1. Executive Summary
The
researcher by way of this report has endeavoured to bring to light the motives
behind sustainable environmental practices program initiated by global
businesses such as McDonald’s and KFC. The report structure has utilised the
five pillars (corporate operations, restaurant operations, sustainable
operations, advocacy & partnerships and culture & communication) of
responsible business practices laid down by McDonalds to compare and contrast
with the approach in sustainable business practices followed by KFC.
The
findings of the report have been astounding. McDonald’s which has widely
advertised its environment friendly approaches has done a mere window dressing
of the issue. The organisation which owns only a third of the outlets (approx
250 out of a total of 869) in Australia has implemented the sustainable
development programs as mere pilot projects at selected owned outlets only and
has failed to generalise any such approaches to its mass business environment. On the
other hand KFC’s actions in this regard have been more convincing, as the fast
food giant has been able to implement the green approaches at more than 75% of
its outlets. Sections in this report carefully analyse and compare the
efforts made by each organisation based on facts published in their annual CSR
reports and various scholarly articles.
Table of Contents
2. Introduction
In
the recent years an increasing number of global businesses are developing
approaches to sustainable development, which can be incorporated in their usual
business dynamics. Some of these businesses are making these environmentally
conscious (and social development related) decisions to mitigate the negative
criticisms levied on their operations by various interest groups (such as
environment protection organisations such as, Greenpeace); others are
incorporating such an ideology as a proactive measure to ensure a greener
tomorrow and nurture healthy relationships with communities.
The
subject of this particular paper is to study the approaches to sustainable
development undertaken by McDonalds (which is a global fast food giant). Also
this paper will contrast the choices made by McDonalds as against those made by
another global leader in food retail, KFC (Refer to Appendix 1 for a
statistical comparison of the two companies). The purpose of this exercise will
be to firstly, state the various achievements and initiatives of the
organisations in question; secondly, to analyse the motive behind such actions;
and lastly to determine the efficacy of such programs in sustainable
development, on implementation.
The
structure of this paper will closely follow analysing the five pillar program
to sustainable development laid down by McDonald’s. This consists of, corporate
operations, Restaurant operations, Sustainable operations, Advocacy &
Partnerships and Culture & Communication.
3. Corporate Operations
Corporate
operation is the heart of all sustainable development approaches McDonald’s
currently employs. Corporate is that part of the business framework which makes
all crucial decisions regarding the operation of the actual business of
McDonald’s. All environmentally conscious ideas such as using bio fuel in
delivery trucks to cleaning drives have their inception and implementation done
by the corporate. Of late the McDonald’s corporate has shown strong solidarity
for environmental and health concerns by participating in the Earth hour
campaign and promoting it through its restaurants, and by making its marketing
approach more responsible by reducing the advertisement of toys to attract
children to the restaurant, by 80% since 2002.
KFC’s corporate operations show a similar
trend when compared to operations of McDonald’s. The global fast food retail
giant has shown concern towards the communities the business impacts and has
taken measures to align its businesses to environmentally responsible methods
like responsible sourcing of chicken, recycling of packaging and reducing
adverse environmental impact of its restaurant holdings to minimise adverse
effects on the environment and minimising costs of business operations incurred
by the community (by way of depletion of common resources such as quality of
air and water).
However,
operations of the fast food giant have been criticised, as a defensive move to
counter negative criticisms rather than an exercise in pro actively managing
sustainable growth. Critics have been stern in accusing McDonald’s of following
approaches such as advertising toys to lure kids into the restaurant promoting
unhealthy food habits among an immature population. Also, the junk food giant
has been accused of ignoring the harmful effects of mass producing of
standardised agro products at the lowest prices, leading to depletion of
natural resources and adversely affecting the availability of food supplies to
the general population.
It can be summed up, that McDonald’s and KFC
need to be pro active in assuming the role of a leader in sustainable
development, in its industry, rather than being defensive in taking up such
policies in order to mitigate criticism.
4. Restaurant Operations
McDonald’s
has taken a variety of steps to lower greenhouse gas emissions and reduce
carbon footprint of its restaurants. This has been done chiefly by:
4.1 Reducing
water usage
by using efficient equipment and incorporating rain water harvesting systems
while landscaping.
4.2 Minimise
energy usage
by using energy efficient equipment such as LED lighting.
4.3 Innovating
on packaging and products
such as napkin dispensers to reduce wastage and use of materials.
4.4 Recycling
by products and wastes
in the processes and operating cleaning
drives to keep surrounding clean.
KFC
has undertaken certain similar steps in making its restaurants eco friendly.
