McDonald’s, KFC and Burger King have been urged to reduce greenhouse gas emissions in their supply chains by a coalition of global investors, with the animal agriculture industry criticised for being one of the world’s highest-emitting sectors without a low-carbon plan.

Increasing concern that the industry is neglecting climate change and has failed to set emissions targets – unlike other sectors – prompted more than 80 investors representing $6.5tn (£4.94tn) to challenge fast food chain owners to put robust targets in place for their meat and dairy suppliers, in what could prove a landmark demand.

In a letter jointly organised by the Farm Animal Investment Risk & Return (Fairr) Initiative and sustainability organisation Ceres, the fast food companies – which account for more than 120,000 restaurants worldwide – were censured for expanding without sufficiently mitigating their environmental impacts.

“If we are to meet the global climate ambitions set by the Paris agreement, and ensure the availability and sustainable management of global water resources, then global fast good brands need to take concrete action to manage supply-chain emissions and water impacts,” said Heike Cosse, from Aegon Asset Management.

“The takeaway from investors is that those firms that fail to meet this challenge face regulatory and reputational risks that put their long-term financial sustainability under threat.”

BMO Global Asset Management added that the long-term value of fast food multinationals was under rising threat, citing the growing demand for plant-based food, increased environmental regulation and fears over water pollution from intensive farms.

In the letter, the investor coalition – which also included Aviva UK – advised the chains to reduce their impact on freshwater, publish time-sensitive targets and publicly announce their progress each year.

Livestock farming is one of the leading causes of deforestation and water pollution, responsible for 14.5% of global greenhouse gas emissions – methane, nitrous oxide and carbon dioxide. If global demand for beef increases 95% by 2050 as expected then catering to the growing appetite could have severe consequences.

“If you look at the next 20 years, methane is over 80 times more potent at warming the planet than CO2, so pollution from livestock is playing an outsized role in the climate-driven devastation we’re already seeing from superstorms, floods, droughts and wildfires,” said Ian Monroe, chief investment officer at Etho Capital and an earth systems lecturer at Stanford University.

In the US the majority of large meat processing plants that pollute streams and rivers face few consequences, according to research by Ceres, and the animal agriculture industry is exempted from reporting its greenhouse gas emissions.

Across the world, animal farming uses 83% of agricultural land despite providing only 18% of calorie intake, with consumers in Europe eating around five times the recommended amount of red meat, poultry and dairy products, according to Fairr. The organisation previously warned demand is set to exceed what can be met within “planetary boundaries”, and that the intensification of animal farming is not sustainable, with scientists recommending people adopt plant-based diets.

“Every day around 84 million adults consume fast food in the US alone, but the inconvenient truth of convenience food is that the environmental impacts of the sector’s meat and dairy products have hit unsustainable levels,” said Jeremy Coller, founder of Fairr and chief investment officer of Coller Capital. “To put this in perspective, if cows were a country, it would be the world’s third largest emitter of greenhouse gases.”

He added: “Other high-emitting industries, such as cars or oil and gas, are beginning to set clear yet ambitious climate targets, making animal agriculture one of the world’s highest-emitting sectors without a low-carbon plan.”