McDonald’s 2020 CSR/Sustainability Framework sets out powerful aspirations. But can the firm deliver?
In April, McDonald’s launched its 2020 CSR/Sustainability Framework, spanning five “pillars”: Food, Sourcing, Planet, People and Community. The company says it hopes actions within these pillars will help it to achieve the social and business imperatives necessary to secure a profitable future.
McDonald’s began publishing CSR data in 2002. Twelve years later, this paper contains its most ambitious targets. But some key aims, on “verified sourcing” for beef for example, remain aspirational and somewhat opaque.
In other places the framework is patchy, and it is littered with caveats such as “we cannot guarantee that we will achieve these stated goals”. The document says market-by-market progress may vary and that it will be difficult to measure progress across all the countries where McDonald’s operates.
Worse, McDonald’s says it “cannot prescribe” CSR and sustainability measures to its franchisees or suppliers. At year-end 2013, more than 80% of McDonald’s restaurants were franchised. It also promises its aspirational goals will focus on its top nine markets by revenue. Two of these markets, Brazil and Japan, are entirely operated by franchisees, and McDonald’s relies on the accuracy of performance data provided by their management.
Food
Providing balanced choices is the key driver behind McDonald’s plans and commitments on food. These include serving 100% more fruit, vegetables, low fat dairy or whole grains across its nine biggest markets by revenue: Australia, Brazil, Canada, China, France, Germany, Japan, the UK and the US.
It also plans to reduce salt, sugar, saturated fat and calories across its menus. McDonald’s is developing guidelines to measure its progress, and will develop reduction goals on salt, sugar and calories in 2015. It also promises to enhance the nutritional profile of menus and improve nutritional information.
Sourcing
McDonald’s says it will lead development of global principles and criteria for sustainable beef in 2014, with a view to begin buying “verified sustainable beef” by 2016.
All of its of coffee and fish will be verified as “supporting sustainable production” by 2020, and 100% of fibre-based packaging will come from certified or recycled sources by 2020.
By 2015, 100% of McDonald’s and its suppliers’ cooking palm oil will be Roundtable on Sustainable Palm Oil (RSPO) certified sustainable, and by 2020, 100% of McDonald’s ingredient oils will be RSPO-certified.
McDonald’s hasn’t yet defined what “verified sustainable beef” or “supporting sustainable production” will mean. Bob Langert, vice-president for corporate social responsibility at McDonald’s, tells Ethical Corporation that locally based metrics to determine this are “under development”. The wider beef industry has, as yet, no definition of “sustainable beef”.
Planet
In its top nine markets, excluding Brazil and Japan, McDonald’s seeks a 20% increase in energy efficiency of company-owned restaurants. It is developing goals to increase energy efficiency through better standards in 2014.
It aspires to recycle 50% of in-restaurant waste by 2020. In 2013, McDonald’s estimated that restaurants in its top nine markets recycled 36% of in-restaurant waste. McDonald’s Europe aims to send zero waste to landfill or incineration by 2020.
People
McDonald’s promises to provide lifelong skills and career opportunities for its global workforce, promote diversity and inclusion and foster a work environment that values contributions. No absolute targets govern this pillar, unlike others in the framework.
The policy guiding this ethical business drive is McDonald’s Standards of Business Conduct, first published 40 years ago and revised annually. These do not do not apply to franchisees, suppliers, or any of their directors or employees.
McDonald’s aligned activities on people with the United Nations Universal Declaration of Human Rights in 2012. This alignment includes treating employees with fairness, respect and dignity, and ”striving” to work with suppliers committed to “universal principles” of responsible business ethics.
Community
Again, no absolute targets drive community, though in 2013, McDonald’s established a Global Community Leadership Board to foster worldwide collaboration and improve global community relations, through disaster relief and charity donation.
In 2013 the firm raised more than $26m for Ronald McDonald’s House Charities in the US. These help families with seriously ill children. Every day, more than 20,000 families benefit from the programmes globally, impacting on the lives of 7 million children and their families annually.
Corporate governance
On compliance, 2013 revisions to reflect legal and company policy updates cover human rights, conflicts of interest, business records and communications and anti-corruption. McDonald’s Global Anti-Corruption Policy, the foundation for anti-corruption, applies to all directors, officers and employees, as well as third parties acting on the firm’s behalf.
McDonald’s global compliance team provides anti-corruption training for employees, with priority given to markets considered to have high levels of corruption based on a risk matrix.
Chequered history
McDonald’s seems to have a history of somewhat overpromising on its sustainability objectives.
On 22 May, the Pesticide Action Network (PAN) asked McDonald’s to stop misleading shareholders, saying the 2020 framework contains no firm commitments. PAN combines more than 600 groups and institutions across over 90 countries, advancing ecologically sound pesticide alternatives.
PAN cites events in 2009, when McDonald’s high-profile public commitments to work towards pesticide reductions in potato fields fell short of any tangible outcomes. PAN says that to date, McDonald’s has offered minimal new data on potato suppliers, while residents in Minnesota’s potato-producing regions continually experience pesticide drift due to frequent pesticide applications.
McDonald’s has also recently been damaged via its Chinese supply chains. Its US-based international supplier OSI Group withdrew all products manufactured by its Shanghai Husi unit at the close of July, after accusations that workers were repackaging old meat as new.
In the 2020 framework, the company states: “Once products leave the supplier they are delivered to our restaurants from approved, audited distribution centers that meet McDonald’s food safety and quality standards, as well as local regulatory requirements for food safety.”
Langert tells Ethical Corporation in response to the Chinese meat scandal that the company has to rely on suppliers to do the right thing. “Trust is core to us, we are built on handshake agreements, work being done right and standards upheld,” he says.
