Published on March 19th, 2019 | by Carolyn Fortuna0
Global Food Investors Want To Have It Their Way, So They Told Restaurants To Make Supply Chains Sustainable
March 19th, 2019 by Carolyn Fortuna
What did you think just before you bit into your last juicy burger at your favorite fast food restaurant? Was it the delectable smell of charcoal roasting? The fresh-off-the grill heat? The melange of tastes reminiscent of your childhood leisure? The satisfaction from a tasty meal at a good price?
When you were ready to munch on that burger, did you stop to think about the path that it took for it to get from the cow on a green field to your local neighborhood market? Did you consider the various stages along the way that were — or were not — sourced sustainably?
Essentially, that’s what the FAIRR Initiative and Ceres did earlier this year. They jointly led a collaborative engagement with 6 quick-service restaurant brands, asking them to set and report on clear strategies for how they are de-risking their meat and dairy supply chains. The 2 organizations advised the fast food companies to develop strong supplier policies, commit to science-based targets, and undertake climate risk scenario analyses.
The $6.5 trillion investor coalition challenged the following fast food giants to set tough targets to reduce the greenhouse gas emissions and water usage of their meat and dairy suppliers:
- Domino’s Pizza
- Restaurant Brands International (Burger King)
- Chipotle Mexican Grill
- Wendy’s Co.
- Yum! Brands (KFC and Pizza Hut)
Over 80 investors, including BMO Global Asset Management, Aviva Investors, and Aegon Asset Management, joined the engagement, which warns that “animal agriculture is the world’s highest-emitting sector without a low-carbon plan.” A failure to tackle these major environmental problems in corporate supply chains, they said, puts the long-term financial sustainability of these household names under threat.
The pool of investors called for more strategic and innovative thinking to manage these risks.
Agriculture and land use constitute 24% of global GHG emissions, and meat and dairy supply chains are major contributors and are also among the biggest drivers of tropical deforestation. Moreover, their productivity will also be impacted by future rising temperatures. This set of factors poses increasing material reputational, operational, and market risks for companies buying animal protein-based products.
The fast food sector plays a dominant role in feeding our global population. On any given day, around 84.8 million adults in the US — nearly 1/3 of the population — consume fast food. Because other high-emitting industries, such as cars or oil and gas, are beginning to set clear yet ambitious climate targets, animal agriculture stands as one of the world’s highest-emitting sectors without a low-carbon plan.
Global Food Investors are Concerned about their Bottom Lines
Global food investors are increasingly concerned about the animal agriculture environmental footprint across 3 key areas: greenhouse gas emissions, water, and land use. According to FAIRR and Ceres, conventional livestock production systems have enjoyed uninterrupted growth over the last few decades. That growth has largely come at the expense of widespread natural capital degradation, which is creating considerable social and environmental stresses and heightening the impacts of climate change worldwide.
Given this sector is highly resource-intensive and dependent on a range of unpriced externalities, global food investors expect that future growth will likely be constrained in the longer term. These risks present challenges to the supply security, sustainability ambitions, brand and reputation, and financial growth of food companies that depend on the sale of products that wholly or partially involve intensively farmed animal proteins.
Jeremy Coller, Founder of FAIRR and Chief Investment Officer of Coller Capital, noted that “the inconvenient truth of convenience food is that the environmental impacts of the sector’s meat and dairy products have hit unsustainable levels. To put this in perspective, if cows were a country, it would be the world’s third largest emitter of greenhouse gases.”
- Livestock farming is responsible for 14.5% of global GHG emissions.
- On a commodity basis, beef and dairy cattle are responsible for a significant portion of total emissions, contributing 65% of the sector’s overall GHG outputs.
- These are followed by pork (9% of emissions) and poultry and eggs (8%).
- Feed production is the dominant driver of GHG emissions across all commodities.
- Agriculture is responsible for more than 70% of global water use, and livestock production accounts for nearly one-third of that use.
- Nearly 98% of animal agricultural water goes towards the irrigation of grain for animal feed.
Advocacy to Push Animal Agriculture to Set Clear Climate Targets
Companies in the spotlight manage over 120,000 restaurants worldwide. The investors asked the fast food companies to adopt the following measures to ensure a clear sustainability strategy and a more forward-looking approach to secure its own supply security, financial growth, and global food security.
- Supplier policy on animal protein sourcing: Ensure that the company develops a supplier policy or code for animal protein commodities that has clear requirements for direct and indirect suppliers to measure, report and reduce GHG emissions and freshwater impacts from the company’s agricultural supply chains.
- Targets and metrics: Publish quantitative, time-bound targets and associated metrics to reduce the impacts of the company’s animal protein supply chains, with a specific focus on freshwater impacts and GHG emissions. These targets should address the largest sources of relevant GHG emissions and water use and pollution in the company’s animal protein supply chains, including animal farming, slaughtering and processing, manure management and fertilizer use for growing feed. They encouraged this to be supported by adopting a supplier engagement target that determines a minimum threshold for actively engaging
with key suppliers on these issues.
- Disclosure: Commit to publicly disclosing on progress towards these targets on an annual basis, in company reports and/or through other public reporting platforms such as CDP.
- Scenario analysis/risk assessment: Commit to undertaking and publishing a scenario analysis to assess the resilience of the organization’s animal protein (meat, dairy, eggs, fish) commodity sourcing strategy against alternative warming scenarios, including, at a minimum, a 2°Celsius scenario over the medium to long term.
Here are some sample statements from the letters that were sent to the major fast food conglomerates.
- “We are keen to see the company take a leadership role in decoupling this growth from the mounting environmental impacts and risks linked to the production of animal protein products, which can threaten long-term sustainability.”
- “The meat sector was the lowest performing industry in Ceres’ 2017 Feeding Ourselves Thirsty ranking, an analysis of water management practices by food companies across their operations and their supply chain, with US meat companies receiving an average of only 15 points on a scale of 1-100.”
- “The importance of managing the impacts of animal protein supply chains is seeking to open restaurants around the world and this is contributing to strong profitability and revenue growth.”
- “In our view, the scale of the company’s animal protein sourcing necessitates a deeper and more strategic approach to de-risking these supply chains.”
The engagements were supported by several investors who are also members of the Interfaith Center on Corporate Responsibility (ICCR).
Mindy Lubber, president and CEO of Ceres, noted that fast-food giants “deliver speedy meals, but they have been super slow in responding to their out-sized environmental footprints.” He described how investors are eager to see more leadership from these companies to reduce the mounting climate and water risks linked to their meat and dairy suppliers. “From eliminating deforestation to reducing water waste, cleaning up their supply chains will have enormous impacts on the animal agriculture sector as a whole, and dramatically increase our ability to meet the goals of the Paris Agreement to limit global warming.”
The investor letter highlighted the fact 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. Alice Evans, co-head of Responsible Investment, BMO Global Asset Management, says, “Far sighted investors cannot ignore the headwinds facing the meat and dairy sector. 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.”
If you’d like to read a white paper that provided data for the global food investors, try “Managing Environmental Risks in Meat and Dairy Supply Chains.”
Images copyright free from Pixabay
Follow CleanTechnica on Google News.
It will make you happy & help you live in peace for the rest of your life.