Get it Together, Ronald: McDonald’s Response to Climate Change
McDonald's impact on the environment, and what it must do to adapt.
Business as usual should be the gold standard for McDonald’s, the world’s largest restaurant chain. But the rapidly changing climate may strike directly at the heart of “business as usual” for the fast food giant.
McDonald’s operates 36,538 outlets across 119 countries, serving 68 million customers. Dining at McDonald’s should evoke a very familiar experience globally: a typical meal consists of a hamburger, french fries, and a soda. Behind that experience, though, reveals the end product of one of the most prolific supply chains in the world – one that carries an enormous impact on the climate.
For McDonald’s to continue to be a mainstay in consumers’ lives, it must be able to adapt its business practices.
So how is McDonald’s affected by climate change?
To supply a world’s worth of food at a cheap cost, McDonald’s has understandably tried to control its costs as strictly as possible. Unfortunately, however, this can often have unintended but still serious ecological impacts: for instance, McDonald’s was found in 1986 to have been sourcing beef from cows raised on deforested land in the Amazon1. As time went on and the public became keenly aware of the impact of the devastation of one of the world’s great rainforests, McDonald’s had to change its supply chain dramatically to bring more sustainable products to its perceptive customers. Those same customers with concerns about the impact that McDonald’s has to the environment have also started to vote with their dollars: beef consumption has continued its steady decline in pounds of beef per person consumed per year. Much of that is fueled by further understanding of the methane emissions caused by cattle farming2. McDonald’s must then also change its core offering to please a more ecologically conscious consumer base3,4.
In addition to pressure from public perception, climate change has the potential to affect the offerings that McDonald’s counts on to create a thriving business. The extreme and unpredictable weather patterns that have emerged because of climate change have started to affect crops needed to make McDonald’s products. For instance, avocados in California have started to increase in price because of surprisingly low yields following years of drought5.
So what’s McDonald’s doing?
Well, quite a bit, actually:
- Supply Chain
- Beef: McDonald’s has participated and adhered to the guidelines set by the Global Roundtable for Sustainable Beef (GRSB). The GRSB commits McDonald’s to perform regular check-ups not only on the raw material consumption (water, grass, corn) needed to produce beef, but also restricts McDonald’s from procuring beef from cattle raised on native forests, grasslands, or other high conservation value areas6.
- Fiber: Due to the huge amount of packaging that goes into every McDonald’s product, McDonald’s has agreed that by 2020, all fiber-based packaging will be sourced from raw materials according to the Forest Stewardship Council7. Among other criteria, the FSC prevents the use of any paper goods derived from illegal logging.
- Restaurant Operations
- Energy Efficiency: Through world-class design standards, updated technology, and better operational processes, McDonald’s will increase the energy efficiency of its company owned stores by 20% by the year 20208.
- Renewable Energy: By 2014, McDonald’s had committed its European restaurants to purchase 76% of their electricity from renewable sources8.
Wait, is that it?
For a company with the expansive footprint of McDonald’s, there seem to be a number of glaring areas of focus that don’t seem to have been addressed.
- Transportation: 15% of all CO2 emissions are attributed to the transport sector. By introducing locally sourced products, McDonald’s may be able to dramatically decrease the eco-footprint of its supply chain.
- Commodity Crops: Reducing the amount of menu items that rely on commodity crops such as corn and soybeans. The so-called “monoculture” of commodity crops helps to propagate the use of pesticides and heavy application of fertilizers, which can be both soil-depleting and pest-attracting9.
- Experiment with Composting: With the amount of food waste intrinsic to fast food, it seems to make sense that consumers should have the option to compost their waste rather than throwing it all into the trash bins. Composting, among many other benefits, can help local areas create richer soil, reduce the use of synthetic fertilizers, and encourage healthy root systems, thus decreasing the impact of runoff10.
A Global Leader
Finally, McDonald’s is looked toward as a icon in not only the restaurant industry, but in the business universe as a whole. If McDonald’s can truly become a sustainable organization while maintaining its tremendous performance, the effect of its sustainability efforts wont be contained to just McDonald’s own supply chain: it can act as a sterling example for other high-powered organizations who currently fear that taking these types of actions would take away from their profitability.
