This paper examines business ethics by critically analyzing McDonald’s Corporate Social Responsibility.
McDonald’s Corporate Social Responsibility
McDonald’s is in the business of providing food to the public with its corporate social responsibility (CSR) being captured in its Scale for Good initiatives that aim at provision of food that is sustainable for the customers, producers and the environment. The initiatives have an online reporting platform that shows the latest updates with respect to the CSR’s “strategy, global priorities, policies and performance”. Notably, Scale for Good impacts on the company’s Velocity Growth Plan that aims to attract more customers to McDonald’s by making the customers feel good about the food, the company and its impact on the world. Scale for Good is hence an ongoing effort that adopts to a changing environment to define the standards for addressing social and environment challenges especially with regard to utilization of scarce food and water resources. The CSR’s initiatives are achieved in collaboration with such stakeholders as customers, suppliers, employees and franchisees.
The Scale for Good CSR objective is based on various business ethics theoretical approaches, with a major basis being the Common Good Approach that bases ethical decisions on what is good for the entire community, with McDonald’s aiming to produce food that is good for all the company’s stakeholders by serving all their interests. The CSR also adopts a Rights Approach framework by respecting the rights of all the stakeholders in business decision-making. Further, the Scale for Good objective is based on the Utilitarian Approach that aims to produce the most good while minimizing harm to the environment with regard to use of food and water resources.
Scale for Good ensures McDonald’s has a responsibility to improve its business by adopting modern, best business practices in food provision. This impacts on the company’s expenses through Research and Development (R&D) that ensures McDonald’s is always improving its product portfolio by developing products that embrace healthier lifestyles for an increasingly informed and aware populace that demand “quality, nutrition and choice” (US SEC, 2018). The R&D is reported as non-material expenditure in the company’s financial statements.
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On the other hand, the CSR initiative is an opportunity for the company to evolve by offering innovative products that resonate with the masses, hence positively influencing the company’s profitability in the long-run. In its risk analysis, McDonald’s notes that “if we do not successfully evolve and execute against our business strategies, we may not be able to increase operating income” (US SEC, 2018). Scale for Good, a recent CSR initiative that is developed from earlier CSR initiatives, aims to contribute in increasing the operating income that has remained steady from 2012-2017 (US SEC, 2018). Notably, McDonald’s has gradually become more reliant on franchisees at the expense of company-owned restaurants, with sales from franchisees rising from $9 billion in 2012 to $10.1 billion in 2017 compared to revenue from company-owned restaurants that fell from $18.6 billion to $12.7 billion over the same period. It is hence imperative McDonald’s boosts its company-owned companies that it has most influence over by setting a comprehensive CSR objective.
Nonetheless, franchisees, as part of the McDonald’s system, are important in realization of the Scale for Good CSR initiative. The 2017 Annual Report notes that
“The strength of the alignment among the company, its franchisees and suppliers (collectively referred to as the “System”) is key to McDonald’s long-term success. By leveraging the System, McDonald’s is able to identify, implement and scale ideas that meet customers’ changing needs and preferences. McDonald’s continually builds on its competitive advantages of System alignment and geographic diversification to deliver consistent, yet locally-relevant restaurant experiences to customers as an integral part of their communities” (US SEC, 2018)
Moreover Scale for Good offers McDonald’s the opportunity to be the industry trendsetter in terms of food standards. That the company is multinational means that it has the opportunity to sample alternative practices from different locations before selecting the most suitable to scale to its many restaurants. According to Steve Easterbrook, McDonald’s President and CEO, the company is “proud to build on our strong commitment to the communities where we operate… embracing our leadership responsibility and demonstrating the incredible opportunities we can create… when we harness our Scale for Good around the world. Francesca DeBiase, the company’s Executive Vice President and Chief Supply Chain and Sustainability Officer, notes that “We want to use our Scale for Good and always keep raising the bar on what it means to be a responsible company committed to people and the planet.”
An analysis of McDonald’s Scale for Good CSR initiative shows that the company – based on its scale and reach – has identified areas of global priority that it can mostly make a major difference in and lead to change in the industry. The global priorities are a reflection of the social and environmental impacts of food and its provision business as well as the material social and environmental issues that affect McDonald’s stakeholders who include stockholders, customers, employees, suppliers and franchisees.
As a result, McDonald’s has prioritized the following CSR initiatives:
- Climate action which McDonald’s cites as “the biggest environmental issue of our time, affecting McDonald’s customers, employees and everything from our supply chain to the thousands of communities around the world in which we operate” (McDonald, 2018). As a result, the company has Science Based Targets to reduce greenhouse gas emissions along its supply chain, which state that “The Company will partner with franchisees to reduce greenhouse gas emissions related to McDonald’s restaurants and offices by 36% by 2030 from a 2015 base year. Through collaboration and partnership with our suppliers and producers, the company also commits to a 31% reduction in emissions intensity (per metric ton of food and packaging) across our supply chain by 2030 from 2015 levels” (McDonald, 2018). Hence, McDonald’s aims to reduce its carbon footprint by 150 million metric tons of C02 equivalents by 2030, with a focus on improvements and innovations on LED lighting, kitchen equipment, packaging, recycling and sustainable agriculture support. This commitment has led to various company and collaborative initiatives such as McDonald’s Energy and Climate Position Statement effective from 2014, the 2015 White House American Business Act on Climate Change Pledge and the 2015 Commitment on Forests. The company submits an annual report to CDP Climate Change. McDonald’s France in conjunction with MoyPark Beef and France’s National Breeding Institute developed CAP’2ER, the European Union’s official tool for its “beef carbon” program (Cop21),
- Beef sustainability whereby as one of the largest buyers of beef worldwide and as a founding member of the Global Roundtable for Sustainable Beef (GRSB), McDonald’s collaborates with farmers, environmental groups and governments in advancing beef farming and production practices through discovering, practicing and scaling sustainable farming methods. This involves supporting environmentally-friendly beef production, advancing animal welfare and health as well as improving the livelihoods of beef farmers. The beef sustainability initiative impacts on McDonald’s behavior and performance by making it gradually source from suppliers participating in beef sustainability programs and practicing forest conservation and preservation, initiating and participating in farmer outreach programs where they share tools and knowledge to promote best practices, selecting and showcasing best practices in McDonald’s Flagship Farmers program, and pioneering new practices through trialing and discovery. Measurement of progress in all of these goals is pegged to 2020, with many McDonald’s restaurants and franchisees in Brazil and Canada already sourcing only sustainable beef. As noted by Dennis Laycraft, the president of GRSB, “Without McDonald’s, the roundtable would not have made the global, industry-wide inroads it has toward making beef a socially responsible, environmentally sound and economically viable product”.
