Outcome: Successfully withdraw as company committed to addressing its contribution to climate change consistent with the recommendations of the global climate science community. This includes an intention to set emissions reduction targets for its full carbon footprint, and adopt new initiatives, as well as continue existing initiatives to reduce the carbon intensity of its supply chain.
In October 2018, the Intergovernmental Panel on Climate Change (IPCC) amplified the urgency behind the 2015 Paris Climate Agreement cautioning it will be necessary to limit global warming to 1.5 degrees Celsius, rather than two degrees Celsius, to minimize the worst impacts of climate change. Achieving this will require deep greenhouse gas (GHG) emissions reductions in all sectors.
The 2018 National Climate Assessment found “climate change presents numerous challenges to sustaining and enhancing crop productivity, livestock health, and the economic vitality of rural communities,” and rising temperatures are “the largest contributing factor to declines in the productivity of U.S. agriculture.” According to a 2015 report by Citigroup, the costs of failing to address climate change could lead to a $72 trillion loss to global GDP.
Unfortunately, UNEP reported that global emissions reached record levels in 2018 and continue to rise, increasing the risk of disruption to agricultural systems.
Chipotle acknowledges the materiality of climate change, stating: “We know that climate change and extreme weather may affect key crops and how our suppliers operate.” Chipotle also states climate change may lead to price spikes for key ingredients and that this would have particularly adverse effects on operating results.
Chipotle’s efforts to support sustainable agriculture and its commitment to measure its full carbon footprint by 2025 are sound first steps, but lag the scale, pace, and rigor of the approach established by McDonald’s, YUM! Brands, Hyatt Hotels, Walmart, Tyson Foods, PepsiCo, Nestle, Mars, Kellogg, General Mills, and Danone. These companies have already set, or committed to set, long-term GHG management goals to reduce their full value chain emissions in-line with the goals of the Paris Climate Agreement and the 2018 IPCC report. Proponents believe this is a prudent course of action that will help reduce risks associated with climate change.
Given the impact of climate change on the economy, the environment, and agricultural systems, and the short amount of time in which to address it, proponents believe Chipotle has a clear responsibility to its investors and stakeholders to develop its own strategies to align the emissions from its value chain with the projected long-term constraints posed by climate change.
Resolved: Shareholders request the Board of Directors of Chipotle Mexican Grill publish a report, at reasonable cost and omitting proprietary information, describing if, and how, it plans to reduce its total contribution to climate change and align its operations with the projected long-term constraints posed by climate change as set forth in the Paris Climate Agreement and 2018 IPCC Report.
Supporting Statement: In the report, shareholders seek information, among other issues at board and management discretion, on if, and how, the Company can undertake the following actions:
• Adopting overall long-term GHG emissions reduction targets for the Company’s full carbon footprint;
• Increasing the scale, pace, and rigor of initiatives aimed at reducing the carbon intensity of Chipotle’s supply chain.