What’s On Your Plate? Pressing Chipotle on Pesticides
Susan Baker
Trillium Asset Management Corporation (“Trillium”) has been pressing restaurant chains to reduce the use of pesticides in their supply chains, continuing our research and advocacy on sustainable food and agriculture.1
Reducing pesticides is a logical step toward protecting the health of farm workers and consumers and minimizing soil and water contamination. The introduction of GMO seed has actually resulted an increase in pesticide use. Yet the restaurant industry has by and large failed to exercise its influence for good in this area. We think it is important for restaurants to get active to reduce pesticide use for a couple of reasons.
First, new research is providing stronger evidence of the link between pesticides and serious conditions such as cancer and other chronic diseases. For example, scientists have known for some time that two pesticides commonly used on tomatoes and other vegetables, maneb and paraquat, trigger a neuro-degenerative process that leads to Parkinson’s disease in animals. In April of this year, two UCLA researchers produced the first study linking the two to high rates of Parkinson’s disease in humans as well. Residents of California’s largely agricultural Central Valley exposed to maneb and paraquat showed a 75 percent increased risk of developing Parkinson’s disease over a 25-year span. The risk of disease increased with earlier exposure in life.2
Second, as attested to in the growth of organic food purchases, consumers are paying more critical attention to the origins of their food. Although organics still represent a very small slice of overall food sales, their sales tripled from $393 million in 2002 to $1.7 billion in 2007. Consumers’ access to good information about pesticides is improving. The Pesticide Action Network (PAN) recently launched a “What’s On My Food” website and iPhone app. The app pairs US Department of Agriculture pesticide residue and toxicity data with common fruits and vegetables for easy lookup in the producer aisle.
In recent months we’ve approached Chipotle Mexican Grill about pesticides. Chipotle offers fast food diners burritos, tacos and salads made with fresh ingredients. Using the slogan “Food with Integrity,” the company sells hormone and antibiotic-free sour cream, chicken and pork. Customers who never before gave much thought to where restaurant meat came from can learn about Chipotle’s meat suppliers on its website.
In dialogue and letters to the company over the past year, we’ve been pushing Chipotle to take their good intentions farther, into produce as well as dairy and meat. We’ve asked the company to disclose what steps they are taking to promote sustainable produce farming. Chipotle told our shareholder group that it is gathering data on water and pesticide management from its avocado suppliers. The company’s web site discusses its sourcing of organic beans (35% of total bean purchases). However, the water and avocado efforts are not reported publicly.
In collaboration with members of the Investor Environmental Health Network, Trillium is filing a proposal asking Chipotle to publish a comprehensive report to shareholders discussing how the company is addressing pesticide use reduction in its supply chain.
Chipotle can bolster the credibility of “Food with Integrity” by prioritizing pesticide use reduction, beginning with high-residue crops such as green peppers tomatoes and lettuce.
Chipotle’s forays into sustainable purchasing lead us to believe the company can undertake this work more holistically and more transparently. Doing so will be certainly be a factor in the company’s successful entrée into the U.K. next year, where consumer awareness and expectations about supply chain issues is higher.
Click footnote number to return to text above:
1. See “Betting on the Farm” from the Spring 2009 issue of Investing For A Better World.
2. American Journal of Epidemiology, April 15, 2009.
Chipotle – Ban on Pesticide Use
WHEREAS
Chipotle has stated that “ ’Food With Integrity’ isn’t a marketing slogan. . . . It’s a philosophy that we can always do better in terms of the food we buy.” Yet, Chipotle has not systematically addressed the use of pesticides in its food sources. (http://www.chipotle.com/html/fwi.aspx)
Chipotle customers and shareholders have come to expect the company to provide leadership in product sustainability. The company has begun gathering important information on water treatment and pesticide management from its avocado suppliers, but Chipotle does not report on this information to the public. Reporting on such practices as those used in its avocado assessment tool, and extending similar techniques to other Chipotle produce suppliers is critical to the company’s brand in the U.S., Canada, and especially in stores opening in the U.K. in 2010.
