Investors Hungry for Action on Climate Change

A multi-trillion dollar investor coalition is demanding that the world’s largest fast-food brands, including McDonald’s, Domino’s Pizza, and KFC, reduce greenhouse gas emissions and water use in their supply chains.

The group – containing more than 80 investors worth over US$6.5 trillion (A$9 trillion) – said animal agriculture was one of the world’s highest-emitting sectors without a low-carbon plan.

In a letter sent by sustainability organisation Ceres and the FAIRR Initiative to six major fast-food brands, the companies have been asked to explain how they plan on enacting meaningful policies and targets to reduce the environmental impact of their meat and dairy suppliers.

The brands targeted are Domino’s Pizza, McDonald’s, Yum! Brands (owners of KFC and Pizza Hut), Restaurant Brands International (owners of Burger King), Chipotle Mexican Grill, and Wendy’s Co. Together they manage over 120,000 restaurants worldwide.

Jeremy Coller, founder of FAIRR Initiative and chief investment officer of Coller Capital, said with around 84 million adults consuming fast food every day in the US alone, the damaging impacts of the sector’s meat and dairy products had hit unsustainable levels.

To highlight this, he noted that if cows were a country, they would be the world’s third largest emitter of greenhouse gases.

“A failure to tackle these major environmental problems in corporate supply chains puts the long-term financial sustainability of these household names under threat,” Coller said.

“Investors are calling for more strategic and innovative thinking to manage these risks.”

Mindy Lubber, president and CEO of Ceres, said while fast-food giants delivered speedy meals, they had been super slow responding to their “out-sized environmental footprints”.

“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,” Lubber said.

“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 to limit global warming.”

The investors involved in the coalition include BMO Global Asset Management, Aviva Investors and Aegon Asset Management.

The letter calls on fast-food companies to adopt a supplier policy with clear requirements for suppliers to report and reduce their greenhouse gas emissions and freshwater impacts.

As well as publishing time-bound targets to achieve this, the investors want brands to commit to publicly disclosing progress on these targets every year.

A recent investor briefing from FAIRR said agricultural emissions were on track to contribute around 70 per cent of the allowable greenhouse emissions needed by 2050 to keep the world’s temperature rise under 2°C this century.

Yet analysis by the Coller FAIRR Index found that more than 70 per cent of meat and livestock index companies did not have targets for reducing emissions.

Eugenie Mathieu, a senior SRI analyst from Aviva Investors, said: “From field to fork, investors want to understand which food companies are monitoring and minimising long-term environmental risks… This [letter] sends a clear message to the fast-food sector that investors expect them to deliver sustainable supply chains.”

In wake of these demands, McDonald’s has come out and defended its environmental record.

A spokesperson for the company told the BBC that in 2018, McDonald’s became the first restaurant company in the world to set a target to reduce greenhouse gas emissions, which has been approved by the Science Based Targets initiative.

“This includes reducing emissions intensity in our supply chain through engagement and collaboration with suppliers and farmers – which we expect will prevent 150 million metric tons of greenhouse gas emissions from being released into the atmosphere by 2030,” they said.

The spokesperson said this was the equivalent of taking 32 million passenger cars off the road for an entire year or planting 3.8 billion trees and growing them for a decade.