January 29, 2019 / News

Investors tackle fast food giants over climate

By Joe McGrath, ESG Clarity

The existing business models of global fast food companies could be threatened by global warming, investors claim

Investors tackle fast food giants over climate

Fund firms with a collective $6.5trn dollars in assets are lobbying the world’s largest fast food companies, amid fears that their business models may be vulnerable to climate and water risks in their supply chains.

Investors from 80 fund groups including BMO Global Asset Management, Aegon Asset Management and Aviva’s fund management arm have written to McDonalds, Domino’s Pizza and the owners of KFC, Pizza Hut and Burger King.

In a statement announcing the initiative, Jeremy Coller, founder of Fairr and CIO of Coller Capital, said the animal agriculture sector has yet to establish credible plans to manage greenhouse gasses, while the oil and gas, and automotive sectors, have made big improvements.

“Every day around 84 million adults consume fast food in the US alone, but the inconvenient truth of convenience food is that the environmental impacts of the sector’s meat and dairy products have hit unsustainable levels,” he explained.

“To put this in perspective, if cows were a country, it would be the world’s third largest emitter of greenhouse gases.”

Coller added that the animal agriculture sector is vulnerable to “major environmental problems” which could threaten the long-term sustainability of these household names. “Investors are calling for more strategic and innovative thinking to manage these risks,” he said.

In letters to the major fast food groups, the investors called for new policies which set clear requirements for suppliers of animal protein products to report on greenhouse gas emissions and their impact on freshwater sources.

The investor group have also asked for time-bound targets to be set for when these companies would seek to reduce their emissions and to publicly disclose their progress on these metrics regularly.

“Far sighted investors cannot ignore the headwinds facing the meat and dairy sector,” said Alice Evans, co-head of Responsible Investment at BMO Global Asset Management.

“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.”

Further details on the contents of the letter are available here.