_McDonald's

Sustainability Saves McDonald's can credit its success to several factors, and adopting sustainability as one of its major growth strategies is one of them. By Jamie Morgan

> > McDonald's says it believes that sustainability practices are "lnextncably linked" with growing Its business and having a positive Impact on the world.

McDonald's sells millions of sandwiches each day.

Consumers are handed their food in a paper bag - the

food goes down the hatch, the paper in the trash. The

customers might have a general end-user idea about

how the sandwich came to be - especially if it's "two

all-beef patties, special sauce, lettuce, cheese, pickles, onions - all on a

sesame seed bun" - but they think nothing of the packaging it came in.

Even though the average McDonald's patron may not know it, the

fil process that brought that bag to fruition is just as

,-- company_pro e --; intricate as the layers of a Big Mac.

McDonald's www.mcdonalds.com

Headquarters: Oak Brook, Ill. 2011 Revenue: S27 billion Specialty: Quick-service restaurants Bob Langert, vice president of sustalnablllty: "By responding to society's needs ... we can lbe sus­talnableJ In a way that drives effi­ciency and Innovation."

It involves the corporate office, owner-operators

and suppliers working in a collaborative effort to

produce the best product for the lowest cost, and

that process delves deeper than just the food itself.

The customer might not eat it, but that bag factors

into the price of the sandwich, too. To keep the price

tag low for the consumer, McDonald's, and subse­

quently its suppliers, has to keep its overhead low.

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Businesses around the globe know this

simple concept, but it can take different

forms. For some, automation or

employee cross-training have been the

solutions because they allow employers

to get more done with less manpower.

Sticking with sustainability At McDonald's, growing its business is

"inextricably linked" to sustainability,

explains Bob Langert, vice president of

sustainability. "We view our work of sus­

tainability as growing our business by

making a positive difference in the

world;' Langert says. "I would say that in

our previous work, those efforts weren't

always linked. As we work on the future,

we celebrate our past at McDonald's.

We've had a great company culture from

the start, but in general most of McDonald's

efforts in sustainability came from the moti­

vation of doing the right thing, which con­

tinues to be a foundation of our company

today."

The difference today, Langert explains,

is that sustainability is now "a business

imperative. We see that by responding to

society's needs - and that touches our

food, our people and our footprint on the

earth - we can do it in a way that drives

efficiency and innovation, [and] reduces

resources and costs in our supply chain

while bringing in more customers, more

transactions and more loyalty.That's the

short case for why we are upping our

game in sustainable practices."

The "how " in upping its sustainability

game involves the three "P's " - passion,

persistence and patience. It begins in the

corporate office and requires getting the

other two legs of the stool - independent

owner-operators and suppliers - to also

buy into the notion that sustainable prac­

tices are a benefit to the whole.

"We are owned and operated by nearly

5,400 owner-operators," Langert explains

in a recent case study published by VOX

Global, "Making the Pitch: Selling

Sustainability from Inside Corporate

America." "We are more than Bo percent

franchise-owned. We very much have a

three-legged stool model of governance in

our company . ... So when it comes to sus­

tainability, one of the biggest skills that you

need is having the ability to discuss the

issue from three different perspectives:

company, owner-operator and supplier."

Those are the players, and at McDonald's

the sustainability game revolves around five

pillars: food, sourcing, community, people

and planet. The three players have champi­

oned initiatives under these five pillars that

work to benefit the world while also

enhancing each entity's bottom line.

The innovation can come from just

about anywhere - a general manager in

Brazil or an employee of one of

McDonald's suppliers. For instance, prov­

ing that the cost of the paper bag does

affect the bottom line, McDonald's Canada

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_McDonald's

recently made a systemwide switch from white napkins and bags to un­bleached brown napkins and bags.

Employees in Western Canada found the bags to be sturdier and customers used fewer napkins. McDonald's Canada rolled out the new supplies to the entire nation, reducing its energy, wood and water consumption, resulting in an annu­al approximate savings of $r.3 million for the whole McDonald's Canada sys­tem, which means savings for the cus­tomers. This, along with countless other initiatives, ultimately helps keep the dol­lar menu alive.