- Packaging and recycling with the company having progressive goals to reduce and improve packaging, innovate in sustainable packaging and recycling, and influence its worldwide customers to recycle more. As an interim goal, the company targets to have all its fiber-based packaging being from recycled or certified sources and where there is no deforestation by 2020, with the company having achieved this in 64% of its market (McDonald, 2018). Overall, McDonald’s aims to have all of its packaging being from renewable, recycled or certified sources by 2025. This target has already being achieved in the US, UK, Canada, France, Germany, Russia, Japan and China. McDonald’s has recycling and litter programs in 12 of its top markets. The company will eliminate foam packaging from all its operations by the end of this year (2018).
- Commitment to families. In 2013, McDonald’s partnered with Alliance for Healthier Generations to introduce Happy Meal product that constitutes of food with more fruits, vegetables and low-fat dairy products. This has directly impacted on the company’s performance, with parents being enthusiastic about the more nutritious meals. Removal of soda from the Happy Meal menu board saw a spike of 14% in uptake of meals served with water, milk or juice. Apart from offering balanced food choices from recommended food groups, the company also has the Happy Meal Readers Book Program and the Ronald McDonald House Charities. The Happy Meal Readers Program inspires a reading passion among children, having distributed over 370 million books globally since 2001. The program has also started distributing toys with the Happy Meal. The Ronald McDonald House Charities is another initiative that shows commitments to families by keeping sick children together with their families. His program started over 40 years ago and constitutes 364 houses, 227 family rooms, and 49 care mobiles in over 64 countries. The program provided “care and resources to more than 5.5 million children and families” in 2016.
- Youth opportunity where in partnership with the International Youth Foundation (IYF), McDonald’s offers training, employment opportunities and workplace development for youth. In so doing, McDonald’s aims to access and attract high-quality talent as well as enhance its corporate brand’s reputation and trust. McDonald’s Youth Opportunity initiative was launched in 2018 with the aim of offering job readiness training, employment and career opportunities to two million young people globally by 2025. McDonald’s has also joined the International Labor Organization’s Global Initiative on Decent Jobs for Youth. The pre-employment job readiness training is currently piloting with 4000 youths in Chicago, with the aim being to scale it out to the rest of the US and globally from 2019. The company’s Hamburger University has seven campuses spread around the world, and has so far trained over 360,000 students to be leaders in the restaurant industry. The Archways to Opportunity career pathway program enables McDonald’s employee development in about 25 countries.
United Nations Sustainable Development Goals (SDGs)
Further, the Scale for Good initiatives are in tune with the United Nation’s Sustainable Development Goals (SDGs) of ending poverty, protecting the planet and ensuring prosperity for all; with various initiatives touching on all the SDGs. However, McDonald’s has identified six SDGs where it commits resources to make the greatest impact, namely:
- Zero hunger (Goal 2) where McDonald’s “is committed to serving delicious food, sourced in a way that is better for both the planet and the communities in our supply chains and where we operate”.
- Decent work and economic growth (Goal 8) where the company and its franchisees has the opportunity and responsibility to provide meaningful work, development opportunities as well as diversity and inclusivity to its one million global workforce that consisted of 235,000 employees as of 2017(US SEC, 2018).
- Responsible production and consumption (Goal 12) with the company being committed to “sourcing high-quality raw materials long into the future” through using natural resources efficiently, minimizing negative impacts in food production and consumption, and responsible food supply chain management.
- Climate action (Goal 13) where as a global citizen and the world’s largest restaurant, it has a major impact through such initiatives as beef sustainability, recycling and smart restaurant design.
- Life on land (Goal 15) with McDonald’s collaborating with various public and private stakeholders in initiatives on deforestation elimination and responsible forestry and production.
- Partnerships for the goals (Goal 17) through expert and community partnerships, McDonald’s is involved in prioritizing business and societal issues for innovative solutions.
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McDonald’s Scale for Good is a CSR initiative that encompasses various programs geared towards aligning the company’s business with ethical practices for societal good. It leverages the company’s reach and scale to adopt a global perspective. Indeed, its global nature is reflected in several of its partners who include IYF, ILO and the European Union. Moreover, it has adopted some global sustainable goals as articulated in the UN’s SDGs. Its partnerships also include governments, NGOs and communities; reflecting the tailoring of its CSR initiative to local needs.
A recent initiative to replace earlier CSR initiatives in the company, the Scale for Good initiative has already started positively impacting on the company’s behavior and performance. The initiative has a section on McDonald’s website dedicated to environmental and social performance goals and indicators that is in effect “a living reporting platform where readers can see how we’re doing year on year, and find the latest updates on our strategy, global priorities, policies and performance (McDonald’s, 2018).