2030 Finance | January 31, 2019

Investors with $6.5 trillion demand fast-food giants manage climate risks

Dennis Price
ImpactAlpha Editor

Dennis Price

ImpactAlpha, January 31 – McDonald’s and Burger King serve up speedy meals, but they’ve been slow to shore up their meat and dairy supplies from mounting climate and water risks.

A group of more than 80 investors, representing $6.5 trillion in assets, sent letters to Domino’s Pizza, McDonald’s, Restaurant Brands International (owners of Burger King), Chipotle Mexican Grill, Wendy’s Co. and Yum! Brands (owners of KFC and Pizza Hut) setting a March deadline for the companies to cough up plans for managing climate risks in their supply chains.

“Those firms that fail to meet this challenge face regulatory and reputational risks that put their long-term financial sustainability under threat,” said Heike Cosse of Aegon Asset Management, which has $380 billion under management. (Read – and listen to – “Risky Business: Corporations need market signals to reduce climate risks”)

  • De-risking supply chains. The letter, organized by the FAIRR Initiative and Ceres, asks the fast-food giants to require suppliers to reduce emissions and freshwater impacts, disclose their progress each year and model their risks in line with the Task Force on Climate-related Financial Disclosures.
  • Sustainable food innovation. While the incumbent food giants drag their feet, upstart firms are raising capital to improve the efficiency of farms, decrease food waste and shifting eating habits toward healthy, plant-based diets. In 2017, for example, investors made 28 investments in early-stage firms in precision agriculture, a market expected to reach nearly $8 billion by 2022.

“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,” said Alice Evans of BMO Global Asset Management, with $260 billion under management.