The QSR industry needs technological innovation in its sustainability practices — we look at the key challenges and considerations of ESG adoption.
In today’s rapidly evolving business landscape, sustainability and social responsibility have taken center stage as critical drivers of success. The QSR industry, known for its fast-paced operations and wide customer reach, is no exception to this. As environmental, social, and governance (ESG) factors become integral to business strategies, innovative QSR chains are focusing on ESG planning to enhance their brand value and contribute to a better world.
ESG goals hold a high degree of importance in the QSR industry as they drive sustainability, customer trust, and resilience. With newer technologies coming to the fore, QSRs can effectively track and reduce their carbon footprint, optimize supply chains, and minimize waste. Active community engagement, fair labor practices, and transparent governance enhance social responsibility and brand reputation. Moreover, robust ESG measures mitigate risks and attract investors valuing ethical and sustainable business models. QSRs that embrace ESG goals not only ensure long-term viability but also contribute positively to society and the environment.
Let’s look at a few statistics that illustrate the importance of ESG planning in QSRs.
The global market for ESG investments is expected to reach $53 trillion by 2025.
In 2022, it was reported that 72% of consumers are conscious of food wastage and see it as an issue that will stop them from repeat orders.
Food service giant McDonald’s has set a goal to reduce their greenhouse gas emissions by 36% by 2030. And, Starbucks has committed to using 100% recycled or compostable cups by 2025.
The QSR industry encounters challenges in several aspects of ESG considerations. Some of these challenges include:
Lack of awareness: Many industry workers and business owners don’t understand how important ESG factors are. This makes it hard for them to implement sustainable practices in their businesses.
Energy transition: The vast networks of these restaurants require substantial energy inputs, and optimizing their energy usage while transitioning to renewable sources remains a significant challenge.
Sustainable sourcing: Reduction in carbon footprint including transportation emissions, food waste management, and sustainable sourcing of ingredients in a high-volume, fast-paced environment is another pressing challenge that QSRs need to address.
Sustainable packaging: Alternatives to single-use plastic and plastic packaging will help QSRs reduce their environmental footprint and respond to consumer demand for eco-friendly packaging.
Regulatory compliance: ESG rules and regulations often vary in different regions. This can make it complicated for QSR businesses that have a presence in multiple regions to understand and adhere to these regulations.
QSRs can embark on their ESG journey by first understanding and addressing their environmental impact. This can be divided into three different emission categories or scopes.
The first category includes direct emissions from owned or controlled sources. QSRs can identify areas for energy efficiency improvements, such as optimizing kitchen equipment and transportation fleets.
The second category includes indirect emissions from purchased electricity. Transitioning to renewable energy sources like solar or wind power can significantly reduce their carbon footprint.
The third category encompasses the entire value chain. QSRs can holistically minimize their carbon footprint by focusing on sustainable sourcing of ingredients, reducing food waste, and collaborating with suppliers to adopt eco-friendly practices.
To understand emissions further, QSRs can follow these regulatory ESG frameworks—Carbon Disclosure Project (CDP), Sustainability Accounting Standards Board (SASB), Greenhouse Gas Protocol (GHG Protocol), and Global Reporting Initiative (GRI). QSRs need to lay a strong foundation for their ESG journey by comprehensively addressing the above three categories (scopes 1, 2, and 3), demonstrating their commitment to environmental responsibility and innovation.
Here’s how leaders can effectively incorporate ESG at every level of an organization’s operations.
Identify the ESG issues relevant to your industry, business model, and stakeholders. These are the issues that might impact the company’s financial performance and reputation the most.
Engage and gather inputs from stakeholders, investors, customers, employees, suppliers, and communities to thoroughly understand expectations and concerns.
Understand the measures and metrics used to track ESG goals such as greenhouse gas emissions, carbon footprint, responsible procurement, water consumption, waste handling, and energy utilization, among others.
In conclusion, ESG planning is not merely a passing trend but a strategic business imperative for QSRs. Some of the strategic steps for the QSR industry to address ESG issues are as follows:
Create and integrate a holistic ESG strategy: A holistic ESG strategy will detail how QSRs can achieve their ESG goals and infuse ESG into all aspects of their business.
Invest in sustainable technologies and infrastructure: Begin investing in renewable energy, energy-efficient appliances and equipment, and sustainable packaging.
Partner with sustainable suppliers: Working with suppliers that adopt sustainable practices will help QSRs reduce the environmental impact of their supply chains.
