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When the history of corporate social responsibility is written, 2005
may be remembered not for the furore over the abolition of the
Operating and Financial Review, but for the entry of two of the world’s
largest companies – McDonald’s and Wal-Mart – into the CSR fold. Hatred
is not too strong a word to describe what many activists feel about
these two global icons. Neither side will now find backtracking easy.
In Wal-Mart’s case, it is too early to know whether Lee Scott’s sudden conversion – ‘a light bulb came on for me,’ he told his staff – prompted apparently by the response to the company’s efforts to help Hurricane Katrina victims, will last. Some of the targets set are sensible cost-cutting; reducing greenhouse gas emissions from stores by a fifth over seven years, for example, sounds like good housekeeping. Others, especially healthcare plans for the half of the US staff with no cover, pose a real challenge for a business built on low wages. If the light bulb stays on, Scott may even find that CSR offers a way back to the ideals of the company’s founder (see page four).
Wal-Mart has yet to back up words with actions. McDonald’s is somewhat ahead, having produced its first CSR report in 2002. Admission to the Coalition of Environmentally Responsible Economies puts the hamburger chain in the same club as Interface, The Body Shop and Timberland, not to mention pressure groups that have attacked it in the past. That is an indication of how far the company’s position has shifted.
McDonald’s use of a methodology developed by the New Economics Foundation to work out that for every £100 ($173) spent by the company’s franchisees in the local economy, £248 of value stays there, suggests the global behemoth can also benefit local communities. Ironically, NEF may now quit Ceres because it has admitted McDonald’s.
Have these companies had a genuine change of heart or just revised their business practices? In a way, the question is immaterial. For a burger business, BSE and GM are fundamental. Europe, McDonald’s second biggest market, generates 40 per cent of its profits. When customer concerns over GM trigger changes even in the source of cornflour to coat Filet-o-Fish servings, it is no more than common sense to identify and address such worries before they take hold. Seen in that light, the marginal cost of only selling organic milk, as McDonald’s does in the UK, is but an insurance premium.
At bottom, much CSR is simply about talking to people, working out whether, and how, what they say will affect the business, and then responding appropriately. McDonald’s has started to do so. Wal-Mart promises the same. We’ll soon know how far each is prepared to go.
In Wal-Mart’s case, it is too early to know whether Lee Scott’s sudden conversion – ‘a light bulb came on for me,’ he told his staff – prompted apparently by the response to the company’s efforts to help Hurricane Katrina victims, will last. Some of the targets set are sensible cost-cutting; reducing greenhouse gas emissions from stores by a fifth over seven years, for example, sounds like good housekeeping. Others, especially healthcare plans for the half of the US staff with no cover, pose a real challenge for a business built on low wages. If the light bulb stays on, Scott may even find that CSR offers a way back to the ideals of the company’s founder (see page four).
Wal-Mart has yet to back up words with actions. McDonald’s is somewhat ahead, having produced its first CSR report in 2002. Admission to the Coalition of Environmentally Responsible Economies puts the hamburger chain in the same club as Interface, The Body Shop and Timberland, not to mention pressure groups that have attacked it in the past. That is an indication of how far the company’s position has shifted.
McDonald’s use of a methodology developed by the New Economics Foundation to work out that for every £100 ($173) spent by the company’s franchisees in the local economy, £248 of value stays there, suggests the global behemoth can also benefit local communities. Ironically, NEF may now quit Ceres because it has admitted McDonald’s.
Have these companies had a genuine change of heart or just revised their business practices? In a way, the question is immaterial. For a burger business, BSE and GM are fundamental. Europe, McDonald’s second biggest market, generates 40 per cent of its profits. When customer concerns over GM trigger changes even in the source of cornflour to coat Filet-o-Fish servings, it is no more than common sense to identify and address such worries before they take hold. Seen in that light, the marginal cost of only selling organic milk, as McDonald’s does in the UK, is but an insurance premium.
At bottom, much CSR is simply about talking to people, working out whether, and how, what they say will affect the business, and then responding appropriately. McDonald’s has started to do so. Wal-Mart promises the same. We’ll soon know how far each is prepared to go.
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