McDonalds CSR Showcases Their Commitment To Social Responsibility.

McDonalds Contribution to the Economy

Discuss about the McDonalds Corporate Social Responsibility.

The concept of business self-regulation for the benefit of the society goes back to the early 19^th century. The debate between the relationship between the society and business has been going on since then and there is no clear consensus as to the proper nature of the relationship. There are two main schools of thought on the nature of Corporate Social responsibility (CSR). There are those who think business has the responsibility of maximizing profit within the confines of the law with the least possible ethical consideration to minimise opposition from the community and those who hold it is the responsibility of business to operate in a manner that is in the best interest of the society (Attig and Cleary, 2014). Archie Carroll offers a definition of CSR that attempts to bridge the gap between the two schools of thought. According to Archie, CSR includes economic, legal, ethical, and discretionary expectations that the community a business operate in expects of it at any given time (Carroll, 1977). According to Carroll’s work on CSR (the most famous work in the field), CSR can be divided into four parts.

One of the leaders of CSR on a global scale is McDonalds. McDonalds is a multinational company that is committed to creating value for communities it operates in by enhancing operations and systems. The most basic responsibility of the management is to operate the business profitably (Jones, Bowd and Tench, 2009). In the Australian economy, McDonalds is a significant contributor to the economy. The company contributed 0.2% of the Gross Domestic Product (GDP) in 2012. According to AECOM (Architecture, Engineering, Consulting, Operations, and Maintenance), McDonalds contributes to a broad range of industries in Australia. In 2011, the company spend more than $1.1 billion in the economy. The money was spent on utilities, manufacturing, and other support services. The company also spends more than $1 billion on wages. The highlight of the report indicates the company adds 79 cents value to other industries for every dollar it spends. Each restaurant creates more than 100 employment opportunities for the local community (McDonald, 2012).

It is the ethical responsibility of a company to operate in manner that not only limit its effect on the natural ecology, but also improve it to enhance sustainability. McDonald leverages its size to influence environmental sound practices among its suppliers and other businesses it engages with. The company only engages with companies that operate in an environmentally sustainable manner and is a leader in waste management and recycling. Packaging or products is done in manner that uses the least possible resources while meeting the company’s promise to its customers of delivering fresh products in an easy to consume manner (EDF, 2016). To minimise the environmental impact of transportation, the company is recycling used cooking oil to fuel its trucks. The company is also renovating existing stores to make them more environmentally friendly and building new stores using the latest technology to reduce energy and water consumption (Jones, Hillier and Comfort, 2014). For example, the company only uses native plants for landscaping because they consume less water and require minimal care. Stores have high ceiling to eliminate the need for air conditioning and wall have clear windows to reduce energy consumption through lighting.

Sustainable Practices to Limit Its Environmental Impact

Responsible businesses go beyond delivering economic value to communities they operate in and limit their footprint to the environment; they also make positive contributions to the society by identifying unique challenges and addressing them (Schwartz and Carroll, 2003). McDonald is a leader in discretionary CSR. The company sponsors events and develops recreation facilities for children in urban centres. The company is a strong advocate of healthy living and believe children should engage in sport to lead a healthy life (Combs, 2002: Mcdonalds.ca, 2016). The company is also growing its menu to include healthy foods options for those who are health conscious. For most people living in urban centres, it is difficult to find grocery stores and other food outlets offering healthy food options. The company have taken the responsibility of availing healthy foods to people living in urban centres at affordable prices. Another sector the company is going beyond its legal requirement is marketing. The company only markets healthy foods to children (Deng, 2009). The company is also a champion at animal welfare and has its own standards that suppliers have to meet. The standard is above the country’s minimum standards.

The main focus of McDonald’s sustainability plan is sourcing sustainability. The company seeks to acquire products that have a minimum impact on biodiversity and deforestation. The company also focus on where it can have the most positive impact on the environment. With the help of the World Wildlife Fund, the company has developed a sustainable sourcing strategy that reduces environmental impact and engages employees, customers, and suppliers in the sustainability journey. One of the main milestones the company has achieved is engaging in the formation of the Global Roundtable for Sustainable Beef (GRSB). GRSB brings together key players in the sector to develop and advocate to advocate for environmentally and economically sound methods of beef production and processing (Saiplatform.org, 2016). Because beef production varies geographically, the country has its first sustainable pilot project in Canada but aims to adopt sustainable principles across its supply chain by 2020.

