Investors press fast food giants to 'urgently' improve supply chain sustainability
A coalition of investment firms with more than $6.5trn in assets under management have called on six of the world's largest fast food companies to take more ambitious action to tackle the climate and water risks within their supply chains, as a "matter of urgency".
Convened by non-profit Ceres and Coller Capital’s FAIRR initiative, the group of more than 80 investors is urging the likes of Domino’s, McDonald’s, Chipotle and Wendy’s to publish detailed plans on how they will mitigate environmental sustainability risks like deforestation and water stress throughout their supply chains.
In an open letter to the food-to-go chains, which also include KFC’s parent firm Yum! Brands and Burger King owner Restaurant Brands International, the investors state that “animal agriculture is the world’s highest-emitting sector without a low-carbon plan,” urging recipients to bolster the sustainability requirements of their respective meat and dairy supply policies by March.
Specifically, the investors are urging the brands to publish quantitative, time-bound targets for reducing greenhouse gas (GHG) emissions in their supply chains and publicly disclose progress against these aims on an annual basis. In order to do this, brands should adopt a supplier policy with clear requirements on carbon emissions and freshwater impact, the coalition claims.
The letter additionally recommends that all fast food brands should adopt the reporting recommendations of the Task Force on Climate-related Financial Disclosures’ (TCFD), including its scenario analysis approach. This involves disclosing what impact different environmental scenarios – including the 2C pathway of the Paris Agreement - would have on their operations.
“Fast food giants deliver speedy meals, but they have been super slow in responding to their out-sized environmental footprints,” Ceres’ chief executive Mindy Lubber said.
“Investors are eager to see more leadership from these companies to reduce the mounting climate and water risks linked to their meat and dairy suppliers. From eliminating deforestation to reducing water waste, cleaning up their supply chains will have enormous impacts on the animal agriculture sector as a whole, and dramatically increase our ability to meet the goals of the Paris Agreement.”
Signatories of the open letter hail from around the world and include BMO Global Asset Management, Aviva Investors and Aegon Asset Management.
The publication of the letter comes shortly after the FAIRR initiative unveiled new research highlighting the environmental impacts and sustainability practices of some of the global fast food sector’s largest dairy and meat suppliers.
The research, produced specifically for investors, highlights claims that carbon emissions from the agriculture sector could eat up 70% of the global carbon budget by 2050 – the date by which the global population is forecast to surpass 10 billion for the first time.
This increase in emissions alone, aside from growth predicted in other sectors, will create an 11-gigaton GHG mitigation gap between reality and the target level required to limit global temperature increase to 2C, the research concludes.
As for water, FAIRR claims that agriculture will use around 10% of global water flows by 2050, exacerbating existing water stewardship challenges.
“Farsighted investors cannot ignore the headwinds facing the meat and dairy sector – increased environmental regulation, rising consumer demand for plant-based food and fears over water pollution from intensive farms are all ingredients in the rising threat to the long-term value of the fast food multinationals,” BMO Global Asset Management’s co-head of responsible investing Alice Evans said.
“This research is further evidence that capital markets are putting sustainable environmental management on the menu for the fast food sector.”
The steaks are high
The global meat sector is widely classed as a key contributor to climate change – and one of the worst-prepared industries for climate challenges such as droughts, floods and heatwaves in the world.
According to FAIRR, none of the industry’s major corporates have aligned themselves with the Paris Agreement’s flagship goal of limiting the world’s temperature increase to 1.5C, with only 28% of the world’s largest 60 intensive farming firms having to set any plans for climate risk mitigation.
These issues, compounded by ethical and human health concerns surrounding the meat, dairy and seafood sectors, have served to place the sustainability of existing food systems under the public spotlight.
A report released yesterday by the Lancet Commission, for example, concluded that an international treaty would be necessary to help the “Big Food” industry tackle three of the key problems it has contributed to – obesity, hunger and climate change.
Similarly, Dame Ellen MacArthur last week unveiled research revealing that, for every dollar that is spent on food, governments and charities spend two dollars compensating for the negative effects these products have on health, the environment and the economy. This issue could be overcome by a global shift towards circular food systems, she argued at the World Economic Forum in Davos.