McDonald's restaurants the world over each address sustainable areas of improvement. Some initiatives blanket the entire global organization. How­ever, Langert affirms that the tone needs to be set from the top.

"This is not just meant for others, it's meant for the corporate office, too," Langert says. He notes that the corpo­rate headquarters in Oak Brook, Ill., is LEED-certified. "The building I'm in is actually LEED Platinum, which is very impressive considering that this build­ing was originally built in the mid 'Bos."

A cause for Each country LEED, which stands for Leadership in Energy and Environmental Design, is a green building ranking established by the United States Green Building Council. McDonald's USA has demon­strated corporate leadership with four LEED-certified restaurants and a goal to build 25 LEED-certified restaurants over the next three years. The company is helping franchisees streamline the rating process with established time, costs and approaches.

LEED certification is optional to franchisees, but McDonald's USA uses the lessons learned from these LEED restaurants to incorporate many of them into the minimum standards for new restaurants. Last year, McDonald's made LED lighting standard for all new, rebuilt and remodeled dining rooms, which the company estimates should decrease energy consumption by 2 per-

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SOMETHING IN THOSE FRIES

McDonald's restaurants from country to country are contributing to the sustainability of the entire organization and ultimately the world. The corporate office sets the tone. but because more than 80 percent of its restaurants are franchised McDonald's sustainability programs wouldn't see much sun without Its franchisees.

"In general. our strategy is always more of a pull versus a push." explains Bob Langert. vice president of sustainability. "You have to remember that most of our restaurants are owned by Independent busi­ness people that make their own decisions. So our goal is to motivate and educate them so they see the benefits of sustainability."

Sustainability has taken on many faces at the company. McDonald's Portugal is contributing to its nation's renewable energy production goals by reducing carbon dioxide emissions. It purchases green energy and has Installed solar roof panels at 14 of Its restaurants. And McDonald's Austria has used its McRecycle program since 1992 to recycle 95 percent of all restaurant waste.

Many of these Initiatives are behind-the-scenes operations. but a few are directly associated with the end-product. In 2007. the corporate office chal­lenged its global equipment suppliers to design a next generation fryer that would provide "better tasting food while Improving crew efficiency," says Gladys Terman. director of worldwide equipment systems for McDonald's Corporate. "We also needed to use less cooking oil and energy."

The result was the Low OIi Volume (LOV) fryer. which Improves cook­ing efficiency. simplifies filtering and cleaning and uses 4 percent less energy than standard fryers. McDonald's can cook the same amount of product using 40 percent less oil. Initial tests of the equipment were so successful that McDonald's suppliers created electric and gas versions that are now In use and available to franchisees worldwide. The LOV fryer was introduced to the McDonald's system In 2008 and became a standard for new store open­ings and replacements of old technology in 2011.

cent in each restaurant each year,

resulting in an annual savings of nearly

$1 million for McDonald's USA.

McDonald's USA and its focus on

green building aligns with its region's

concerns, Langert explains. Energy

costs are a major talking point for U.S.

citizens and McDonald's USA's focus

on developing green buildings responds

to that. Likewise, each country has its

own pet projects that address particular

concerns in that region.

"When it comes to especially the envi­

ronment and the supply chain efforts, we

do have some common approaches;'

Langert says. "[But] there's no cookie­

cutter approach. [It depends] on the

country and needs of the society. For

example, water is a huge issue in Aus­

tralia. They have problems with water

and drought and they are leading the

McDonald's system for figuring out ways

to save water."

In Japan, reducing greenhouse gas

emissions has been a focus for the

nation since the Kyoto Protocol was

adopted. In other countries, landfill

usage might come at a high cost - mak­

ing recycling a must. For instance, the

collection of restaurant waste and used

cooking oil to create biodiesel or bio­

gas is widespread in several countries.