Overall it has been able to reduce CO2 emissions by 25% per tonne of
construction material used by using alternatives for timber products and
sustainable material. Simple thoughtful steps like reducing electric signage
and using covered bike racks to reduce four wheeler use has resulted in savings
as well as reducing carbon footprint. Technologies like dual flush cistern and
waterless urinals have helped save 92,000 litres/ year per restaurant.
Although
organisations such as PETA may still argue that McDonald’s processing beef wastes
ten times the water needed to process vegetarian food, it is important to note
that the use of current eco friendly energy efficient processes and equipment
have resulted in various benefits accruing to the company. In case of
McDonald’s this has been by way of benefits such as reduction in water usage by
60% in case of spray guns, reducing energy usage by 50% in car parks by using
LED lights, new fry vats which utilise 40% less oil in cooking and the like. KFC has benefitted in a similar
manner. However, where implementation of such programs has already been done
across almost all KFC holdings, McDonald’s is running green technologies in its
restaurants only at certain limited facilities, mostly as pilot projects.
Nevertheless the result of implementing ‘green measures’ has not only made
actual cash savings for this business but have also helped in spreading a
positive word about them.
5. Sustainable operations
Of
late, McDonald’s has undertaken various measures to make its operations
sustainable in context of environment protection. Innovating in areas like
using used cooking oil as biodiesel to fuel delivery trucks, innovative
packaging to minimise wastage of materials, waste management to reduce waste
diversion to landfills and ensure recycling and use of recycled products in
various operations, are just some of the steps in this regard.
KFC is of a similar view when it comes to
sustainable operations. However, unlike McDonald’s most of KFC’s environmental
programs are implemented across majority of its restaurants. For example, each
year 7.75m Litres of low trans fat vegetable oil is collected from KFC
restaurants in the UK to be converted into biodiesel to fuel delivery trucks. On the other hand,
McDonald’s sustainable development program have been criticised as being mere
lip service when it comes to Corporate Social Responsibility. Majority of its
programs lack any environmental value until they are introduced on a mass
level. For instance the use of biodiesel is limited to the units operating in Victoria;
most sustainable operations are limited to specific restaurants as pilot
projects (that too only company owned restaurants which are about 250 out of
over 869 functioning McDonald’s restaurants in Australia). Critics are also of
the view, that McDonald’s has failed to address issues like depletion of soil
and pollution caused due to mass standardised farming practices encouraged by
McDonald’s.
To sum up, it can be said that while KFC has
published certain measurable progress and benefits of its various initiatives,
McDonald’s programs are more of painting a rosy picture of the company than
producing some actual results.
6. Advocacy and Partnerships
McDonald’s
has joined hands with certain organisations to build awareness on certain
issues as well as to make the objectives of these organisations a part of its
own policies.
6.1 Rainforest
Alliance-
McDonald’s has sourced 1.5 million kilograms of coffee for its Australian
operations from Rainforest Alliance program certified farms; promoting
sustainable agricultural practices and forest conservation in context of coffee
plantations.
6.2 Foodbank
Australia- Partnering
with Foodbank to divert all excess food supplies to the bank, helping make
Australia hunger free.
6.3 Roundtable
for sustainable beef Australia (RSBA)- McDonald’s is one of the
founding members of this organisation promoting ethical and sustainable
practices in beef supply chain.
KFC also focuses on
certain such alliances to advocate and promote the cause of certain
organisations. KFC is a signatory to the Australian packaging covenant; which
requires it to follow sustainable development approaches while designing and
implementing packaging, reducing wastage and encouraging recycle of materials
used. Also KFC has heeded to pleas of organisations such as PETA and is
advocating responsible sourcing and humane treatment and slaughter of chicken,
which is a primary raw material for most KFC preparations.
Critics are of the view that organisations such as
McDonald’s by creating in house programs such as RSBA are only promoting their
own cause than doing any actual good to the environment. Concern groups such as
PETA (Fig 1.1 and 1.2) have criticised McDonald’s for cruel practices in
procurement of meat products. Despite having a mechanism such as RSBA in place,
McDonald’s fails to monitor the actual ranches where the beef producing cattle
is raised. Other programs such as Rainforest Alliance and Foodbank have been
undertaken in only limited markets and only limited procurement is done under
such programs. Adverse effects of farming practices encouraged by McDonald’s
has been criticised by international environment watchdog Greenpeace.
True that the businesses
are at times dressing up their operations to make a positive impression
however, certain practices have real benefits associated with them. For example
adhering to Australian packaging covenant (by KFC) has really helped reduce
environmental impact and result in savings for the fast food retailer (Fig 2.1).
