Fast food giants have been praised for their increased focus on climate change, including setting reduced emissions targets, following a two-year focused engagement with investors.
A coalition of investors representing $11trn in asssets was formed by global network FAIRR and sustainability organisation Ceres in January 2019, to add pressure to fast food chains such as McDonald’s and Domino’s Pizza to ramp up their climate commitments. Investors encouraged the firms to de-risk their meat and dairy supply chains by setting ambitious targets to reduce their greenhouse gas emissions, to undertake climate risk scenario analysis, and reduce the water usage and water quality impacts in their animal protein value chains.
Updating on the progress, a joint statement from FAIRR and Ceres said five out of the six fast food brands engaged with have now publicly stated they will set, or have already set, science based targets (SBTs) to reduce their emissions – up from just two companies last year.
The five brands include McDonald’s, Yum! Brands, Chipotle, Domino’s and Wendy’s – last year only McDonald’s had set a science-based target (SBT), and only Yum! Brands had announced its intention to set an SBT.
Jeremy Coller, head of Jeremy Coller Foundation, founder of FAIRR and CIO of Coller Capita, commented: “For two years, investors have pressured fast food giants to come up with a recipe to stem their huge levels of climate risk. In this breakthrough year, we’re seeing that work bear fruit: fast food chains managing over 100,000 restaurants worldwide are now setting, or planning to set, aggressive climate targets aligned with a commitment to keep global warming below 2°C. An essential ingredient in meeting these ambitious targets will be protein diversification. Fast food needs to see a meaningful shift towards sustainable plant protein products if it is to deliver on its commitments.”
Progress
Among the new announcements, Yum! Brands said this week that its SBT had been approved. It now aims to reduce Scope 1, 2 and 3 emissions by 46% by 2030, consistent with reductions required to keep global warming within 1.5 degrees, and will reach net-zero emissions by 2050. This new target means Yum! Brands now has the most ambitious climate commitment among its peers in this engagement, according to FAIRR And Ceres.
Restaurant Brands International (RBI), has disclosed that it will set a global GHG target that includes its Scope 3 emissions, though it remains unclear whether it will be approved by the Science Based Targets Initiative.
Meanwhile, as a result of consumer demand, the fast-food chains are all looking at plant-based options for their menus; all cite “soaring public demand” for meat alternatives which is being driven by concerns over health risks, animal welfare and the environmental impact of livestock farming.
See also: – Investing in veganism is more than avoiding meat
McDonald’s is set to test a vegan McPlant burger in key markets this year, Domino’s added plant-based options last year, and Burger King, which launched a new plant-based ‘Rebel Whopper’ in the UK in January, has announced its ambitions to transition up to 50% of their UK menu to plant-based protein by 2030.
Weaknesses
Despite the positive progress, FAIRR and Ceres said fast food companies have been much slower in addressing water scarcity and pollution risks to their meat supply chains.
Although the six companies acknowledges the water risks, half of them have not disclosed any assessment of water risks in their supply chains, while efforts to reduce supply chain water use and pollution have been limited in scale and scope.
Kirsten James, director of water at Ceres, said: “We need these same companies to step up and make strong commitments to address water scarcity and water pollution, which also create substantial risks within dairy and meat supply chains. We hope that with continued deep engagement, investors can help raise up sustainable water management as the next frontier in fast food sustainability.”
The coalition also highlighted fast food businesses still face significant climate risk – FAIRR calculated potential future carbon taxation could cost 40 leading global protein producers $11.6bn. This is on top of 30% higher feed costs due to expanding drought, and storm damage – Texas livestock farmers lost $228m last month as a result of storms causing the deaths of newborn calves, destroying grazing fields, supply chain disruption and feedlots running empty.
Investors are concerned that the sector has yet to assess the resilience of its protein sourcing strategies in a 2 degree global warming scenario and noted the limited progress on TCFD climate risk analysis by all six companies.
“These are concerning findings for investors given that UK companies will be legally required to report against TCFD by 2025 and the US Securities and Exchange Commission (SEC) has also begun to explore potential regulations that would require companies to disclose their contributions and exposure to global warming,” the statement said.
Stephanie Mooij, responsible investment manager at Aegon Asset Management and member of the investor coalition, said: “The growing number of fast-food companies adopting ambitious emissions targets will be reassuring to ESG-conscious investors that are increasingly aware of the costs of climate change.
“However, as companies work to achieve their targets, we need to see greater adoption of TCFD-aligned scenario analysis to help companies and their investors understand the implications of a warming planet on business models and think strategically about both the risks and the opportunities it poses across their value chains. We’re proud to have been part of this collaborative engagement to help drive a more sustainable food system that is resilient and ready for the low-carbon economy.”
