By Alicia Kelso
McDonald’s recently announced its “refreshed purpose to feed and foster communities”
In November, McDonald’s announced its new comprehensive growth strategy, called Accelerating the Arches. The plan prioritizes marketing, menu, digital, delivery and drive-thru—foundational pieces that have elevated the chain into juggernaut status during the Covid-19 crisis (and well prior).
Beneath the fold, the company also announced its “refreshed purpose to feed and foster communities,” with a focus on four areas specifically: responsibly-sourced ingredients, driving climate action, connecting with communities in times of need and an increasing focus on equity. With that plan, McDonald’s disclosed some pretty lofty goals, including sourcing 100% of packaging from renewable, recycled or certified sources by 2025 and “reducing barriers to employment” for over 2 million people.
No doubt focusing on everything from equity to packaging to hunger is a tall task. To lead this work, the chain brought Katie Beirne Fallon on board in October as its new executive vice president and chief global impact officer.
A deeper look into McDonald’s “renewed purpose to drive greater impact” illustrates that Fallon certainly has her work cut out for her. Fallon, however, served as an advisor to President Barack Obama, so she certainly has the global experience under her belt. Not to mention, the chain very much has the foundation in place to guide her. The company issued its first worldwide social responsibility report all the way back in 2002. In 1990, long before sustainably-sourced ingredients and social responsibility reports became a thing, McDonald’s forged a relationship with Conservation International to add sustainable whitefish sources for its Filet-O-Fish sandwiches.
Still, there is plenty of opportunity here. For instance, not one restaurant company earned a spot on Newsweek/Statista Inc.’s “Most Responsible Companies” list, despite the increased urgency of corporate responsibility. The Harvard Business Review notes that consumers and other take-holders want companies that see social good as a necessity, not just a marketing strategy, to address the growing number of global issues–from climate change to systemic racism.
With McDonald’s scale, including more than 36,000 restaurants in more than 100 countries, it has the potential to create a sea change.
For Fallon, that means taking an all-hands-on-deck approach. Shortly after her hire, McDonald’s added a new,dedicated Global Impact Team, for example, which brings together dozens of global experts across Public Policy and Government Relations, Communications, Sustainability and ESG Strategy, Community Impact, and Ronald McDonald House Charities.
“Our social purpose strategy is largely fueled by the fact that we operate in nearly every community around the world and serve the equivalent of over 80% of the world’s population at least once a year,” Fallon said. “We are encouraging the whole company to be part of our efforts by ensuring that all of our impact strategies have cross-functional support and execution teams.”
Though the company has long reported on its social responsibility efforts, the need to do better across the board has become even more urgent during the pandemic. That is part of the reason McDonald’s “refreshed purpose” is a component of its broader Accelerating the Arches announcement.
“We felt we needed to reinvigorate our purpose during the pandemic. Not only has it been critical for employee inspiration and morale during these unprecedented times, but we know that consumers are closely watching how companies are responding and even looking to business leaders for stability, and even hope,” Fallon said.
Throughout the past year, for example, McDonald’s gave away 12 million “Thank You Meals” to healthcare workers and first responders, hosted Kindness Kitchens in the Philippines to serve more than 100,000 meals to healthcare workers and donated millions of masks and millions of pounds of food throughout its global communities. The Thank You Meals giveaway, Fallon notes, equates to about $63 million in free food.
Though it can be difficult to identify a return on investment from environmental, social and governance work, Fallon said the company saw a “measurable increase in trust” among its customers throughout 2020. The company is also working on a solution to fill that measurement void.
“Everyone working in the ESG space knows how challenging it is to quantify a return on investment for the work we do in this space, especially with a decentralized franchise business model with an independent supply chain,” she said. “That is why it is important we continue to build momentum toward more holistic impact metrics tracking and a reporting regime that can bolster our collective ability to define and quantify value creation.”
An example would be to use more advanced analytics to understand energy cost drivers at restaurants. Positive consumer sentiment is also a worthy ROI and there is an abundance of research to support such sentiment. A global study from Zeno Group shows that consumers are four to six more times more likely to purchase and champion purpose-driven companies, for example. Edelman research finds that 86% of consumers believe that brands are expected to solve both societal and personal problems, including the proper treatment of employees. Sixty-three percent of consumers believe brands should support their communities.
Consumers aren’t the only ones clamoring for these efforts, however. “There is enough evidence to demonstrate that companies that prioritize positive environmental and social impacts as part of their growth strategies tend to generate more sustainable returns for shareholders, are more resilient to economic and political shocks and have an easier time attracting and retaining talent,” Fallon adds.
With several focus areas and audiences, and a footprint the size of McDonald’s, it is no doubt difficult to prioritize resource allocation. McDonald’s does so by listening to its customers and identifying the most material environmental and social impact areas. Using this formula, the company has identified those four aforementioned categories (sourcing, climate action, community connections and a focus on equity).
To get a glimpse of the extensive work being done here, the company recently announced it would link a percentage of executives’ incentive bonuses to hiring women and diverse employees. It also signed a strategic partnership agreement with Beyond Meat to co-create more plant-based menu items as part of its recently announced McPlant platform.
Fallon adds that the company, as one of the world’s largest beef purchasers, has convened partners across sectors to help shape sustainability standards alongside farmers, ranchers and suppliers “so the entire food industry can move forward toward more sustainably sourced beef together.” Another example of the work being done here is the deployment of satellite technology to help eliminate deforestation from the chain’s global supply chain by 2030.
“[Our] scale and reach allows us the opportunity, and candidly the responsibility, to tackle big challenges and make a big difference,” Fallon said.
Making a big difference can come with a cost, however. Fallon said this work is done collaboratively with franchisees, suppliers and employees, with franchisees serving as “authentic ambassadors for our purpose in their local communities.” The idea behind the Thank You Meal program, for example, came from a franchisee.
Though McDonald’s has been doing this work for decades, Fallon recognizes much work remains–daunting, but necessary work.
“The challenges we face as a society are too big for one company or government alone to tackle, and we now have a historic chance to build back from the pandemic in a more resilient way,” she said. “There is a lot of expertise McDonald’s can bring to the table as one of the world’s largest employers, franchisors and supply chain managers. I’ll be looking for every opportunity I can to ensure that McDonald’s plays a role in shaping a stronger future.”