7. Culture and Communication
McDonald’s
is trying to build a culture of sustainable environment friendly practices
among its various stakeholders. For instance, employees at various facilities
volunteer in the clean drive programs aimed to make neighbourhoods litter free,
customer’s are also requested (by notices near or in the restaurant) not to
litter, and the organisation participates in endeavours such as Earth Hour
(initiated by World Wildlife Fund) by not only switching off electric equipment
at its offices but also promoting the cause by printing material to educate
customers at its various restaurants. Overall, the promotion of such a culture
and communicating it to third parties, actions groups and governments can be
viewed as an exercise in building favourable public relations however, the
representatives of the organisation say that it is just a part of the core
beliefs of the organisation.
KFC follows a similar culture of promoting
environmental sustainability and community development. Especially its environment
sustainability approaches which have been generalised to a major part of its
restaurant holdings. Also KFC has been under major criticism from various
interest groups like PETA. In recent years KFC has made an effort to heed to these
criticism and modify its approaches to commonly acceptable ones such as humane
treatment of animals and responsible sourcing of supplies.
Comparing the culture and communication of
both the organisation it may be said that both of them may be doing it to guise
the negative effects of their various processes. However, one may see some
consistency of approach and dedication in case of KFC where the non vegetarian
fast food company even makes efforts to generalise the practices on a scalable
level across the organisation. However, in case of McDonald’s it seems as half
hearted efforts done more to please critics than to actually bring about a
change. Most of the points stated in its annual corporate responsibility and
sustainability report seem like mere ideas which are yet to be put in action -
without any stated measurable results, until now.
8. Conclusion
Essentially KFC is an organisation which
seems committed to incorporate sustainable environment development practices in
its various business functions. On the other hand, McDonald’s though superficially
seems to be following a similar approach, has failed to scale up such practices
to be implemented across majority of its facilities. Although both of them seem
to have taken up sustainable development approaches to mitigate opposition and
criticism slammed by various interests groups and governments, KFC has made
actual efforts to improve and has been thorough in implementing change. While
McDonalds’ efforts still lack commitment and are mere window dressing to
address the opposition.
By comparing McDonalds and KFC across the
five parameters laid down by McDonalds itself, the various differences in
approach to handling the issue of sustainable development has come to light by
the medium of this paper.
9. References
1.
McDonalds’
corporate responsibility and sustainability report 2012.
2. Moore E.S. & R.J. Lutz (2000). Children, Advertising, and Product
Experience: A multi-method inquiry. Journal of consumer research, 27(1),June,
31-6
3.
McDonald’s
Report: More Corporate Social Irresponsibility By Paul Hawken
4. Can McDonald's
lead in green? By Jennifer
Inez Ward; Published April
30, 2012 (Green Biz.com)
5. McDonald’s CSR Report A
Nutritious Meal, But Critics Want More; Andrew W. Singer; May/June 2009
6.
Yum! Restaurants
Australia Pty. Ltd. Australian Packaging Covenant Action Plan 2010 – 2015
7.
www.kfcdevelopment.co.uk/sustainability
9.
McDonald's:
We Need To Define What 'Sustainable' Beef Means; The Huffington Post | By Rachel Tepper Posted: 09/27/2012 2:45 pm
Fig 1.1
Fig 1.2
Fig 2.1
Shows
percentage of various packaging materials used by YUM food brands KFC and Pizza
Hut in Australia.
Appendix 1
McDonald's
|
KFC
|
|||
Overview
|
Over 31,000 restaurants in 118 countries; $23.5 billion revenue,
400,000 employees
|
Over 17,000 locations in over 115 countries, $9.5 billion
revenue (FY09); 190,000 partners (employees)
|
||
Product
|
Premium salads,
fruit and yogurt parfait, and apple dippers in Happy Meal choices; packaging
gives customers essential nutrition information in easy-to-understand icon
and bar chart format
|
Chicken
preparations, like sandwiches, chicken wraps and pressure fried chicken.
|
||
Management
Practices |
Carefully
managing supply chain to control costs and implement sustainability, and
developing an environmental scorecard to measure supplier performance
|
Managing supply
chain and implementing green measures in a way to ensure savings too.
Sustainable approaches generally influenced by criticism from groups such as
PETA and Greenpeace.
|
||
Earth
|
About 82% of the
consumer packaging used in its nine largest markets made from renewable
materials and 30% of the material comes from recycled fiber. Despite testing
of innovative materials, have not yet identified more sustainable packaging
materials that are commercially viable
|
Use of recycled
packaging material and alternative material to reduce environmental impact
and keeping sustainable approaches in mind while design packaging has
resulted in savings and reducing carbon footprint of KFC.
|
||
Trust
|
Guidelines to
determine the sustainability of fisheries developed in partnership with
Conservation International
|
Responsible
sourcing of chicken and fish (and other animal products), reducing carbon
footprint by thoughtfully designing packaging and restaurant facilities are
some of the initiatives to develop trust among various stakeholders.
|
||
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