Fast food brands under fire from investors over climate risks

Investors worth £5 trillion have claimed that some of the world’s largest foodservice chains are ignoring the environmental impact of their supply chains.

Domino’s Pizza, McDonald’s, Restaurant Brands International (owners of Burger King), Chipotle Mexican Grill, Wendy’s Co. and Yum! Brands (owners of KFC and Pizza Hut) have continued to expand with little concern for carbon emissions or water use, according to letters signed by a coalition of 80 investors.

The firms have all been asked to explain, by March 2019, how they plan to enact meaningful policies and targets to de-risk their meat and dairy supply chains.

Letters coordinated by the Farm Animal Investment Risk & Return (Fairr) Initiative and sustainability organisation Ceres have been sent to each company detailing how nearly all their “phenomenal global growth” is linked to the popularity of products that wholly or partially involve animal protein. This puts the businesses at risk given global targets to reduce emissions.

“The inconvenient truth of convenience food is that the environmental impacts of the sector’s meat and dairy products have hit unsustainable levels, “ said Jeremy Coller, founder of Fairr and chief investment officer at Coller Capital. “Other high-emitting industries are beginning to set clear yet ambitious climate targets [but] failure to tackle these major environmental problems in corporate supply chains puts the long-term financial sustainability of these household names under threat.”

In the letters, the investors warned: “In our view, the scale of the company’s animal protein sourcing necessitates a deeper and more strategic approach to de-risking these supply chains. Without a clear sustainability strategy and a more forward-looking approach, we believe [you] will endanger not only [your] own supply security and financial growth, but also global food security.”

They called on the firms, which together manage 120,000 restaurants, to develop new codes for animal protein commodities with “clear requirements” for reducing greenhouse gas emissions and freshwater impacts. They should also publish targets to reduce the impacts of their animal protein supply chains, and publicly disclose progress against these.

Eugenie Mathieu, a senior analyst at Aviva Investors, added: “From field to fork, investors want to understand which food companies are monitoring and minimising the long-term environmental risks in their supply chain. This engagement sends a clear message to the fast food sector that investors expect them to deliver sustainable supply chains.”

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