The growth in organic food sales, which according to the USDA’s Agriculture Census, more than tripled to $1.7 billion in 2007 from $393 million in 2002, is evidence of strong public interest and demand for reduced pesticide use.
Providing further evidence of public interest, in November 2009, 85 advocacy groups launched a campaign opposing President Obama’s choice of a pesticide industry official to represent U.S. interests in agricultural trade negotiations.
Pesticides impose a heavy burden on farmworkers, adjacent communities, and the environment. In turn, a reduction in pesticide use can lessen these burdens and production costs. Reduced pesticide use and reduced worker exposure to pesticides can also yield reputational benefits.
Companies leading the way in pesticide use reduction include:
- Sysco Corporation, which supplies Wendy’s, Applebee’s, and other restaurant providers, has established an Integrated Pest Management (IPM) Program that in its first three years reduced pesticide use by nearly 900,000 pounds. Sysco’s program requires its suppliers to prepare IPM programs and employs third party auditors.
- McDonald’s, formerly Chipotle’s corporate parent, has begun a process of gathering and disseminating information on best management practices for pesticide use reduction in its potato supply chain.
Similarly, in Idaho, a multi-stakeholder collaborative demonstration project has shown that mustard greens can be used successfully as a “bio-fumigant” instead of chemical pesticides to control insects and plant diseases affecting potato crops, at reduced cost.
RESOLVED
Shareholders request that within one year a committee of independent directors of the board publish a comprehensive report to shareholders discussing how the company is addressing pesticide use reduction in its supply chain, at reasonable expense and omitting proprietary information.
SUPPORTING STATEMENT
While the company has the discretion to determine the precise content of the report, we believe the following information would be useful to shareholders: identifying those fruit and vegetable supply chains where pesticide use education and farmworker and community benefits are most promising; key performance indicators; incentives, technical assistance mechanisms, and other methods; and timetables and future goals. We also believe the report should identify methods and best practices for monitoring farmworker and community health, treating and reducing farmworker exposure to pesticides, and reporting publicly on these activities.
Chipotle Mexican Grill, Inc.
Chipotle Mexican Grill (CMG – NYSE) operates fast, casual, fresh Mexican food restaurants serving burritos, tacos, bowls and salads. Through its vision of “Food with Integrity,” Chipotle is seeking better food that is sustainably grown and naturally raised with respect for animals, the land and farmers. The Company has about 700 restaurants in 33 states, almost all of which are company-owned.
Chipotle is a well-executed concept and great growth-stock story. The company has consistently beaten consensus earnings estimates since going public and over the last five years revenues have grown between 30 and 55 percent. Strong growth across all of Chipotle’s markets is driven by expansion and increasing same store sales in what is considered a very challenging economic backdrop for restaurants.
Chipotle is a sustainability leader in the restaurant industry. The company serves more naturally raised meat per year than any other restaurant in the United States. All of Chipotle’s restaurants serve naturally raised pork, 85 percent serve naturally raised chicken, and over 50 percent serve naturally raised beef. No meat is purchased from factory farms and farms are visited to ensure high quality. Today 25 percent of beans are organic and the company is increasing that percentage as greater supply becomes available. The company donates money to the Land Institute, which conducts sustainable agriculture research. The sour cream and cheese contain no synthetic growth hormone.
Chipotle also uses many elements of sustainable architecture in its restaurants including recycled content in 60 to 90 percent of their interiors, low VOC paints, tank-less water heaters, low-E windows and energy efficient lighting. Chipotle is currently testing a recycling system in 25 stores, which will be rolled out to all stores once the design is satisfactory.
Chipotle Mexican Grill, Inc.
1543 Wazee Street
Suite 200
Denver, CO 80202-1442
United States – Phone: 303-595-4000
www.chipotle.com