Another part of business the company is emphasising on sustainable practices is packaging. The company prides itself in delivering easy to consume products. Coffee, sandwiches, and other food stuffs are warped in easy to open and consume packages. The packages are made of fiber made of paper and cardboard. McDonald is the first global network of restaurants to be part of the Global Forest & Trade Network. The network is a global initiative to eliminate illegal; logging. This is the result of a 2014 commitment to eliminate products produced from illegal logging in its supply chain. The commitment includes not only eliminating illegal logging but also promoting the utilisation of forest resources to promote local communities. The commitment is an addition to its 2020 goal of operating sustainably across its supply chain. Coffee is a main source of income for the company (Ingenbleek and Reinders, 2012). McDonald is committed to serving coffee from sustainable sources. The coffee served in Brazil is certified by the Rainforest Alliance, while 22% of the coffee served in the United States is certified by the same body (Rainforest-alliance.org, 2016). The coffee served in the European region is also certified except for decaf coffee. To achieve sustainable production, the company not only engages with farms that comply with Rainforest Alliance Certification, but also engages directly with farms to support sustainable production.

Discretionary CSR and Positive Contributions to Society

Chicken is another source of income for the company that is getting attention from the company’s sustainable production efforts. There are no broadly acceptable standards of chicken production; therefore, McDonald is engaging with farmers by setting standards and providing guidelines to encourage sustainable poultry production. The company’s project includes the use of enriched housing system that makes use of natural sources of energy to reduce environmental impact. McDonald is also engaging with farmers to limit the use of drugs in poultry production. Another approach the company is using to encourage the sustainable production of poultry is purchasing from sources that feed chicken with soy that is sourced sustainably. Soy is a major input in poultry production. The company also uses palm oil in its restaurants to prepare food. 100% of the palm oil used in its restaurant sis sourced from sustainable sources and is certified by the GreenPalm Book (Earthisland.org, 2016).

McDonald is also engaged in animal welfare. 99.8% of farms the company source poultry, beef and pork products are certified by an independent animal audit firm. The use of drugs, especially antibiotics, is a growing concern among consumers because it results in the build up of resistance, which affect both production and consumer health. The company is engaging with farms to ensure they use antibiotics and other drugs responsibly (Honkanen and Ottar Olsen, 2009). One of its main focus is purchasing only from farms that adhere to the World Health Organisation’s (WHO) prohibited drugs list. WHO classifies some drugs that are important for human health as illegal for use in animal production. The company also requires the monitoring of production by veterinarians to ensure the animals receive proper care. Economical layering of animals also involves the use of growth promoting hormones. The company requires that hormones used in the production of animals be acceptable for human consumption and in quantities that are not harmful to the consumers. Some of the initiatives the company is engaged in to promote sustainable animal production include promoting farming practices and animal husbandry techniques that eliminate the use of antibiotics and growth hormones.

McDonald is also working with suppliers and other business partners to identify ways of reducing energy consumption in its restaurants. Some of the ways the company is achieving this include the use of LED lighting to illuminate its restaurants. In 2014, the company’s energy consumption reduced by 6% when measured against the number of customers. The company estimates savings of up to 11 million dollars in the US market because of the use of LED in its restaurants. Existing restaurants are also being redesigned to include the use of green designs that utilise natural ventilation and lighting to reduce energy consumption. New restaurants are also built using the same concept. For example, the company is building restaurants with large windows and that can easily be opened to allow air flow and allow sunlight to come in. The company is also emerging as a leader in recycling. In its efforts to achieve zero contribution to landfills and incineration, the company is recycling paper, cardboard, and cooking oil or a range of uses in its restaurants in Europe and other significant markets (McDonald, 2014).

