Investors Call on Food Supply Chain to Reduce Climate, Water Risk

Investors Call on Food Supply Chain to Reduce Climate, Water Risk

Investor groups want the fast-food industry to adopt a supplier policy with clear requirements for suppliers of animal protein products to report and reduce greenhouse gas emissions and freshwater impacts.

Global investors representing more than USD $6.5 trillion on Jan. 29 today called on six of the largest companies in the $570 billion global fast-food sector to act urgently on the climate and water risks in their supply chains.  

The investors have sent letters to 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).

 “Far-sighted investors cannot ignore the headwinds facing the meat and dairy sector,” said Alice Evans, Co-Head of Responsible Investment, BMO Global Asset Management. 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. This investor engagement is further evidence that capital markets are putting sustainable environmental management on the menu for the fast food sector.”

The letters, facilitated by the sustainability oorganizationCeres and the FAIRR Initiative, ask companies to explain by March 2019 how they plan to enact meaningful policies and targets to de-risk their meat and dairy supply chains.

 “Every day around 84 million adults consume fast food in the U..S alone, but 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 of Coller Capital. “To put this in perspective, if cows were a country, it would be the world’s third largest emitter of greenhouse gases.

“Other high-emitting industries are beginning to set clear yet ambitious climate targets, making animal agriculture one of the world’s highest-emitting sectors without a low-carbon plan. A failure to tackle these major environmental problems in corporate supply chains puts the long-term financial sustainability of these household names under threat. Investors are calling for more strategic and innovative thinking to manage these risks.”  

A new investor briefing from FAIRR, highlights the environmental impact of the meat and dairy producers that supply the fast food sector. Agricultural emissions, including those from meat and dairy, are on track to contribute around 70% of total allowable GHG emissions by 2050. This will create an 11-gigaton GHG mitigation gap between projected emissions and the target level required to keep global warming under a 2°C threshold. The livestock sector is also estimated to use approximately 10% of annual global water flows.

The investor letters highlight that the meat and dairy industry currently has limited water and climate policies and goals in place. Analysis by the Coller FAIRR Index found that more than 70% of meat and livestock index companies do not have targets for reducing GHG emissions. The meat sector was also shown to be the lowest performing industry in Feeding Ourselves Thirsty, a 2017 analysis of water management practices released by Ceres, and is a major source of nitrogen and phosphorus pollution globally. 

The letters call on the fast food companies to:

  • Adopt a supplier policy with clear requirements for suppliers of animal protein products to report and reduce greenhouse gas (GHG) emissions and freshwater impacts.
  • Publish quantitative, time-bound targets to reduce the GHG emissions and freshwater impacts of their own meat and dairy supply chains.
  • Commit to publicly disclose progress on these targets annually.
  • Undertake a climate scenario analysis in line with the recommendations of the Task Force on Climate-related Financial Disclosures.
     

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