A shareholder activist group is pressuring McDonald’s, BJ’s Restaurants and several other publicly traded restaurant companies to measure and reduce their food waste.
The Accountability Board Inc., or TAB, which has an investment portfolio of about 200 companies, largely in the food and retail sectors, has submitted shareholder proposals at several publicly traded restaurant chains asking for more disclosure on the amount of food waste they produce, and to establish targets for reducing that waste.
Food accounts for almost one quarter of the waste sent to landfills in the U.S., according to the U.S. Environmental Protection Agency. In landfills, that organic material rots and creates methane, one of the most potent greenhouse gases that contribute to climate change. The EPA estimates that wasted food is responsible for about 58% of landfill methane emissions.
But concern about the climate is not the only motivation for the shareholder proposals, said Matthew Prescott, TAB’s co-founder and president.
“It’s a financial issue,” Prescott said. “All waste is financial waste. Strategies that mitigate food waste also save money.”
TAB cites a report by Champions 12.3, a coalition of business and government leaders that includes Nestlé, Sodexo and Rabobank, that found for every $1 invested by restaurants to cut back on food waste saved an average of $7 in operating costs over a three-year period, which is a 600% return on that investment.
TAB’s proposals also point to Starbucks and Yum Brands as examples of competing restaurant chains that have voluntarily disclosed information about the type of waste they produce and the amount, starting in 2020. Both chains have pledged to cut food waste in half by 2030.
In this round of submissions, TAB targeted several companies that they said offered little information about their overall food waste production, including beverage company Coca-Cola and retailer Dollar General.
But restaurants were the primary targets. The firm, for example, said McDonald’s 78-page Purpose & Impact Report offers only one line on food waste: “Donated excess food in cooperation with suppliers to support families in need.”
McDonald’s, however, does devote more attention to packaging waste, with goals for sourcing packaging from renewable or recycled materials by next year. But the franchise chain does not disclose food waste measurement or measurable reduction targets, TAB contends.
“While we recognize the company’s packaging waste efforts, we believe identifying food waste totals and targets would substantially advance its management and oversight of this highly consequential ‘priority impact’ issue,” the TAB shareholder proposal for McDonald’s said.
At the casual-dining chain BJ’s, a 2023 Environmental Stewardship report indicates the chain donated about 63,000 pounds of food waste that year. But the number doesn’t account for the types of waste or what proportion that represents of the chain’s overall waste. It also indicates the donations were from 59 restaurants in California, but doesn’t address waste diversion at the chain’s other more than 150 units, the shareholder proposal said.
Similar proposals on food waste were also submitted to the fast-casual grilled chicken chain El Pollo Loco, as well as MTY Food Group, a multi-brand platform that includes about 20 brands in the U.S. and Canada, including Papa Murphy’s, Cold Stone Creamery and Wetzel’s Pretzels.
Shareholder resolutions have been used for years by investors seeking change on environmental, social or governance, or ESG, issues, though support for such efforts has reportedly fallen in recent years.
Typically companies targeted by ESG moves respond in the spring, closer to annual shareholder meetings when the proposals come up for a vote. McDonald’s, BJ’s, El Pollo Loco and MTY did not immediately respond to request for comment.
TAB, in the past, has won shareholder support for proposals on other issues, Prescott said.
Last year, the advocacy group filed climate change proposals at Jack in the Box and Wingstop asking for more reporting on greenhouse gas emissions, and both won a majority vote by shareholders.
The group also submitted a similar proposal at Denny’s, which won 49.9% of the vote. Though it didn’t technically pass, the company still changed policy to offer more transparency on greenhouse gas emissions and setting reduction targets, Prescott said.
This year, food waste is the issue that TAB felt needed to be addressed, targeting companies where there is a “lack of oversight and management.”
Said Prescott: “We think it’s important to send a message loud and clear to management.”
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