2020 goals
WWF collaborated with McDonald’s to develop 2020’s sourcing priorities and goals. Jeff Malcolm, manager of supply chains at WWF, argues that the focus on sustainable sourcing across beef, chicken, coffee, packaging, palm oil and fish shows that McDonald’s is working to address sourcing impacts.
“McDonald’s sustainability plan is a great step for a company serving over 69 million people per day,” says Malcolm.
Ruaraidh Petre, executive director of the Global Roundtable for Sustainable Beef, says McDonald’s has done much to start making its beef supply chain traceable, but admits there are challenges facing both GRSB and McDonald’s.
Making true sustainability claims, he says, necessitates verification and demonstration of positive impacts. “The industry is not yet in a position to tackle this at a really large scale,” Petre says.
“McDonald’s have been key in bringing actors throughout the supply chain into the sustainability discussion, even when some of those actors did not want to recognise the problem, or believed that the problems are elsewhere,” he adds.
Richard George, forests campaigner for Greenpeace UK, praises the framework. He argues a big public brand makes companies more responsive to public concerns, and McDonald’s is among the biggest.
“They have a bit of a chequered past, and as a result of that, they’re now a lot more alert to environmental issues than many of their competitors,” he says.
George cites the example of soy traders who are trying to weaken Amazonian protection, allowing more tree felling and soy production for livestock feed. He says McDonald’s is “one of the good guys trying to stop Cargill, Bunge and ADM from trashing more rainforest.”
Langert highlights McDonald’s willingness to depart from its past, referencing how, at one point, issues of Amazonian soy were not even on its radar. “You might say, how could we ignore this, but issues of transparency are hard to trace far down the supply chain. We wrestle with these issues, and to use our power of influence.”
Critiques
While McDonald’s sustainability plan mentions its greenhouse gas footprint, climate change, and water, Malcolm says WWF would like to see a greenhouse reduction target and water stewardship strategy developed and implemented.
The framework explains McDonald’s is working to articulate a water stewardship strategy and it plans to focus its efforts on regions with the greatest water risk.
As for its uncertain relationship with its franchisees regarding sustainable practices, the 2020 framework explains franchisees develop and implement their own business plans and make their own purchases of goods and services. It claims McDonald’s ensures its restaurants conform to strict quality, service, cleanliness and safety standards, “collaborating” with franchisees to support responsible business practices.
But nowhere does the framework explicitly state that the company dictates to franchise owners exactly how to procure sustainably, or embed elements such as more sustainable light or power.
Andrea Moffat is vice-president for corporate care at the sustainability advocacy group Ceres, who was on McDonalds’ 11-strong stakeholder advisory team that shaped the 2020 framework. In the framework text she says: “Ceres would like to see more transparency regarding complex issues like obesity, climate change, and water scarcity, along with bolder actions McDonald’s might take and how they will engage franchisees in this journey.”
Langert admits: “The world is becoming more transparent and we need to be more open to sharing data.” He adds: “We are looking at digital platforms as a way to do this.”
Langert hints too at the company’s wish to further engage with its supply chain, but he remains ambiguous as to where the responsibility for supplier transparency lies. “Sometimes it is our role, sometimes that of the supplier to get to the truth of the matter.”
McDonald’s 2020 CSR/Sustainability Framework:
Stakeholder engagement
McDonald’s engages with the Global Reporting Initiative, WWF, Global Roundtable for Sustainable Beef (GRSB), Roundtable on Sustainable Palm Oil, International Food & Beverage Alliance, Clinton Global initiative and Conservation International’s Business and Sustainability Council.
McDonald’s 11-strong stakeholder advisory team shaped the 2020 framework. It includes Andrea Moffat, vice-president for corporate care at Ceres, Jessica McGlynn, US director at the World Business Council for Sustainable Development, and Eric Olsen, senior vice-president for advisory services at Business for Social Responsibility.
Previously, McDonald’s formed a Global Advisory Council (GAC) in 2003, comprising 12 academic experts guiding nutritional approaches. In 2013, McDonald’s joined the International Food & Beverage Alliance, a group seeking to meet World Health Organisation goals on food and health.
Carbon Footprint
Of McDonald’s greenhouse gas emissions, 71% come from its supply chain; the other 29% are from its direct operations including its power consumption and waste from buildings. Of supply chain emissions, 41% stem from beef, 6% packaging and 3% transportation, making beef production McDonald’s single most damaging activity.
Principles, practices and transparency for beef
McDonald’s collaborates with diverse stakeholders, primarily the GRSB, developing globally aligned, local, measurable principles and criteria for beef sustainability.
The firm is launching field projects in environmental protection, traceability, animal health and welfare, technology use, employee well-being, and other priorities, to make cross-industry best practice standard, investing $1.8m in 2013. In Brazil, Germany, Europe and Australia, McDonald’s has pilot programmes working to trace beef throughout the value chain.
Potential best practice outcomes on verifying sustainable beef in Canada will be presented at the Canadian Roundtable for Sustainable Beef meeting this autumn. McDonald’s is working closely with CRSB, a national, multi-stakeholder initiative developed to advance sustainability efforts, to trial and develop solutions. “We can’t make the changes alone: we need collaboration and we need regional metrics,” says Bob Langert, vice-president for corporate social responsibility at McDonald’s.
McDonald’s key facts
McDonald’s is the world’s largest restaurant chain, with more than 35,000 restaurants worldwide in 119 countries, employing 1.8 million people. In the 2013 the firm served 70 million customers per day.
In 2013, the company returned $4.9bn to shareholders through dividends and share repurchases. In 2014, it plans to open more than 300 new restaurants and re-image about 400 existing restaurants.
In the first quarter of 2014, McDonald’s revenues were $7.18bn and its net profit was $1.39bn.
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