In recent weeks we've looked at what General Electric (NYSE:GE) and Coca-Cola (NYSE:KO) are doing to make a positive difference in the world, particularly on issues of education and the environment. Today, we turn our attention to McDonald's (NYSE:MCD) and its efforts to engage some important global issues.
With over 30,000 restaurants in operation, touching the lives of more people on the planet than any other restaurateur, the company is in a unique position to serve the public with more than just burgers and sodas. Let's take a look at some key issues McDonald's is addressing.
Sustainable fisheries
Sustainability is a key concept behind corporate social responsibility (CSR). It appears that McDonald's is smartly applying the concept to fit its own business context. Since the restaurateur purchases roughly 50,000 tons of whitefish per year, the sustainability of fisheries is critical to the company's long-term success. Beyond its own business interests, the leadership at McDonald's recognizes that because of increasing economic and environmental pressures, it also has a social responsibility "to protect" the health and productivity of fisheries.
In 2001, the company began closely monitoring fishery health from its suppliers. From these initial findings, it identified that some of its suppliers, like Russian Pollock, were "undergoing severe decreases in actual catches," calling into question the "long-term sustainability of these sources."
In response to the fishery crisis, the company, in partnership with Conservation International, "rolled out sustainability guidelines for fisheries worldwide." The company reports that the global rollout was completed in 2005. The latest corporate social responsibility report from McDonald's indicates that as a result of this initiative, over the past five years, 18,000 tons of whitefish "have been shifted to fisheries that meet the new criteria."
Sustainable forests
Given the enormous amount of packaging utilized by McDonald's, the company is identifying ways it can manage and minimize the environmental impact of packaging. According to 2005 data, approximately 83% of its packaging is paper based (the other 17% is plastic), of which only 31.5% is from recycled paper. Its packaging consumption presents three obvious opportunities for McDonald's: to increase its usage of recyclable product, to reduce its usage of packaging, and to participate in the effort for sustainable forests.
As far as increasing the usage of recyclable packaging, McDonald's has partnered with its principle packaging supplier, Perseco, to develop a "comprehensive set of environmental guidelines for consumer packaging." Not only do the guidelines place a greater priority on the maximizing of recycled content, they also emphasize the demand for smaller, more efficient packaging.
Beyond working with suppliers, McDonald's has taken matters into its own hands to identify ways it can reduce packaging consumption. One way it has done this is by reducing the weight of North American fry boxes. Because of a little tweak to fry boxes, in 2005, McDonald's was able to reduce packaging weight by 1,100 tons from 2004 levels. Similarly, its operations in Brazil managed to reduce packaging weight by 582.6 tons in 2005, simply by making minor adjustments to packaging size.
In addition to increasing recyclable packaging and reducing packaging consumption, McDonald's is also looking at "environmentally responsible fiber procurement" as a way to make a difference. The company is in the initial development stages of what it hopes will be a comprehensive long-term sustainable forestry program.
Its operations in Europe may be what will get the ball rolling for the company. In 2004, its European operations finalized its "sustainable forestry policy," which offered guidelines to increase its procurement of wood-based products from forests that have "achieved certification for sustainable management." Implementation will occur over several stages in the coming years, beginning with consumer packaging.
Social responsibility initiatives as varied as its menu
A read through the company's latest corporate social report highlights the various ways McDonald's is trying to make a positive difference on important issues. We've highlighted its efforts with fisheries and forests, but we would be remiss for failing to acknowledge the company's active participation to improve animal welfare and address nutritional concerns and eating habits, as well as its efforts to work with produce suppliers to encourage fairer labor practices.
In regard to its labor efforts, it's worth noting that McDonald's has partnered with Walt Disney (NYSE:DIS), among others, in Project Kaleidoscope -- a collaborative effort to promote improved worker conditions. Still in its early stages, the program has been working with 10 factories in China.
McDonald's is engaging many important global issues on multiple fronts, but more can be done -- and it is good that its leadership recognizes that. Jim Skinner of McDonald's asserts, "While I am proud of what McDonald's is today, I am more proud of what we can be." As potential investors in McDonald's, we want to know what steps the company is taking to make its business model sustainable for the very long term. It appears McDonald's is taking sustainability seriously and has taken concrete steps to make it a lasting investment for shareholders.
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Fool contributor Jeremy MacNealy has no financial interest in any company mentioned. The Motley Fool has a disclosure policy.
