Chipotle Mexican Grill Inc.
CMG on NYSE US1696561059
Key Information
HQ:
United States
Market Cap:
$49.09bn
Primary Markets:
North America, Europe & Russia
Meat Sourcing Engagement
Analysis Breakdown
Board oversight
Is the board briefed by management on the company’s strategies for mitigating environmental risks associated with their meat and dairy supply chains on at least an annual basis?
Chipotle states that "Sustainability, environmental, social, human capital management and diversity matters" are a discussion topic at annual meetings each fall.
Additionally, the corporate governance committee receives a report on Chipotle's "policies and programs relating to environmental, sustainability and social responsibility" biannually.
Sustainability/environmental topics are discussed in front of the board on at least an annual basis, but it is unclear whether the board is briefed specifically on risks associated with their meat and dairy supply chain. The board is briefed regularly on the risks from their various teams - food, people and environment. The board is briefed quarterly by their food safety and quality assurance teams, which establish and monitor their quality and food safety programs and work closely with suppliers to ensure high standards are met throughout the supply chain.
*No change
Yes
Have company representatives presented to the Board on physical/transition risks from climate change impacts on commodity sourcing?
Chipotle clearly outlines risks from climate change impacts on commodity sourcing in their 10k, and shows that the audit committee and board of directors regularly reviews key risks, which include commodity sourcing risks from climate change.
*No change
Yes
Supplier policy
Does the company have a publicly-available supplier policy that addresses the climate, deforestation, water use and quality impacts of its commodity suppliers?
Chipotle's Supplier Code of Conduct does not specifically address the climate, water or deforestation impacts of commodity suppliers beyond compliance with environmental laws, regulations and conducting their operations in ways that conserve natural resources (pg. 3) A review of their CSR, proxy report, and other material, does not indicate any enhanced expectations for suppliers.
*Downgraded from Partial to DNF
No
Does the company have a supplier monitoring and verification system that ensures that direct and indirect suppliers meet the company’s environmental requirements?
While previous sustainability reports have provided more details about Chipotle's supplier monitoring and verification system (see 2021 QSR benchmark), this year's report does not share any information on ways that Chipotle monitors suppliers beyond audits. Based on the supplier policy, which was never updated to reflect prior commitments from earlier sustainability reports, it is unclear if environmental regulation compliance is a part of the audits Chipotle conducts. Given that the supplier code does not include specific environmental expectations, it is unclear if compliance auditing would assess the environmental compliance of Chipotle's suppliers.
*Downgraded from Yes to DNF
No
Does the policy include a non-compliance protocol that specifies specific criteria (e.g. violation of no-deforestation pledge or major pollution incidents) that would trigger the suspension or termination of contracts and facilitates development of time-bound action plans for suppliers to return to compliance?
The supplier code states, "All suppliers and their affiliates, subcontractors, employees, workers, and agents must comply with this Code of Conduct. Suppliers shall immediately notify Chipotle of any violation of this Code of Conduct. Failure to comply with this Code of Conduct shall be cause for Chipotle to revoke a supplier’s approved status and, at Chipotle’s discretion, to terminate any agreements Chipotle has with such supplier". There is no mention of specific criteria that would trigger suspension/termination, neither is there any mention of action plans to return to compliance. While the code lacks specific language, it is clear that non-compliance triggers suspension or termination. Therefore partial credit is awarded.
*No change
Partial
Does the policy specify that suppliers address all major emissions sources, including those related to land use change and deforestation, enteric emissions from animals, and emissions from manure and chemical fertilisers?
While Chipotle has a scope 3 reduction target, the company has not published any language on specific requirements for suppliers in alignment with the target. The supplier policy does not mention GHGs.
*no change
No
Does the policy ask direct suppliers to measure, report and reduce the greenhouse gas emissions associated with their direct operations and agricultural supply chains?
Chipotle does not have a clear expectation for measurement and reporting of GHG emissions but does monitor and record some of this data for its suppliers as their disclosure of scope 3 emissions makes clear. Therefore, partial credit is awarded for their collaboration with suppliers on GHG emissions reporting as it related to their scope 3 target.
*Upgrade from DNF to partial
Partial
Does the policy specify that direct and indirect suppliers address all major sources of water pollution and waste in the animal protein supply chain, including slaughtering and processing activities, animal production (CAFOs), and feed production?
While Chipotle does expect suppliers to comply with environmental regulations, it does not specify suppliers must address sources of water pollution and waste nor does it mention the animal supply chain. *Downgrade from Partial to DNF
No
Does the policy encourage suppliers to set science-based and/or context-based targets on water?
While Chipotle is conducting a water risk assessment which includes their supply chain, and they expect regulatory compliance, the supplier policy does not ask suppliers to measure, reduce, or report on their water impacts, and there is no indication that Chipotle requests this information from suppliers in other documentation which was reviewed. While the 2020 sustainability report indicated that suppliers were asked questions about water management in audit forms, there was no update about this effort in 2021 and it is unclear if that question is still asked. *Downgrade from Partial to DNF
No
Does the policy ask direct suppliers to measure, reduce (beyond regulatory compliance levels) and report on the water quantity and quality impacts of their direct operations and agricultural supply chains?
No mention of science-based targets for water in the supplier policy, CSR, or other publicly-available information.
*No change
No
Does the company have a time-bound, quantifiable zero deforestation/conversion-free policy that covers the entire supply chain for soy, cattle and palm commodities?
No policy can be found in the CSR, supplier policy, 10k, proxy report, or other publicly-available information.
*No change
No
Targets
Has the company set a time-bound, quantitative reduction target for Scope 1 + Scope 2 GHG emissions?
Chipotle has set scope 1+2 quantitative reduction targets in alignment with SBTi standards.
*Upgrade from Planned to Yes
Yes
Has the company set a time-bound, quantitative emissions reduction target that explicitly address Scope 3 emissions?
Chipotle has set scope 3 quantitative reduction targets in alignment with SBTi standards.
*Upgrade from Planned to Yes
Yes
Has the company set time-bound quantitative targets to reduce water use in direct operations?
No documentation indicates that Chipotle has water use targets which are time-bound or quantitative.
*Downgrade from Partial to DNF
No
Has the company set time-bound quantitative targets to reduce water quality impacts in direct operations?
No mention of water quality targets is found in any publicly-available documentation reviewed.
*New category
No
Has the company set time-bound quantitative targets that explicitly address water use and quality impacts in the supply chain?
While Chipotle intends to decrease water risks, there are no specific targets that are planned or set.
*Downgrade from Planned to DNF
No
Risk assessment/Scenario analysis
Has the company committed to undertaking and publishing a scenario analysis in line with TCFD recommendations?
While Chipotle mentions they may align with the TCFD framework in the future, they make no commitment to do so and do not provide a timeline in which this alignment might occur. Furthermore, their CSR does not include any mention of planned TCFD alignment.
*No change
No
Has the company conducted a water risk assessment across its direct operations?
Chipotle is currently in the process of conducting this water risk assessment. They have actions planned through 2022 to complete it, but it has not been completed yet.
*No change
Partial
Has the company conducted a water risk assessment of suppliers & major commodities?
Chipotle is currently in the process of conducting a water risk assessment which includes suppliers/commodities. This is planned through 2022, but is not completed yet.
*No change
Partial
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Workstream Information
Last Updated:
14 June 2022
2022 Resources
Phase 3 | Progress Briefing Report Meat Sourcing Engagement