicly committed to setting science-based emission reduction targets in line with the Paris Agreement – meaning they aim to limit global warming to well below 2C above pre-industrial levels, with a goal of limiting warming to 1.5C.
A further company, Restaurant Brands International, has committed to set a similar emissions reductions target for its operations in the US and Canada.
McDonald’s has also publicly disclosed that it has conducted a water risk assessment specifically for meat and dairy suppliers, the analysis finds, while Restaurant Brands International plans to conduct a life-cycle assessment which will consider its water footprint among other impacts.
However, none of the companies have set specific requirements on climate and water for their meat and dairy suppliers, the analysis finds, adding that compliance monitoring systems remain unclear across the six firms’ meat and dairy supply chains. This leads the analysis to conclude that the companies’ are falling far short of what is required to sufficiently mitigate their exposure to the considerable physical, regulatory, and reputational risks climate change poses to animal agriculture.
“Investors are concerned about the climate impacts of our burgers and burritos. Feed for livestock alone uses around a third of annual global water withdrawals and is a major emitter of greenhouse gases. Failure by the global fast food sector to tackle the environmental issues in their supply chains puts the long-term financial sustainability of their businesses under threat,” said Aarti Ramachandran, Head of Research and Engagements at the FAIRR Initiative. “Investors are asking the industry to manage these risks, using tools such as water risk assessments and science-based emissions targets, but the companies are failing to respond at the pace and with the detail required by investors.”
Kirsten James, Director of Water at Ceres, added: “Fast food companies have long lagged behind other high-emitting and water-intensive industries that take these material, financial and reputational risks seriously. It is time for these companies to have a plan and take urgent steps to ensure their meat and dairy supply chains are resilient to the impacts of rising temperatures and extreme droughts and flooding. Investors are not only demanding action, but they want more information about the concrete steps that companies are taking to tackle supply chain issues — the cost of ignoring them is too high.”
The second phase of the Ceres/FAIRR engagement programme launches this week with the investor coalition writing to each company with specific tailored requests based on their current strategies.
