Fast food giants including McDonald’s and Domino’s are ramping up their climate commitments under pressure from an $11 trillion (€9 trillion) global investor engagement in what has been called a “breakthrough year”.
Following a two-year investor engagement project with six leading fast food chains, five brands have now publicly stated that they will set, or have already set, science-based targets to reduce their emissions.
This also includes decarbonising their supply chains – often where the majority of a company’s greenhouse gas emissions come from via so-called Scope 3 emissions.
Last year, only two companies had made such commitments, according to research by the FAIRR initiative, a group of institutional investors involved with impact investing and engaging with companies.
As of April 30, McDonald’s, Yum! Brands, Chipotle, Domino’s and Wendy’s have all made commitments to set “aggressive” targets to reduce their emissions.
Jeremy Coller, founder of FAIRR and CIO of Coller Capital, said it was a “breakthrough” year for the engagement.
“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,” he added.
Meanwhile, the sixth company, Restaurant Brands International – owners of Burger King – have said they will set a global greenhouse gas target including indirect emissions in the supply chain, but it remains unclear whether these will be science-based.
Despite this overall progress, however, FAIRR highlighted that fast food still faces significant climate risk.
Climate change is already proving costly for the industry, the group said. According to calculations by FAIRR, potential future carbon taxation could cost 40 leading global protein producers a further $11.6 billion.
Water security risk also poses a major issue. Although all six companies now acknowledge the materiality of water risks to their supply chains, half haven’t disclosed any assessment of these risks.
Meanwhile, efforts to reduce supply chain water use and pollution have been limited in scale and scope, FAIRR stated.
Kirsten James, director of water at sustainability-focused non-profit 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.”
Investors involved in the engagement include Aviva Investors, Aegon Asset Management, and Skandia Mutual Life Insurance Co.
Eugenie Mathieu, a senior analyst at Aviva Investors, said: “As investors, we have a vital part to play in the fight against climate change to safeguard our clients’ investments and ensure the stability of our planet and its natural resources.”
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