These programs all have one thing in

common - as long as the company or

independent owner-operators want to

enact these programs, enacted they will

be. Save water here, reduce waste there

and a restaurant owner can nickel and

dime his or her way into significant sav­

ings. However, many agendas require

that third leg of the stool - the supplier.

Collaborating with Suppliers "Our suppliers engage with us to

achieve mutual strengths," Langert

says. "We operate by the three E's of

business: environment, ethics and eco­

nomics when it comes to our suppliers.

We're concerned with animal welfare,

environmental responsibility and hav­

ing superior workplace labor standards

and practices."

Because McDonald's drives efficien-

cies at its restaurants, it urges suppliers to

do the same. On its Best of Sustainable

Supply 2012 list, McDonald's recognized

companies such as Mullins Food Pro­

ducts. Through its Let's Get Healthy

Together program, Mullins provides edu­

cation on medical, nutritional and finan­

cial health. It opened a full-service work­

out center and subsidizes Weight Watch­

ers programs for employees. The aim is

to create happier, healthier employees

and a less stressful workplace, leading to

lower health insurance premiums and

higher productivity.

A Step Above McDonald's aim is to choose suppliers

that are at its own level or a step above

in terms of sustainability. However, as it

crosschecks its list of suppliers there

might be some that don't hold these

same values. In those cases, rather than

severing the relationships, McDonald's

leverages its dollar-power to create

change in its suppliers.

"We see a role to to use our size and

leverage to make a difference in our

supply chain," Langert explains. "These

changes won't just be for McDonald's,

though, but for the broader industry, as

well. One thing we use is the environ­

mental scorecard for major suppliers

around the world. We ask them to sup­

port measures related to water, energy

and waste. It's their environmental

responsibility to do so, but it's also

about growing our business. W hen you

use less and conserve more, you have a

more efficient supply chain."

This power to create change is most

apparent in its food supply. McDonald's

has six food priorities: beef, poultry,

palm oil, coffee, wood fiber and fish. Its

vision is to buy all of its food from ver­

ifiably sustainable sources. For some

areas, there are ready standards to look

to. For instance, 99 percent of its fish

qualifies for the Marine Stewardship

Council program.

W here guidelines are lacking,

McDonald's makes efforts to create and

improve standards for better animal

welfare. In May, McDonald's USA

McDonald's _______________ _

joined a new coalition to study U.S. hen

housing. The group includes animal

welfare scientists, academic institu­

tions, non-government organizations

and egg suppliers in a commercial­

scale study of housing alternatives for

egg-laying hens in the United States,

including cage-free housing and en­

riched housing such as nests. The study

will help McDonald's and other organi­

zations make informed decisions on

sustainable egg purchases.

McDonald's is also a co-creator of the

Global Roundtable for Sustainable Beef,

formed in conjunction with the World

Wildlife Fund and more than a dozen

other companies. "This organization was

created a year-and-a-half ago and has

accelerated its efforts to deliver stan­

dards on best practices to improve the

sustainability of beef in every way;'

Langert explains. "This is one example

of how we use our size and leverage to

improve something that's meaningful to

us and to society."

Living By Its Belief W hen it comes to practices in the agri­

culture industry, McDonald's could play

the innocent bystander. But history has

shown and McDonald's knows that

when one industry comes under fire, it

affects all related industries. By pro­

moting sustainable changes among not

just agriculture but its entire supply

chain and itself, McDonald's is living by

its belief that sustainability is "inextri­

cably linked to its business growth,"

and that the world's sustainability is tied

to McDonald's sustainability, as well.

"We want to make a positive differ­

ence in the world and help grow our

business - simply stated, that's the ulti­

mate goal," Langert explains. "We

know we have the people, the talent, the

size and the scope to make a positive

difference in the world, and we know

that we can take these aspects and all

these issues and turn them around in a

way that will help our business grow.

We can connect with society to address

needs that people have and offer them

better choices." FD

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