Is Nestlé and McDonald’s climate ambition ‘undermined’ by ‘plodding’ meat and dairy suppliers?

By Katy Askew contact

- Last updated on GMT

Protein suppliers for some of the world's largest brands could undermine climate commitments: FAIRR / Pic: GettyImages-DronG
Protein suppliers for some of the world's largest brands could undermine climate commitments: FAIRR / Pic: GettyImages-DronG

Related tags: Net zero, Carbon emissions, Protein, animal protein, Climate change

Global investor network FIARR warns that high street brands like Nestlé and McDonald’s risk missing their climate targets due to scant progress to reduce emissions from meat and dairy suppliers. But the food giants tell FoodNavigator that partnership and collaboration with the supply chain on climate remains a priority.

New data released this week in the Coller FAIRR Protein Producer Index - which assesses the sustainability of large meat, fish and dairy producers – came as sober reading for those hoping to see strong progress toward reducing the climate impact of animal production.

The Index examines 60 publicly-listed animal protein producers, worth a combined $338bn, and rates the level of ESG risk these companies expose investors to.

In total, 86% of major meat and dairy suppliers are still failing to set ‘meaningful’ targets to reduce greenhouse gas emissions, the Index found.

“FAIRR’S data shows three in four global meat and dairy giants are hiding the full extent of their climate emissions or failing to set comprehensive targets to reduce them,”​ Jeremy Coller, Founder of the $25 trillion FAIRR network and CIO of Coller Capital, stressed.

These suppliers provide the meat and dairy inputs for many of the burgers, nuggets and ready meals sold by high street brands. “Factory farms are undermining both the climate ambitions of high-street brands and the viability of the Paris Agreement,”​ Collier warned.

Climate action 'severely undermined' by suppliers 

Many large consumer-facing food businesses have made significant commitments to curb the climate impact of their operations.

Nestlé has said that it will reach net zero emissions across scopes 1, 2 and 3 of its business by 2050. McDonald’s, meanwhile, has pledged a 31% reduction in emissions by 2030, as well as a commitment to eliminate deforestation in its supply chain by this date.

However, FAIRR’s Index found that McDonald’s and Nestlé currently use suppliers like Fujian Sunner in China, Seaboard Corporation in the US and Cherkizovo Group in Russia who score 1% or less on FAIRR’s GHG criteria. This means they do not declare any GHG emissions and/or have no public targets to reduce them.

Today’s findings, FAIRR warned, suggest that the climate pledges of major high-street brands are being ‘severely undermined’ by the animal protein supply chain’s failure to act on climate change.

GettyImages-spflaum1 McDonalds
FARR says the climate ambitions of well known brands are at risk / Pic: GettyImages-spflaum1

‘Engaging our suppliers is critical’

When contacted by this publication, both McDonald’s and Nestlé reiterated their commitment to achieving their climate goals which, they said, include emissions in their supply chains.

“To secure a thriving food system for the future, the food industry as a whole has an opportunity – and responsibility – to help mitigate the impacts of climate change and find more sustainable ways to feed people. At McDonald’s, our responsible sourcing strategy includes a climate action target to reduce greenhouse gas emissions intensity in our supply chain by 2030, as well as a commitment to eliminate deforestation from our global supply chains by 2030, prioritizing by end of 2020 the raw materials we buy in the greatest volume: beef, chicken (including soy in feed), palm oil, coffee and the fibre used in guest packaging,”​ a spokesperson for McDonald’s emphasized.

Meanwhile, Nestlé emphasized the work that has already been undertaken to map its carbon footprint since the net zero pledge was announced a year ago. “Nestlé is committed to achieving net zero carbon emissions from ‘farm to fork’ by 2050. Since announcing our net zero pledge in September 2019, we’ve been working hard on assessing exactly where our emissions come from and how we can reduce them, working in partnership with others,”​ a spokesperson for the Swiss food giant explained.

To hit its target, Nestlé acknowledged the necessity of getting suppliers to cut their carbon footprints, the spokesperson continued. “The vast majority of our emissions originate from our supply chain, particularly in the agricultural sector. This means that engaging our suppliers is critical to success. We look forward to making rapid progress, building on decades of success in improving social and environmental conditions in our supply chains.”

Likewise, McDonald’s insisted that it needs to work alongside suppliers to cut scope 3 emissions. “We are proud of our ongoing partnership with our suppliers and producers to accelerate action and achieve the widespread adoption of more sustainable practices. We work closely with our biggest suppliers in the product categories in which we can have the greatest impact and actively encourage these suppliers to set targets, measure and report emissions and take action to make reductions. We know we cannot drive industry-wide change alone, and we encourage all companies to work collaboratively on solutions.”

Nevertheless, Teni Ekundare, Investor Outreach Manager at FAIRR, told us that big name brands could ‘do more’ to achieve meaningful change at their suppliers.

GettyImages-Julio Ricco
Pic: GettyImages-Julio Ricco

Brands as agents of change

“Consumer brands like Nestlé and McDonalds need to do more to encourage action from their suppliers… including making disclosure on emissions part of the procurement process, incentivizing innovation in the agriculture and forestry sectors - for example to capture more carbon - and perhaps supporting legislation to expand renewable energy or to establish carbon pricing,"​ Ekundare urged. 

