Shareholder Activists Push Fast Food Chains to Commit to Climate Targets

The food we eat is responsible for as much as a third of global greenhouse gas emissions. Most of that comes from beef — including millions of burgers served up by fast food chains across the world. To date, fast food companies have made little progress in curbing their climate pollution, but pressure to hold these corporations accountable is beginning to come from what may seem like an unlikely group: their own shareholders. This year, fast food chains Jack in the Box and Wingstop agreed to publish their first set of measurable climate targets, led by a group called The Accountability Board.

The two-year-old nonprofit owns shares in roughly 100 publicly traded companies. Its purpose: “to hold companies accountable on issues relating to the environment, social matters and corporate governance,” says Matt Prescott. Prescott is a co-founder and one of the leaders of the organization.

How Shareholders Pressure Jack in the Box and Other Fast Food Chains

Shareholders, at least those that own a certain percentage of a company, are able to file proposals asking for action by the company that the shareholder wants to see. A growing movement of nonprofit shareholders have also used this strategy to increase corporate accountability. Kevin Chuah, PhD, an associate professor at Northeastern University who researches stakeholder activism, explains the tactic: “They’re using the financial system infrastructure to enable them to get access to companies that they might not get access to otherwise.”

The Accountability Board focuses on the food and agriculture sector in particular, says Prescott, including industry giants like Tyson Foods and Hormel Foods. While issues like corporate governance and diversity, equity, inclusion and justice are universal across industries, food and agriculture companies are unique in their outsized impact on the environment and animal welfare, Prescott says.

Most multinational corporations have made public climate commitments, but many have failed to back them up with actionable plans for accomplishing those goals. That was the case too with Jack in the Box, Prescott tells Sentient. “They’ve got disclosures about risks posed by climate change and other environmental issues, but the company didn’t actually have measurable goals for reducing its emissions,” he says. But thanks to the newly-passed proposal, now they will.

Jack in the Box now reports scope 1 and 2 emissions — emissions the company directly emits or that are generated from the electricity or other utilities the chain uses. In the food sector however, as much as 90 percent of greenhouse gasses come from scope 3 sources, with most of those coming from meat and dairy products. Scope 3 refers to emissions that come from a company’s supply chain, which in this case, includes the very beef burgers that are a massive driver of food-related emissions.

Yet an important part of The Accountability Board’s strategy is structuring their proposals strategically to make it more likely to actually pass. The group aims to keep them general, says Prescott, in this case asking for measurable targets, but not prescribing exactly what those targets should be.

Ahead of the vote, the nonprofit’s team spent time engaging with the largest shareholders to ensure they would find the proposal appealing. When it comes to “major shareholders, like BlackRock and Vanguard Group,” says Prescott, they lean against supporting proposals “that are overly prescriptive.”

A Brief History of Shareholder Activism

Shareholder activism traces its roots back to the 1980s, when individuals or groups would acquire shares in companies in order to push for some kind of change within the corporation. At that time, shareholder activists usually sold their shares once they accomplished their goals, earning them the nickname of “corporate raiders.”

Since then, shareholder activists have managed to reform their reputation, even with corporate executives. According to Chua, whose research focuses specifically on environmental, social and governance issues, a number of executives can point to “situations where shareholders have brought interesting information to us that we hadn’t thought about before.”

The Accountability Board doesn’t usually sell its shares, instead choosing to maintain and also grow its portfolio by acquiring stock in new companies, says Prescott. Most of the shares the organization owns were bought with an initial $11 million grant from the non-profit foundation, Open Philanthropy. Tax records indicate the group’s investments netted them $17,280 in 2022, but because The Accountability Board was formed in the latter part of that year, the figure only reflects a few months of proceeds.

For Chua, shareholder activists are one piece of the bigger picture of change. Agitator nonprofits and religious groups are often the “innovators,” he says, the ones “who get issues onto the table and effectively bring them to the attention of the mainstream.” Next, “the institutional investors get on board.” Real progress, he says, will require both: those working within and outside of institutions.