Investors call for increased sustainability in fast-food supply chains

A coalition of investors representing $6.5 trillion has sent letters to fast-food giants urging them to address the climate and water risks in their supply chains. The letter makes it clear that investors want change—they want sustainable supply chains. Not only will this benefit investors and fast-food companies, as their businesses will operate more sustainably, but the environment will benefit too.

Domino’s Pizza, McDonald’s, Burger King, Chipotle Mexican Grill, Wendy’s, KFC, and Pizza Hut have all received letters signed by more than 80 investors. The letter calls for “meaningful policy” and targets that reduce the risk in their meat and dairy supply chains. By March, fast-food giants are expected to formulate realistic steps for how to achieve this, as current reports show that fewer than 30% of meat and livestock index companies have targets for reducing greenhouse gas emissions.

The letter was facilitated by sustainability organisation Ceres and FAIRR Initiative and was signed by investor including BMO Global Asset Management, Aviva Investors, and Aegon Asset Management.

“Other high-emitting industries, such as oil and gas, are beginning to set ambitious climate targets, while animal agriculture is one of the world’s highest emitting sectors without a low-carbon plan,” said Jeremy Coller, Chief Investment Officer of Coller Capital and Founder of FAIRR. Failure to tackle major environmental problems in corporate supply chains puts the long-term financial sustainability of these companies under threat, he predicts. “Investors are calling for more strategic and innovative thinking to manage these risks.”

In particular, the letter urges fast-food companies to:
• Adopt a supplier policy. It calls for clear requirements for suppliers of animal protein products to report and reduce greenhouse gas emissions and freshwater impacts.
• Publish quantitive, time-bound targets to reduce the greenhouse gas emissions and freshwater impacts of their own meat and dairy supply chains.
• Commit to public disclosure on their targets.
• Undertake a climate scenario analysis in line with the recommendations of the Task Force on Climate-related Financial Disclosures.

An investor briefing from FAIRR states that agricultural emissions, including those from meat and dairy, are on track to contribute around 70% of total allowable greenhouse gas emissions by 2050. The report estimates that the livestock sector uses approximately 10% of annual global water flows. The report also highlighted the fact that the meat and dairy industry have limited water and climate policies and goals in place.
Some of the challenges involved in the fast-food supply chain include deforestation, water risk, increased environmental regulation, rising consumer demand for plant’based food, and fears over water pollution from intensive farms. “Far-sighted investors cannot ignore these risks,” says Alice Evans, Co-Head of Responsible Investment with BMO Global Asset Management.