Chipotle’s 2023 ESG goals include increasing diversity within its internal candidate pipeline and adding more composting programs.
Chipotle has identified its newest investment targets as part of its Cultivate Next venture fund. They include Local Line, a local food sourcing platform for regional food systems that helps farms, producers, food hubs and food buyers digitize their operations and sell products. And, Zero Acre Farms, which produces cultured oil with a mission of reducing the industry’s dependence on vegetable oils.
Cultivate Next, formed in April 2022, is a venture that aims to make early-stage investments into “strategically aligned” companies to accelerate Chipotle’s strategic priorities. Cultivate Next’s investments thus far have included foodservice platform Hyphen and plant-based protein company Meati Foods.
With its Local Line investment, Chipotle will support the expansion of the platform across the U.S. to procure local food for its 3,200-unit system. Local Line started in 2015 as a match-making service for small farms and chefs. Now, the Ontario-based company features a suite of sales, inventory and distribution tools used by food producers across North America, according to its website. California-based Zero Acre Farms was founded in 2020 and produces oil from fermented cultures instead of conventional oil crops which, the company says, results in an environmental footprint 10x smaller than vegetable oil.
These investments are part of Chipotle’s broader 2023 Environmental, Social and Governance updates announced today. Goals for this year include:
The purchase of “at least” 37.5 million pounds of local produce, from 36.4 pounds purchased in 2022.
Retention improvement among diverse support center and field operations employees.
Instituting composting programs in at least 23% more restaurants. As of January 2023, about 1,000 of Chipotle’s restaurants were participating in composing programs.
In the “food and animals” category, Chipotle notes it surpassed its 2022 goal of purchasing more than 57 million pounds of organic, transitional and/or locally grown ingredients, with 58.3 million pounds purchased.
On the “people” side, Chipotle reports that 90% of all restaurant management roles were internal promotions in 2022, including 100% of U.S. regional vice president roles, 81% of team directors, and 74% of field leader positions. The company also aimed to increase diversity above its 60% rate within its internal pipeline of candidates for all promotions into these positions, which it achieved at 63.6%.
Finally,, on the “environment” side, Chipotle’s composting expansion supports the company’s broader goals of increasing its diversion rate and reducing waste to landfills by 5% by 2025. In 2022, Chipotle exceeded its goal of reducing its Scope 1 and 2 greenhouse gas emissions by at least 5%, achieving a 13% reduction rate versus 2019 emissions.
“Chipotle’s ESG goals are a direct reflection of our commitment to inspire real, sustainable change with a potential impact far beyond this Company,” Laurie Schalow, chief corporate affairs, said in a statement. “We hold our executive leadership team accountable to make business decisions that Cultivate a Better World, and we want to continue to transparently showcase the steps we’re taking to help meet these objectives.”
Last year, the company increased its executive incentive bonuses tied to achieving certain sustainability goals. For 2022, up to 15% of officers’ annual incentive bonus was based on the company’s progress toward reaching ESG targets. In 2021, it was 10%. The 15% bonus payout for executive remains in place this year. Other companies have also started to tie executive incentives into achieving ESG goals, including Wendy’s and Papa Johns.
New research from Moore Global finds that companies that place an importance on ESG goals significantly outperform those that do not. Between 2019 and 2022, companies that prioritized ESG experienced a nearly 10% jump in revenues versus 4.5% for those that did not. Accordingly, 89% of investors believe the inclusion of ESG metrics is important for annual and long-term incentive plans.
Contact Alicia Kelso at [email protected]
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