McDonalds Sustainability Plan

The company has a cycling plant where used cooking oil is converted into biodiesel for use in its fleet of distribution trucks. McDonald is also a leader in efficient water use and conservation. In long-term water conservation initiative, the company is constructing water harvesting system to make use of rain water in its restaurants. All its restaurants use water efficient taps. McDonald is working in collaboration with the World Resources Institute (WRI) to indentify restaurants in water stress areas and develop approaches that add this challenge. Some of the ways the ways the company is enhancing water conservation is raising employees’ awareness through training about the importance of conserving water (Jones, Hillier and Comfort, 2014). Employees working in McDonald restaurants receive training on how to make the most of water and improve energy consumption in their work stations. The company is also engaged in raising consumer awareness to facilitate informed decision making. Another significant contributes to high water consumption in McDonald restaurants is landscaping. Previously, the company used exotic plants to beautify its restaurants in different regions. Currently, the company is engaged in planting native species to beautify its restaurants because they require minimal care and consume less water (McDonald, 2014).

McDonald’s sustainability plan is contributing to its bottom-line because of the reduced cost of operation and cost of doing business. The use of LED, natural lighting, and more efficient appliances means that the company spends less of electricity. Environmentally sound designs reduce the amount of energy spent on air conditioning, which also reduces the operating cost. The use of water efficient taps and washroom reduce the amount of water spent in its restaurants, which also reduce the amount of money the company spends on water bills. Engaging suppliers in the sustainable production means that the company can serve its customers with products that are not only healthy, but also produced sustainably. The monitoring of production techniques also means the products are free from drugs and hormones that could negatively impact on the health of consumers. Transportation is a significant contributor of global warming. The company is using its spent cooking oil to fuel its trucks, which is not only reducing the amount of carbon it releases into the atmosphere but also the amount of money spent on purchasing fuel (Conservation International, 2016).

Engaging suppliers in the production process means that the company has to spend money to ensure the suppliers adhere to the standards it sets. The many certifications the company has to acquire to operate sustainably also affect its bottom-line. There are no clear guidelines in the production of poultry, beef, and pork products in many countries; therefore, the company has to engage with suppliers to ensure they adhere to its policies (Bunge, Gasparro and Kesmodel, 2015). Some of the requires the company sets, such as limiting the use of some drugs and growth hormone products in its products means that it cannot purchase from some suppliers who offer competitive prices. The company also faces the challenge of ensuring the suppliers are not using drugs and growth hormones prohibited by WHO. Other than monitoring at the farm level, it is expensive and difficult for products arriving at its restaurants to go through testing to ensure the suppliers are following the company’s policies.

Sustainable Practices in Packing and Animal Welfare

One of the ways McDonald can address the challenge of ensuring suppliers adhere to its policies is vertical integration. Some of the most successful companies in the most successful companies in the world have a high level of vertical integration. Vertical integration refers to the engagement of a company in more than one stage in the production process (Merchant, 2014). For example, McDonald can purchase existing farms or open its own farms to guarantee its customers quality products. By engaging in the production of animal products, the company and ensure the animals are feed using products that are produced sustainably and only the legal drugs in the right amount are administered. Alternatively, the company can engage with certification bodies and provide funding to enable more vigorous monitoring and testing of products to ensure they adhere to set regulations.

The main goal of doing business is to make profit; however, there is a growing concern over the impact of human activities on the environment. A considerable number of species have already disappeared and many more continue to become extinct every day. People are becoming more environmentally conscious and even shareholders in companies are seeking to see their businesses running in a sustainable manner. The conflict between the two schools of thought in CSR results from a limited consideration of what CSR comprises of. Multinational companies, such as McDonald are demonstrating that companies do not have to forego profits to implement CSR initiatives (Hernández-Murillo and Martinek, 2009). By operating more efficiently, the company is able to spend less on energy and water. The savings can be used to fund projects aimed ensuring products from suppliers are produced sustainably. McDonalds has significant gains towards operating sustainably; however, there are still challenges the company has yet to overcome. As people and business become more aware of the importance of the environment to not only the continued success of business, but also of life on the planet, it is the responsibility of businesses to leverage their size to influence positive change.

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