At a time when investors are increasingly assessing the sustainability of their assets, a coalition of investors representing $6.5 trillion have sent letters to fast-food giants urging them to address the climate and water risks in their supply chains. The letter intends to send a clear message to the fast food sector that investors “expect them to deliver sustainable supply chains.”

More than 80 investors signed the letter, which was sent to Domino’s Pizza, McDonald’s, Restaurant Brands International (owners of Burger King), Chipotle Mexican Grill, Wendy’s, and Yum! Brands (owners of KFC and Pizza Hut). The letter asked these companies to enact “meaningful policies” and targets to reduce risk in their meat and dairy supply chains, and to explain by March of this year how they plan to do so. Analysis by the Coller FAIRR Index found that fewer than 30% of meat and livestock index companies have targets for reducing GHG emissions.

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

Chief Investment Officer of Coller Capital and founder of FAIRR, Jeremy Coller, points out that other high-emitting industries, such 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. A failure to tackle these major environmental problems in corporate supply chains, he says, puts the long-term financial sustainability of these companies under threat. “Investors are calling for more strategic and innovative thinking to manage these risks,” he adds.  

Specifically, the letter calls 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 (TCFD).

New Report Highlights Meat and Dairy Industry Shortcomings

A new investor briefing from FAIRR states that agricultural emissions, including those from meat and dairy, are on track to contribute around 70% of total allowable GHG emissions by 2050. The livestock sector uses approximately 10% of annual global water flows, the report estimates.

The investor letter highlights that the meat and dairy industry currently has limited water and climate policies and goals in place.

Challenges 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.