Firms including McDonald’s and Domino’s have not updated their supplier policies to reflect ESG priorities © Photo by Matthew Horwood/Getty images
Firms including McDonald’s and Domino’s have not updated their supplier policies to reflect ESG priorities © Photo by Matthew Horwood/Getty images

Fast food firms' supplier policies 'not fit' to combat water and CO2 risks

Fast food restaurants are failing to align supplier policies with corporate climate and water commitments, according to a report.

The report, by sustainability non-profit Ceres and ESG investor network Fairr, said firms including McDonald’s and Domino’s had not updated their supplier policies to reflect ESG priorities, leaving them “not fit for purpose”.

Requirements in policies focused on animal welfare, deforestation, food safety, labour rights, and regulatory compliance, but there was little or no emphasis on suppliers’ emissions, water, and land use footprints.

The report said: “The current environmental requirements of supplier policies are not fit for purpose to deliver the GHG emissions reductions and water-related risk mitigation measures urgently needed in agricultural supply chains.”

Companies used language in policies encouraging, rather than requiring, climate and water sustainability.

The six target companies in the report – Chipotle, Domino’s, McDonald’s, Restaurant Brands International (which owns Burger King and Tim Horton’s), Wendy’s, and Yum! Brands (which owns KFC and Pizza Hut) – had adopted greenhouse gas reduction targets approved by the Science-Based Targets initiative, but some had not updated their supplier policies or code of conduct to reflect this. 

Other companies had no clear supplier expectations for climate and water risks, only general expectations over climate impact, or a simple expectation of regulatory compliance.

The report said companies must expand their supplier policies to serve as an extension of their own climate and water commitments. They should engage with key suppliers and regularly audit their progress to ensure proactive steps are being taken.

Some brands, such as McDonald’s, had made progress by requiring suppliers to answer CDP’s climate change and forests questionnaires.

The report cited research showing agricultural supply chains are especially vulnerable to climate and water risk. The livestock industry’s reliance on pastures and feeds makes it vulnerable to global warming, which can damage freshwater availability, soil quality, and pollinator health.

Livestock production is the main agricultural emissions source, and leading driver of water depletion and degradation.

The report provided other steps for companies to take to address the “global water crisis”.

1. Board oversight 

Fast food brands should disclose actions and the results of efforts to resolve climate and water risks frequently to ther board.

2. Implementation plans 

Companies should put into place emissions reduction plans, including the entire animal agricultural supply chain, with alignment between supplier codes of conduct and climate commitments.

3. Water risk 

Firms need to conduct comprehensive water risk assessments along their animal protein supply chain. This will help prioritise vulnerable regions. Disclosing the scope and timing of this assessment will also be vital to ensure effectiveness.

4. Water targets 

Companies must commit to water-use reduction targets informed by local water supply challenges. Commitment to eliminating pollution in operations by 2025, and throughout the value chain by 2030, is also critical.  

​​By promoting agricultural practices with suppliers, such as cover cropping, reduced tillage, agroforestry, and fertiliser optimisation, firms can help farmers improve the water retention of soil, reducing nutrient runoff and enhancing resilience to droughts and flooding.

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