Chipotle’s recent SEC filing caused quite a stir. Specifically, one of the risks stated in that filing caused a stir.
The company cited “changes associated with global climate change” as having a potential “significant impact on the price or availability of some of our ingredients.” Due to cost increases, Chipotle “may choose to temporarily suspend serving menu items, such as guacamole or one or more of our salsas.” However, Chipotle spokesperson, Chris Arnold downplays that specific example. “It’s routine financial disclosure,” Arnold told Think Progress. “Nothing more than that.”
Chipotle may or may not have to suspend serving such staples of its menu as guacamole and salsas. However, chances are great that climate change will have an effect on the fast food chain. The filing also mentioned that weather events “such as freezes or drought” could lead to temporary price increases on certain ingredients. The filing goes on to mention drought. “For instance, two years of drought conditions in parts of the U.S. have resulted in significant increases in beef prices during late 2013 and early 2014.”
California is in the midst of a three-year drought, and this drought is an historic one. Two scientists studied tree rings and found that the last time California had a drought this severe was 500 years ago. As a major agricultural state, California produces almost half of all fruit, nuts and vegetables grown in the U.S. Due to the ongoing drought, California farmers were told not to expect any water deliveries which means that to irrigate their crops they will be tapping ground water. If drought conditions continue, groundwater levels in California are likely to reach historic lows.
The U.S. Department of Agriculture (USDA) released a report last year on the potential effects of climate change on agriculture. As the report makes it clear, climate change will affect agriculture. Temperature increases and more variable rainfall “will reduce productivity of crops.” Although effects will vary in various regions in the U.S., “all production systems will be affected to some degree by climate change.” The USDA is not the only federal agency to detail potential climate change effects on agriculture. The EPA cites both droughts and floods as posing challenges for farmers and ranchers. Both the USDA and EPA point out that farmers and ranchers need reliable sources of water, and drought puts stress on water supplies.
Chipotle is not the only company to recognize that climate change poses a risk to its operations. The CDP, formerly known as Carbon Disclosure Project, released a report last September which looked at the risks of climate change to the supply chain. The report is based on the responses of 2,415 suppliers to a survey. In fact, 52 of the 54 CDP supply chain members responded to the survey, and they represent a combined spending power of almost $1 trillion. The majority (70 percent) of the respondents identified either a current or future risk related to climate change. Over half of the supply chain risks identified due to drought and rainfall extremes are already affecting the respondents’ operations or are expected to have an effect within the next five years.
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