FAIRR and Ceres have developed company-level analysis arising from this engagement, available exclusively to our Investor Members.
The latest analysis was published in January 2020.
For fast food companies buying meat and dairy, these supply chain risks present growing challenges to their supply security, sustainability ambitions, brand and reputation, and financial growth.
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 one third of the population, consume fast food. This sector continues to expand rapidly across developed and emerging markets. A significant portion of this consumption is linked to food items that wholly or partially involve meat and/or dairy products.
Across three key areas – greenhouse gas emissions, water and land use – animal proteins have a significant environmental footprint. In August 2019, the IPCC published a special report on climate change and land arguing that the global food system both contributes to global GHG emissions and is vulnerable to climate change impacts. This increasingly creates material reputational, operational and market risks for the companies buying animal protein-based products. 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. Their productivity will also be impacted by rising temperatures.
Main contact: Iman Effendi, Research and Engagement Manager
In Phase 1 (completed in 2019), investors were encouraged by companies’ responsiveness, their increasing recognition of climate and water risks in meat and dairy supply chains, and by meaningful efforts to mitigate such risks (disclosed throughout the dialogues). However, notable gaps in the sector’s risk management strategies remain, particularly around assessing supply chain resilience to various warming scenarios, and setting time-bound, quantitative targets addressing supply chain emissions, water use, and water pollution.
In the second phase of this collaborative engagement, investors will have the opportunity to progress the dialogues beyond a contextual discussion to more specific questions. Investors will be able to request that companies commit to key interim objectives identified during Phase I of the engagement. While these objectives differ for each company, examples include:
Emphasis on animal protein supply chain risks in board discussions and formalizing existing board oversight
Development of staff capacity and expertise on sustainability
Formalising sustainability disclosure
Adding further detail to existing environmental expectations of major suppliers
Setting science-based climate and water targets
See our briefing on these issues to understand how climate and water risks affect quick-service restaurants, and why investors should engage on this issue.
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