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Six fast food giants have bowed to investor pressure and ramped up their climate commitments after a two-year engagement process, according to an $11.4tn investor coalition.
Headed by FAIRR and Ceres, the group of now more than 90 investors including Aegon, LGIM and Aviva began their engagement with McDonald’s, Yum! Brands, Chipotle, Restaurant Brands International (RBI), Wendy’s, and Dominos in 2019 to push them to make commitments regarding climate – including undertaking climate scenario analysis in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) – and water risks in their supply chains.
All companies apart from RBI – the owner of Burger King, Popeyes and Tim Hortons – have now either set or stated they will set Science-Based Targets (SBT) to reduce their emissions, according to the coalition. This is a notable change from the coalition’s last update in January last year, when only McDonald’s had set an SBT and Yum! Brands had announced its intention to set one.
“This rapid uptake of ambitious pledges in just one year shows the fast food sector is accelerating action on climate amidst rising pressure from investors,” said the coalition.
RBI has stated it will set a global GHG target including its Scope 3 emissions but it remains unclear whether it will be approved by the Science-Based Targets Initiative.
Jeremy Coller, Head of Jeremy Coller Foundation, Founder of FAIRR, and CIO of Coller Capital, said an essential part in meeting these ambitions targets will be for the fast food chains to diversify the proteins they use to plant-based proteins.
However, the investors warned there has been “limited progress on TCFD climate risk analysis by all six companies”.
Another concern is that the chains have been “much slower” to address water scarcity and pollution risks. Although all six companies now acknowledge the materiality of water risks to their supply chains, half 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.
The lack of change regarding water was highlighted in the group’s 2020 report – at the time none of the above had “set specific requirements on climate and water for meat and dairy suppliers, with unclear compliance monitoring systems across the board”.
“We hope that with continued deep engagement, investors can help raise up sustainable water management as the next frontier in fast food sustainability,” said Kirsten James, Director of Water, Ceres.
Moving forward, the investors are beginning the third phase of their engagement – open for new investors to join – which will focus on tackling water risks and improving climate scenario analysis.