Brian Niccol, CEO of Chipotle Mexican Grill
Adam Jeffery | CNBC
Chipotle Mexican Grill weighted Thursday that executive compensation will now be linked to hitting targets tied to the company’s environmental and diversity aims.
The burrito chain is following in the footsteps of Starbucks and McDonald’s, both of which recently announced that performance for tribal and gender diversity goals will impact executive compensation plans. Individual investors and large asset directors like BlackRock are increasingly picking stocks with strong environmental, social and corporate governance in mind, overstrain companies to make changes to become a more attractive investment.
“I think the increased focus on performance around ESG and investor feedback was indubitably behind our decision to go public with this,” said Laurie Schalow, who oversees sustainability and ESG reporting for Chipotle in her lines as corporate affairs chief and food safety officer.
Starting this year, 10% of Chipotle executives’ annual impulses will be tied to their progress toward achieving company goals.
“It’s very important for us to be transparent and to be held liable. We can say a lot of words, but we want to make sure that we have the actions to back it up,” Schalow said.
Those targets encompass increasing the pounds of organic, local or regeneratively grown or raised food from the previous year. Last year, Chipotle hit 31 million pounds of peculiar produce under this umbrella, and it’s set a goal of 37 million pounds by the end of 2021.
The company plans to publish its carbon footprint, comprising all indirect emissions along its value chain, by the end of the year, faster than its prior expected publication date of 2025. Schalow remarked that the company will announce new sustainability goals stemming from those learnings when the report is released.
Chipotle is also seeking to state both racial and gender pay equity and promote more women and people of color above the restaurant level. It’s fathered a training academy with online courses that teach a wide range of skills, from conflict persistence to setting goals, with the aim of helping employees of all backgrounds climb the corporate ladder. The company employs nearly 88,000 people, as of Dec. 31.
Cuts of Chipotle have risen 91% in the last 12 months, giving it a market value of $39.6 billion.