Most importantly, Ekundare continued, urgent action is required to address the link between animal protein production and deforestation. “Perhaps the most significant step should be to monitor and set targets to stamp out any deforestation that is being undertaken in their supply chain in order to provide feed for livestock… Amazonian deforestation hit its highest levels in over a decade in 2019, and continued to climb in 2020."

Ekundare believes that, for companies who have set their own science-based targets, this approach will have to feed through to their suppliers. "I think that the process of setting and implementing a science-based target will automatically require the suppliers of the committed firm to start reducing their emissions in line with what science demands.”

According to the index, seven suppliers have committed to a science-based target. Of these, three (CPF, Cranswick and Marfrig) are in the process of actually setting one. But the deep supply chain analysis required this takes time.

Nevertheless, FAIRR expects that this is going to be increasingly important for food makers and their suppliers with climate action ‘absolutely’ expected to become part of commercial discussions.

“With COP26 on the horizon, the regulatory headwinds are pushing for further and faster action on climate and that is increasingly shaping commercial discussions. Separate analysis by FAIRR found that carbon taxes alone could cost 40 of the biggest meat companies up to $11.6 billion of EBITDA by 2050,”​ Ekundate noted.

FAIRR's league table 

2020 Rank overall

Company Legal Name

Country

Category

1

Mowi ASA

Norway

Low risk

2

Maple Leaf Foods Inc

Canada

Low risk

3

Bakkafrost P/F

Faroe Islands

Low risk

4

Marfrig Global Foods SA

Brazil

Medium risk

5

Tyson Foods Inc

USA

Medium risk

6

Grieg Seafood ASA

Norway

Medium risk

7

Fonterra Co-operative Group Ltd

New Zealand

Medium risk

8

Lerøy Seafood Group ASA

Norway

Medium risk

9

JBS S.A.

Brazil

Medium risk

10

BRF SA

Brazil

Medium risk

11

Hormel Foods Corp

USA

Medium risk

12

Charoen Pokphand Foods PCL

Thailand

Medium risk

13

Cranswick PLC

UK

Medium risk

14

Thai Union Group PCL

Thailand

Medium risk

15

Multiexport Foods SA

Chile

Medium risk

16

WH Group Ltd

China

Medium risk

17

Grupo Nutresa S.A.

Colombia

Medium risk

18

Salmones Camanchaca SA

Chile

Medium risk

19

Vietnam Dairy Products JSC

Vietnam

Medium risk

20

SalMar ASA

Norway

Medium risk

21

LDC SA

France

Medium risk

22

China Mengniu Dairy Co Ltd

China

Medium risk

23

Bell Food Group AG

Switzerland

High risk

24

NH Foods Ltd

Japan

High risk

25

Tassal Group Ltd

Australia

High risk

26

Scandi Standard AB

Sweden

High risk

27

Inner Mongolia Yili Industrial Group Co Ltd

China

High risk

28

GFPT PCL

Thailand

High risk

29

Australian Agricultural Co Ltd

Australia

High risk

30

RCL Foods Ltd/South Africa

South Africa

High risk

31

MHP SE

Ukraine

High risk

32

Cal-Maine Foods Inc

USA

High risk

33

Minerva SA

Brazil

High risk

34

Beijing Sanyuan Foods Co Ltd

China

High risk

35

Nippon Suisan Kaisha Ltd

Japan

High risk

36

QAF Ltd

Singapore

High risk

37

Almarai Co JSC

Saudi Arabia

High risk

38

Maruha Nichiro Corporation

Japan

High risk

39

Astral Foods Ltd

South Africa

High risk

40

Japfa Ltd

Singapore

High risk

41

Great Wall Enterprise Co Ltd

Taiwan

High risk

42

QL Resources Berhad

Malaysia

High risk

43

New Hope Liuhe Co Ltd

China

High risk

44

Industrias Bachoco SAB de CV

Mexico

High risk

45

Seaboard Corporation

USA

High risk

46

Sanderson Farms Inc

USA

High risk

47

Thaifoods Group PCL

Thailand

High risk

48

San Miguel Food and Beverage Inc

Philippines

High risk

49

Cherkizovo Group PJSC

Russia

High risk

50

Inghams Group Ltd

Australia

High risk

51

China Modern Dairy Holdings Ltd

China

High risk

52

COFCO Meat Holdings Ltd

China

High risk

53

Beijing Shunxin Agriculture Co Ltd

China

High risk

54

Wens Foodstuff Group Co., Ltd.

China

High risk

55

Prima Meat Packers Ltd

Japan

High risk

56

Grupo Bafar SAB de CV

Mexico

High risk

57

Muyuan Foodstuff Co Ltd

China

High risk

58

Venky's India Ltd

India

High risk

59

Fujian Sunner Development Co Ltd

China

High risk

60

Fortune Ng Fung Food Hebei Co Ltd

China

High risk

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