Dive Brief:

• Chipotle will link up to 15% of its executives' annual incentive bonuses to the chain's diversity and environmental goals for 2022, the company announced Wednesday. Last year, the restaurant tied 10% of executive incentives to such benchmarks. 
• Environmental targets include purchasing at least 57 million pounds of organic, transitional or locally grown ingredients — a 2 million pound increase over what it bought last year. Rice and beans are not included in this benchmark "due to external crop factors." Chipotle also aims to cut some greenhouse gas emissions by at least 5%, as part of a larger 2019 goal to reduce GHG emissions by 50% by 2030.
• The company plans to increase diversity for internal promotions to salaried restaurant support center jobs and management positions, including field leaders, team directors and regional vice presidents, above its current 60% diversity rate. 

Dive Insight:

Adding incentives for executives to adopt more inclusive hiring practices and environmentally friendly sourcing strategies builds on several company investments in such policies. 

Last year, the company launched an accelerator program to develop diverse employees and hired an independent third party to conduct a pay equity analysis, Chipotle said in the release. The company did not, however, share the results of this analysis. The chain also implemented a system "to ensure consistent and equitable pay" across the company, and 90% of restaurant management roles were filled by internal promotions in 2021. 

Chipotle also supports the National Young Farmers Coalition and is calling for the 2023 Farm Bill to include policy changes that will grant equitable access to roughly 1 million acres of land for future farmers. 

"As a company with over 3,000 restaurants and nearly 100,000 employees, we have a responsibility to transparently share our progress and drive positive change," Laurie Schalow, chief corporate affairs and food safety officer, said in a statement.

The burrito chain has been a leader in the fast casual space, and the restaurant category in general, when it comes to competitive employee pay and benefits. Last year, Chipotle raised its average hourly wage to $15, a move that resulted in retention CFO Jack Hartung said was "as good or better" than pre-pandemic retention. In 2021, the company also began offering $200 employee referral bonuses for crew members and $750 referral bonuses for apprentices and general managers. This could become a significant investment given the scale of Chipotle's workforce. 

The company's commitments to higher pay and better opportunities for diverse employees to climb the corporate ladder could help minimize past labor issues. Last fall, Chipotle agreed to pay $8 million to settle a 2012 lawsuit that alleged the company misclassified management trainees as exempt from overtime, and a Muslim employee filed an EEOC complaint against the chain alleging an assistant manager demanded she remove a religious head covering. 

Starbucks and McDonald's have also pushed their executives to further DEI and environmental goals by tying these benchmarks to leadership pay. A year ago, McDonald's began linking 15% of executive annual incentive bonuses to hiring women and diverse employees. In 2020, Starbucks started tying pay for senior vice presidents to goals that will help it hit its target of representation of at least 30% for Black, indigenous and people of color at all corporate levels and at least 40% at retail and manufacturing roles by 2025.