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1: Astor, Michael, “Greenpeace: McDonald’s Harming the Amazon.” USA Today, April 2006, http://usatoday30.usatoday.com/tech/science/2006-04-06-mcdonalds-amazon_x.htm, accessed November 2016
2: Barclay, Eliza “A Nation of Meat Eaters: See How It All Adds Up.” NPT, June 2012, http://www.npr.org/sections/thesalt/2012/06/27/155527365/visualizing-a-nation-of-meat-eaters, accessed November 2016
3: McDonald’s Corporation FORM 10-K. December 2013, https://www.sec.gov/Archives/edgar/data/63908/000006390814000019/mcd-12312013x10k.htm, accessed November 2016
4: Greenpeace, “Eating Up The Amazon.” Greenpeace, April 2006, http://www.greenpeace.org/international/Global/international/planet-2/report/2006/7/eating-up-the-amazon.pdf, accessed November 2016
5: Eastwood, Joel, “Climate Change Could Take a Toll on Fast Food Menus.” The Star, March 2014, https://www.thestar.com/business/2014/03/05/climate_change_could_take_a_toll_on_fast_food_menus.html, accessed November 2016
6: Global Roundtable for Sustainable Beef Website, “Natural Resources.” http://www.grsbeef.org/what-sustainable-beef/natural-resources, accessed November 2016
7: McDonald’s Corporate Website, “Commitment on Deforestation.” http://corporate.mcdonalds.com/content/mcd/sustainability/sourcing/priority-products/commitment-on-deforestation.html, accessed November 2016
8: McDonald’s Corporate Website, “White House Climate Pledge.” http://corporate.mcdonalds.com/content/dam/AboutMcDonalds/2.0/pdfs/McDonalds_White%20House_Climate%20Pledge_Oct%2019%202015.pdf, accessed November 2016
9: Mulik, Kranti, “The Healthy Farmland Diet.” Union of Concerned Scientists.” October 2013, http://www.ucsusa.org/food_and_agriculture/solutions/expand-healthy-food-access/the-healthy-farmland-diet.html#.VXh-AmOGfdk, accessed November 2016
10: Washington State University Website, “Compost Fundamentals.” http://whatcom.wsu.edu/ag/compost/fundamentals/benefits_benefits.htm, accessed November 2016
Student comments on Get it Together, Ronald: McDonald’s Response to Climate Change
Brian this is very interesting. I’m surprised to see that McDonald’s has not looked to reduce its carbon footprint within the context of transportation, which on the surface appears to be somewhat of a low-hanging fruit in comparison to securing higher levels of energy efficiency in all of its stores, and committing to the purchase of mostly renewable energy. I did a little research and saw that in comparison to the large carbon footprint that McDonald’s has, transportation is not actually a very large contributor: On their website, McDonald’s claims that only 3% of their carbon footprint is attributed to transportation, could this be possible? See: http://corporate.mcdonalds.com/mcd/sustainability/planet/climate-and-energy/mcdonald-s-enterprise-carbon-footprint.html.
If this is indeed the case, then clearly the main areas to focus on are within the supply chain rather than store operations.
It would be interesting to look at the evolution of the profit margin of McDonald’s since they started these initiatives as most of them involve more costly practices. As you said Brian, other smaller players might be reluctant to start this type of actions fearing to reduce profitability. However, McDonald’s potential success story does not automatically translate into a generic best practice for everyone since most other players do not enjoy the benefits of the economy of scale that McDonald’s has. For instance, sourcing all fiber-based packaging from raw materials according to the FSC might be much less costly per unit for McDonald’s compared to a smaller restaurant chain. I agree with everything you said about the large impact potential that McDonald’s has, but other smaller players will still struggle with the question of profitability vs. sustainability.
Brian, you made some great points here about the natural tension between McDonald’s need to deliver a consistent, inexpensive experience for its customers and to its desire to move towards the more sustainable practices its customers are looking for. Two questions immediately come to mind. First, you pointed out that Americans are eating less meat year over year. What you do you think that means for McDonald’s brand? Do you think that ethically sourcing the meat will be enough, or should McDonald’s push different menu items? Second, you suggested that McDonald’s experiment with composting. Are you worried about adding workload onto McDonald’s employees?
While I agree that McDonald’s has done quite a bit to address climate change, I do think they’re missing one essential thing: a veggie burger. Chipotle recently added Sofritas, or tofu chilli, to their menu, and Burger King has been offering a veggie burger for several years now. Why hasn’t McDonald’s done the same? My guess is that they probably don’t think it will be a profitable addition to their menu, but I believe that view to be extremely short-sighted. According to the U.N., shifting to a low-meat or meatless diet “will reduce monetary costs of climate change mitigation by 2050 by between 70% and more than 80%.”  Clearly, they have a lot to lose financially if they don’t bring a veggie burger to the table. McDonald’s needs to get on board with this before it’s too late.
 Flexitarianism: flexible or part-time vegetarianism
Brian, what a well-written article – bravo! Perhaps the biggest challenge I see with McDonald’s sustainability efforts is that approximately 80% of its restaurants are franchised. Do you see any potential challenges with getting franchisees on board with the company’s newly adopted sustainability practices?
McDonald’s has been slow to adapt a LEED certified prototype for its stores – given the additional capital investment required. Some franchisees have jumped at the opportunity to develop LEED certified buildings (https://www.youtube.com/watch?v=rpeq9pTlVsM); however, despite the anticipated benefits of LEED certification on the environment, why has McDonald’s corporate not required LEED certification for all new stores? Starbucks, for example has taken a stronger stance than McDonald’s; since 2008, Starbucks has committed to only developing LEED certified buildings.
McDonald’s needs to do more: in fact, only 25 restaurants from 2013-2016 (approximately 2% of newly developed restaurants) are slated to be LEED certified. By requiring all franchisees to go green, I think McDonald’s will continue to grow brand equity and improve the company’s long term footprint – not to mention the potential positive impacts to our environment. Would be great to hear your thoughts.
Thanks for the posting, Brian. It’s interesting learning about McDonald’s efforts to be more efficient, particularly given the 1986 discovery about their products. It seems that even despite their efforts to be more efficient though, that they could be doing more in other areas. As Adam notes above, transportation costs among others might yield greater efficiencies. Have they pursued alternative menu items or new campaigns in this area that might help minimize the consumption of meat? Kelly touches on this in her response and it sounds like a great avenue for them to pursue.
Very interesting – thanks for the post Brian. I would agree that given McDonald’s size and influence, they should be doing a lot more to combat climate change since as we saw with the IKEA case, it is definitely possible to deliver low prices and be sustainable as well. If transportation isn’t actually a significant portion of their CO2 emissions, the real opportunities seem to be in the supply chain and store operations. In addition to beef and fiber, did you come across any initiatives to improve sustainability in the sourcing of their other raw materials? And for store operations, as Eric mentioned, the real impact will only occur when they impose the requirements on their franchisees.