Fast food going green? McDonald’s, Yum! Brands, Chipotle, Domino’s and Wendy’s “pressured” to up sustainability game

03 May 2021 --- Fast food giants are committing to science-based targets (SBTs) to reduce their emissions following pressure from investors and consumers to step up actions to combat climate change.

Five out of six fast food brands managing over 100,000 restaurants worldwide are now setting or planning to set aggressive SBTs aligned with a commitment to keep global warming below 2°C. These include McDonald’s, Yum! Brands (owner of KFC, Pizza Hut and Taco Bell), Chipotle, Domino’s and Wendy’s, up from just two brands last year (McDonald’s and Yum! Brands).

The rapid uptake of ambitious pledges shows the fast food sector is accelerating action on climate amid rising pressure from investors.

“For two years, investors have pressured fast food giants to come up with a recipe to stem their huge levels of climate risk,” says Jeremy Coller, head of Jeremy Coller Foundation and founder of FAIRR.

The FAIRR Initiative is an investor network that helps define environmental, social and corporate governance (ESG) issues linked to intensive livestock and fish farming and provides tools to integrate this information into investment decisions.

Investors are concerned that the fast food sector has yet to assess the resilience of its protein sourcing strategies.Initiating change
The coalition of fast food brands, facilitated by global investor network FAIRR and sustainability organization Ceres, originally launched in January 2019 with the backing of investors with combined assets of US$6.5 trillion.

Since then, it has grown by 75 percent to include over 90 investors with combined assets of US$11.4 trillion, signaling an increased awareness among investors of the threats posed to food systems by climate change, water scarcity, and water pollution.

In addition to those five companies, a sixth company, Restaurant Brands International (owners of Burger King, Popeyes and Tim Hortons), has disclosed that it will set a global GHG target that includes its Scope 3 emissions, though it remains unclear whether it will be approved by the Science Based Targets Initiative.

The protein transition
The firms were asked to de-risk their meat and dairy supply chains by setting ambitious targets to reduce their greenhouse gas emissions, to undertake climate risk scenario analysis, and reduce the water usage and water quality impacts in their animal protein value chains.

“An essential ingredient in meeting these ambitious targets will be protein diversification. Fast food needs to see a meaningful shift toward sustainable plant protein products if it is to deliver on its commitments,” explains Coller.

Public demand for meat alternatives is soaring and becoming prominent in new product offerings. Meat alternatives are being driven by concerns over potential health risks, animal welfare issues, ethics and the environmental impact of livestock farming.

These consumer trends are pushing fast food to go green. This year, McDonald’s is set to test a vegan McPlant burger in key markets. In other developments, Domino’s added plant-based options last year, and Burger King, who launched a new plant-based Rebel Whopper in the UK in January, has announced its ambitions to transition up to 50 percent of their UK menu to plant-based protein by 2030.

US livestock producers face 30 percent higher feed costs due to expanding drought this year.Climate change takes a toll
This year, US livestock producers face 30 percent higher feed costs due to expanding drought. Texas livestock farmers lost US$228 million last month to storm damage, with newborn calves killed, grazing fields destroyed, supply chains disrupted and feedlots running empty.

Climate change is already proving costly for the industry: FAIRR has calculated that potential future carbon taxation could cost 40 leading global protein producers a further US$11.6 billion.

Investors are concerned that the sector has yet to assess the resilience of its protein sourcing strategies in a 2°C global warming scenario. This type of scenario-specific assessment is a key recommendation of the Task Force on Climate-Related Financial Disclosures (TCFD).

TCFD-aligned climate disclosure in the agriculture, food and forest products sector linked to company strategy fell by 7 percent between 2017 to 2019, and the engagement finds limited progress on TCFD climate risk analysis by all six companies.

These are concerning findings for investors, given that UK companies will be legally required to report against TCFD by 2025, and the US Securities and Exchange Commission (SEC) has also begun to explore potential regulations that would require companies to disclose their contributions and exposure to global warming.

Weak on water
Although all six companies now acknowledge the materiality of water risks to their supply chains, half haven’t disclosed any assessment of water risks in their supply chains. Meanwhile, efforts to reduce supply chain water use and pollution have been limited in scale and scope.

Kirsten James, director of water at Ceres says: “It’s encouraging to see the amount of progress by the fast food sector in tackling climate action in just two years. However, 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. We hope that with continued deep engagement, investors can help raise up sustainable water management as the next frontier in fast food sustainability.”

Accelerating plant-based
Last month, the Good Food Institute and more than 60 key players and stakeholders in the alternative protein space called on the US federal government to invest in the science and technology of alt-proteins as a “national priority” in the fiscal year 2022 budget.

In February, Beyond Meat inked two high-profile deals with fast food giants McDonald’s and Yum! Brands to accelerate plant-based products in quick-service restaurants.

By Missy Green

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