Organizational Governance Organizational Governance

Chipotle Expands 2023 ESG Goals Tied to Executive Compensation

The company aims to increase pounds of local produce purchased, improve diverse employee retention, and increase the number of restaurants with composting programs — goals that can affect executives’ overall bonus payout by up to 15 percent.

Published 1 year ago | About a 3 minute read

Image: Chipotle Mexican Grill

This week, Chipotle Mexican Grill announced three categories of 2023 Environmental, Social and Governance (ESG) goals tied to executive compensation:

Food & Animals: Purchase at least 37.5 million pounds of local produce, up from 36.4 million pounds in 2022.
People: Improve the retention of its diverse US-based restaurant support center and field operations employees.
Environment: Institute composting programs in at least 23 percent more restaurants (which aligns with Chipotle’s broader objectives of increasing its diversion rate and reducing waste to landfills by 5 percent by 2025).

The achievement of these goals can positively or negatively impact Chipotle officers’ 2023 annual incentive bonus by up to 15 percent.

“Chipotle’s ESG goals are a direct reflection of our commitment to inspire real, sustainable change with a potential impact far beyond this company,” said Laurie Schalow, Chief of Corporate Affairs at Chipotle. “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.”

In 2021, Chipotle announced it had created a new ESG metric that tied 10 percent of its execs’ annual incentive bonus to the company’s progress toward achieving goals in these three areas; this year's expansion of those goals pushes that percentage to 15 percent.

Food & Animals

Chipotle is committed to increasing total pounds of produce purchased from local farmers year over year. In 2023, Chipotle’s goal is to purchase at least 37.5 million pounds of local produce, up from 36.4 million pounds purchased in 2022. The organization met its 2022 goal of purchasing more than 57 million pounds of organic, transitional and/or locally grown ingredients, achieving 58.3 million pounds — with rice and beans excluded from this goal due to external crop factors.

People

Chipotle’s Diversity, Equity & Inclusion strategy involves developing and retaining diverse talent at every level of the organization. In 2023, Chipotle plans to continue these efforts by improving the retention rate for diverse employees in restaurant support center and field operations positions.

Last year, Chipotle aimed to increase diversity within its internal pipeline of candidates for all promotions into salaried restaurant support center positions and field management roles. As a result, 90 percent of all restaurant management roles were internal promotions — including 100 percent of US Regional Vice President roles, 81 percent of Team Directors and 74 percent of Field Leader positions. The company also aimed to increase diversity above its 60 percent rate within its internal pipeline of candidates for all promotions into these positions, which it achieved at 63.6 percent.

Environment

As of January 2023, about 1,000 Chipotle restaurants participate in composting programs. Throughout the year, the chain intends to increase this number by at least 23 percent. The composting program supports Chipotle’s broader goals of increasing its diversion rate and reducing waste to landfills by 5 percent by 2025. Chipotle exceeded its 2022 goal of reducing its Scope 1 and 2 greenhouse gas (GHG) emissions by at least 5 percent, achieving a 13 percent reduction against 2019 emissions. Additional sustainability progress will be shared in Chipotle’s Sustainability Report next month.

Cultivate Next investments

Chipotle is leveraging its new venture fund, Cultivate Next, to invest in early-stage companies that can help further its mission and meet its ESG goals. Chipotle seeks to increase its local produce supply through its latest investment in Local Line — a leading local-food sourcing platform for regional food systems helping farms, producers, food hubs and food buyers digitize their operations and sell products. Chipotle’s investment will also support the expansion of Local Line across the US to procure local foods for Chipotle’s 3,200 restaurants.

Cultivate Next is also investing in Zero Acre Farms — a food company focused on healthy, sustainable oils and fats that is on a mission to end the food industry's dependence on vegetable oils. The immense amount of vegetable oils produced today contribute to record rates of deforestation and carbon emissions; and Zero Acre Farms has a new category of healthy, cultured oils and fats made by fermentation that use 85 percent less land than canola oil, emits 86 percent less CO2 than soybean oil, and requires 99 percent less water than olive oil.