Shareholders Driving Climate Action in the Fast Food Industry

The food industry is a major contributor to global greenhouse gas emissions, with beef production being a significant driver. While fast food chains have been slow to address their climate impact, a growing movement of shareholder activists is pushing for change. These shareholders are using their financial influence to hold companies accountable and drive measurable climate targets, starting with industry giants like Jack in the Box and Wingstop.

Empowering Shareholders to Enact Real Change

Leveraging the Financial System for Environmental Impact

Shareholders, particularly those with a significant ownership stake in a company, have the power to file proposals and push for action on issues that matter to them. This strategy is being employed by a nonprofit organization called The Accountability Board, which owns shares in roughly 100 publicly traded companies, including major players in the food and agriculture sector. By using the existing financial infrastructure, The Accountability Board is able to gain access to these companies and advocate for change.

Targeting the Food Industry's Outsized Environmental Impact

The food and agriculture industry is unique in its significant impact on the environment, particularly when it comes to greenhouse gas emissions and animal welfare. The Accountability Board has identified this sector as a key focus, targeting industry giants like Tyson Foods and Hormel Foods. While many corporations have made public climate commitments, The Accountability Board is pushing for these companies to back up their promises with measurable, actionable plans.

Strategically Structuring Shareholder Proposals

The Accountability Board's approach to shareholder proposals is strategic and nuanced. They aim to keep their proposals general, asking for measurable targets without prescribing the exact details. This approach is more likely to gain the support of major shareholders, such as BlackRock and Vanguard Group, who tend to favor proposals that are not overly prescriptive. By engaging with these influential investors ahead of the vote, The Accountability Board increases the chances of their proposals being approved.

Driving Change from Within and Without

Shareholder activism is part of a broader movement towards corporate accountability and environmental responsibility. While organizations like The Accountability Board work within the financial system, other groups, such as agitator nonprofits and religious organizations, often play a crucial role in bringing important issues to the forefront. Real progress, according to experts, requires a combination of these efforts – those working both inside and outside of institutions.

The Evolution of Shareholder Activism

Shareholder activism has come a long way since the 1980s, when it was often associated with "corporate raiders" who would acquire shares solely to push for change and then sell their holdings. Today, shareholder activists like The Accountability Board are more focused on maintaining and growing their portfolios, using their financial influence to drive long-term, sustainable change. Some corporate executives have even acknowledged the value that shareholder activists can bring, as they can provide new perspectives and insights that the company may not have considered.

The Accountability Board's Approach and Impact

The Accountability Board's strategy has already yielded tangible results, with fast food chains like Jack in the Box and Wingstop agreeing to publish their first set of measurable climate targets. This is a significant step forward, as these companies previously lacked concrete plans to address their environmental impact, particularly when it comes to scope 3 emissions from their supply chains. The Accountability Board's approach of engaging with major shareholders and structuring proposals strategically has proven effective in driving this progress.