SUPPLY CHAIN ENVIRONMENTAL SUSTAINABILITY AT MCDONALD'S: PAST, PRESENT, FUTURE
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Supply Chain Environmental
Sustainability at McDonald’s:
Past, Present, Future
We have a long history of
progress on sustainable supply…
1989 1990 1991 1993 1997 1999
Animal Code of Conduct
Global Waste Code of
Rain Forest Welfare
Environ- Reduction Conduct Audits
Beef Policy Audits
mental Action Plan
Policy
2000 2001 2003 2004 2006-07
Animal Sustainable Global Environ- Amazon Soy
Welfare Fisheries Antibiotics mental Moratorium
Council Guidelines Policy Scorecard
And a history of being a
lightning rod…
1998-2000 1999-2001 1995-97
Waste Crisis/Disposable Polystyrene McSpotlight
society
1998-2000 2000-06 2006
2004
Greenpeace Eating
Anti-Globalizaton Fast Food up the Amazon
Movement Nation 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 industriesEnvironmental 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 SkinnerAiming for “The Smart Zone”
Non-profitable area
“Smart Zone”
Requirements
Maximise
Shareholder
Value
Threat to
Shareholder
Value
Illegal area
TimeSustainable 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 Environmental Economic
We envision We envision We envision
purchasing from influencing the delivering affordable
suppliers that follow sourcing of our food, engaging in
practices that ensure materials and equitable trade
the health and safety ensuring the design practices, limiting
of their employees of our products, their the spread of
and the welfare and manufacture, agricultural diseases,
humane treatment of distribution and use and positively
animals in our supply minimize lifecycle impacting the
chain. impacts on the communities that
environment. 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 valuesGreenpeace video
The Odd Couple
Cannot do it alone….
Accelerating Better
Practice Adoption
Performance Curve
Performance
Shift
Best
PerformanceAnticipating and Managing
Emerging Issues
Publicity/ Public Politicians
Exposure
Interest Media
and Groups
Who Is Scientists
Involved “Fringe” Academe Opportunity
Phase Emergence Triggering “Crisis”/Public Resolution
Event Positioning
Best Opportunity to Save
Resources, Cost &
Reduce Risk
Time Anticipatory CrisisFuture 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 F-flute:
– Minimize harmful chemicals --46% recycled
content
– Renewable material
--majority of fiber
preference unbleached
– Reduce CO2 --25% lighterSupplier Environmental Scorecard
Land Conservation Guidelines
Education and Communication
www.crmcdonalds.comHarvard 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
FundRESPONSIBLE FOOD FOR A SUSTAINABLE FUTURE
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