It wasn’t until 2013 when the first study was published correlating sustainability with stronger financial performance. From there, ESG (environmental, social and governance) efforts started to pick up a bit. Then around 2018, a light switch flipped – with global sustainable investments reaching nearly $31 trillion.
For Wendy’s, those macro developments meant it was time to formalize a strategy. The work was spearheaded by Liliana Esposito, Wendy’s chief corporate affairs and sustainability officer. She initially joined the company in 2014 as chief communications officer but wanted to expand that responsibility to keep pace with corporate responsibility trends picking up in the industry and elsewhere. The company set the ball in motion in 2019 by tapping a third-party firm to create its first materiality assessment.
“There were nearly 1,000 stakeholders involved, from the board to investors to our franchisees, assessing topics where we could have the biggest impact based on our business model,” Esposito said during a recent interview. “We knew we wanted to focus on where we could have the biggest impact.”
That focus, she adds, is critical for a company the size of Wendy’s and necessary to ensure progress is being made.
“As a big brand, we get pulled into any manner of issues that are very important, but may not be material to our brand,” Esposito said. “For us, step one was formalizing the issues we could tackle.”
From its assessment, the company derived three priority areas – food, people, and footprint – and worked to put foundations in place, like setting goals, creating processes, and procuring the right technology. The company’s first corporate responsibility report, part of the Good Done Right platform, was published in 2020, reporting progress from 2019.
On food, the company strives to responsibly source its top 10 categories by 2030. “What are the 10 products we buy most, for example, beef? That is what is going to have the most potential impact,” Esposito said.
For people, Wendy’s is aiming to “substantially increase the representation of previously underrepresented populations across both the company and franchise system,” she said. That means increasing the number of women and people of color in management roles, in the franchise community and on the board of directors.
And, for footprint, Wendy’s is targeting 100% sustainable customer-facing packaging by 2026, whether recyclable, compostable or reusable. Additionally, Wendy’s set science-based greenhouse gas emissions reduction targets, aiming to reduce emissions by 47% across its global system by 2030.
Updates on the company’s progress are expected in the latter part of April, but Esposito is confident in the work that has been done thus far given that Wendy’s is fairly new to this work. Of course, there have been challenges in getting this machine to start churning. Esposito likens one of those challenges to the story about the tortoise and the hare.
“Seeding the foundation and having both patience and urgency can be hard, and recognizing that every stakeholder isn’t coming from the same place. It means saying no to some things, which doesn’t mean they’re not important, it just means they’re not going to have our most material impact,” Esposito said. “When dealing with some external groups putting expectations on you, you feel like the tortoise, that you’re not moving fast enough or ambitious enough. When you’re inside the company, you feel like the hare. Balancing that – we do have to move more quickly than we may be comfortable with but also take time to put process in place – is part of the foundational work.”
An example of the process work is the collection of data from Wendy’s biggest suppliers to ensure progress on its “responsibly sourced” goals.
“We need a tech platform for that. We need to know how to define those goals and what we’re asking our suppliers to do,” Esposito said.
Sure, there have been some growing pains along Wendy’s fledgling ESG path, but Esposito notes it’s all part of the process to achieve these increasingly critical goals. So important has this work become to Wendy’s, in fact, the company recently began tying executive compensation to ESG performance – one of several restaurant companies that have made such a move. The company believes this added incentive will drive more progress toward its goals.
“We know this work is the right thing to do and that’s why we expanded our compensation incentives beyond the vice president-and-above level and to every corporate bonus-eligible employee, which is basically all of our corporate and field support employees,” Esposito said.
For Wendy’s, this means that 10% of an employee’s existing bonus is now dependent on ESG outcomes.
“That tends to get a lot more people interested in ESG, and we believe it’s really important to bring the entire system along for this,” Esposito said. “There’s always more that can be done. A lot of these goals are longer term because they’re not easy challenges to tackle. But I think we’re moving at a pace that is appropriate and impactful.”
Contact Alicia Kelso at [email protected]
