A company which has attracted the amount of flak that McDonald’s has over the years does not take the decision to publish a global social responsibility report lightly. This is not just because the Golden Arches are, in the words of chairman and chief executive officer Jack Greenberg, a ‘symbol’ of anti-capitalist protest, nor because of the scale of its operations – 29,000 restaurants, 121 countries, 46 million customers daily.
The biggest obstacle to the company fulfilling its commitment to do what Greenberg calls ‘the right thing’ may prove to be its franchise structure, which has driven the global expansion. More than 70 per cent of its restaurants are owned and operated by individual entrepreneurs. Keeping a tight grip on their management practices is not going to be easy.
But the decision had to be made. McDonald’s cannot afford any more clumsy responses to reputational challenges such as its unfortunate decision to prosecute the McLibel case – a truly Pyrrhic victory. And the need to defend its brand grows with every new branch that opens – 27 a day in 2002 alone.
Underpinning the decision is the reality that of all single-brand companies, the McDonald’s brand has the highest value relative to its market capitalization. It is not the world’s most valuable brand – that honour belongs to Coca-Cola – but it represents a hefty 68 per cent of the company’s market capitalization, according to a London Business School study. The equivalent figure for Coca-Cola is 21 per cent.
So why has it taken so long to produce its first social report? Probably because it is aware of the scale of the task: the report has minimal performance data and is not externally verified.
Yet McDonald’s can justifiably claim to be making significant changes in certain areas, such as animal welfare and refrigeration technology. These challenges pale beside the task of measuring social performance, though it has allied itself to the GRI guidelines, which ask for ‘reliable comparative data’. But having taken the plunge, McDonald’s can now develop a coherent approach to risk that in the long run should make life easier for its public relations officers – and its lawyers.