Supply Chain Environmental
Sustainability at McDonald’s:
Past, Present, Future
We have a long history of
progress on sustainable supply…
1989
Rain Forest
Beef Policy
2000
Animal
Welfare
Council
1990
Global
Environmental
Policy
1993
1997
1999
Code of
Conduct
Animal
Welfare
Audits
Code of Conduct
Audits
1991
Waste
Reduction
Action Plan
2001
Sustainable
Fisheries
Guidelines
2003
Global
Antibiotics
Policy
2004
Environmental
Scorecard
2006-07
Amazon Soy
Moratorium
And a history of being a
lightning rod…
1998-2000
1999-2001
Waste Crisis/Disposable
society
1998-2000
Polystyrene
2000-06
1995-97
McSpotlight
2006
2004
Anti-Globalizaton
Movement
Fast Food
Nation
Greenpeace Eating
up the Amazon
Campaign
Plus a history of engagement
and partnership…
Why Sustainable Supply?
Safe, assured supply
Brand trust
Do the right thing
Assured Supply
Brand experience remain most
important to consumers
– no slip-ups allowed
Consumer Expectations of Socially Responsible Companies
% Saying Company “Held Completely Responsible for,”
Prompted, Average of 25 Countries, 2007
Tendency Toward
Brand
Experience
Note: “Ensuring health
and safety of products”
not asked in 2007 ranked #1 in 2005
Tendency Toward
Corporate Citizenship
1. I am going to read a list of things some people say should be part of the responsibilities of large companies. For
each one, please tell me to what extent you think companies should be held responsible.
The food industry’s CSR reputation
has worsened in a number of
McDonald’s key markets
CSR Performance of Food Companies, Net Ratings (“Above Average”
Minus “Below Average”), Decreases: 2001–2007*
In Brazil and
Great Britain,
ratings have
improved since a
low in 2005
*Asked of half of sample in 2007, 2003, and 2001
**Only 200 people were asked this question in 2001
9B. Please rate each of the following types of companies on how well they fulfill their responsibilities to society.
bt) Food companies
CSR performance ratings of nearly all
industries continues to decline, leading to a
gap between CSR expectations and
perceived industry performance
Expectations of Large Companies on CSR vs Perceived Industry CSR
Performance, Average of 18 Countries, 2001–2007
*Aggregate net expectations of 10 responsibilities of large companies
**Aggregate net CSR performance ratings of 10 industries
Environmental Issues Would Most Like
to See McDonald's Address More
Prompted, USA, 2008
High mentions of “waste and recycling” and “packaging
materials and design” clearly illustrate the importance of
McDonald’s addressing the environmental issues that tie in
directly with what’s core to the business: food.
Integral to Our Company Values
“We give back to our communities:
We take seriously the
responsibilities that come with
being a leader. We help our
customers build better
communities, support RMHC, and
leverage our size, scope and
resources to help make the
world a better place.”
Do the Right Thing
“Be a good citizen. Have a real
sense of community. Be involved
in the life and spirit of the
community you serve.”
-Ray Kroc
“We must do the right thing –
and we must do things right.”
-Jim Skinner
Aiming for “The Smart Zone”
Requirements
Non-profitable area
“Smart Zone”
Maximise
Shareholder
Value
Threat to
Shareholder
Value
Illegal area
Time
Sustainable Supply Vision
McDonald’s vision for sustainable supply is a supply chain that profitably
yields high-quality, safe products without supply interruption while
leveraging our leadership position to create a net benefit by improving
ethical, environmental, and economic outcomes:
Ethical
We envision
purchasing from
suppliers that follow
practices that ensure
the health and safety
of their employees
and the welfare and
humane treatment of
animals in our supply
chain.
Environmental
We envision
influencing the
sourcing of our
materials and
ensuring the design
of our products, their
manufacture,
distribution and use
minimize lifecycle
impacts on the
environment.
Economic
We envision
delivering affordable
food, engaging in
equitable trade
practices, limiting
the spread of
agricultural diseases,
and positively
impacting the
communities that
our suppliers operate
in.
Guiding Principles
1. Undertstand
2. Long-term
3. Stakeholder
engagement
4. Science-based
5. Supplier partnership
6. Economic
sustainability
7. Global vs. local
“How” is Very Important
– More than just what you can
produce or sell – it’s how you do it
– Values
– Caring, trying
– Transparency
– World is Flat
– Internet
– Public demands information
A Seat at the Table
Sustainable Supply Chain is:
– Quality and food safety
– Contingency
– Risk management
– Predictable and competitive
pricing
– Brand relevance
– Social responsibility and
company values
Greenpeace video
The Odd Couple
Cannot do it alone….
Accelerating Better
Practice Adoption
Performance Curve
Performance
Shift
Best
Performance
Anticipating and Managing
Emerging Issues
Publicity/
Exposure
and
Who Is
Involved
Phase
Public
Interest Media
Groups
Scientists
“Fringe” Academe
Emergence
Politicians
Opportunity
Triggering
Event
“Crisis”/Public
Positioning
Best Opportunity to Save
Resources, Cost &
Reduce Risk
Time
Anticipatory
Crisis
Resolution
Future Priorities
–
Strengthen current environmental
programs
–
Enhance measurement of
environmental impacts
–
Implement land conservation policy
–
Educate and communicate (internal)
Sustainable Packaging
– Revised Sustainable
Packaging Scorecard in
development:
– Maximize recycled content
– Maximize “end of life”
options
– Minimize weight
– Minimize harmful chemicals
– Renewable material
preference
– Reduce CO2
F-flute:
--46% recycled
content
--majority of fiber
unbleached
--25% lighter
Supplier Environmental
Scorecard
Land Conservation
Guidelines
Education and Communication
www.crmcdonalds.com
Harvard Business Case:
McDonald’s Corporation: Managing
a Sustainable Supply Chain
“McDonald’s has been
able to make progress at
McDonald’s prices, which
is great for society. It
keeps sustainability from
being a luxury item.”
--Gwen Ruta,
Environmental Defense
Fund
RESPONSIBLE
FOOD
FOR A
SUSTAINABLE
FUTURE