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McDonald's and Wal-Mart -- Hard Facts, Please

When it comes to demonstrating real corporate responsibility progress, it's the numbers that count, argues Roger Cowe.

Closing the Business for Social Responsibility (BSR) conference at the beginning of November, the McDonald's CEO Jim Skinner talked about challenging the assumptions people make about companies like his.

He warned against social responsibility becoming political and bureaucratic, and about: "reports, conversation, and presentation."

In classic consumer industry fashion, his claims were accompanied by three videos -- about the value of a career start at McDonald's, the importance of exercise, and an attack on the movie Super Size Me.

He is not alone in asserting his company's innocence in the face of sustained assaults on its reputation. Nestle has famously joined the Fair Trade enemy. And Wal-Mart appears to have experienced the kind of startling Damascene conversion on broad corporate responsibility that GE has gone through on environmental technology.

Wal-Mart CEO Lee Scott recently told employees: "We are going to have the courage to lead and do what is right." He was referring to the environment, but also product sourcing, healthcare and wages - all areas where the supermarket giant has been repeatedly attacked.

As well as calling for an increase in the U.S. minimum wage, he introduced the startlingly green concept of EDLC -- Every Day Low Carbon. This is the carbon equivalent of the Every Day Low Price approach which has driven the store group's growth, relegating retailers' traditional tactic of occasional special offers. It will help achieve Scott's ambition "to sell products that sustain our resources and environment."

Cynical Reception

It is a pretty safe bet than most activists, many investors, employees and customers will dismiss such promises as "greenwash" -- empty public relations which will change little on the ground.

It will take more than a few well-crafted speeches to transform these companies into corporate responsibility heroes. (Skinner's BSR speech was greeted with rapturous applause, but people do tend to get a bit carried away at such events.)

Such speeches are by no means a waste of time. Indeed, they are absolutely necessary. They need to be repeated in different forums many times to get the message across.

But critics will ask three important questions.

Firstly, is the message that the company promises to change, or that it believes it was right all along and the critics are misguided? McDonald's, like Nestle and others such as ExxonMobil, seems to suggest the latter. Skinner talked about "challenging assumptions" and "changing the framework of the debate."

Secondly, what are you going to do that is different? The conversation cannot get to this question, of course, unless the company is promising to change. But vague promises to change, even if well intentioned, need to be translated into specific objectives.

Scott went further than many CEOs in making several clear commitments (though not all with timescales attached), including:
  • zero waste;
  • increasing distribution fleet efficiency by 25% over the next three years and doubling it within ten years;
  • eliminating 30% of the energy used by stores;
  • reducing greenhouse gas emissions from stores by 20% over the next seven years;
  • reducing solid waste from U.S. stores by 25% in the next three years; and
  • replacing PVC packaging for private brands within the next two years.
The third question these companies have to answer is: where is the evidence? Skepticism remains justified until there is solid evidence of improved performance. For example, I could not find any figures about Wal-Mart's current greenhouse gas emissions on its website. The Carbon Disclosure Project says the supermarket giant has so far declined to participate in its efforts to shed light on greenhouse gas performance.

Get the Message Right

This is where good communications come in. Even if the company is achieving ambitious targets, people's perceptions of the company as it moves from zero to hero will only begin to change if it publishes a credible record of improvement.

Skinner's rousing speech is let down in this respect by his company's report (which was also available at the conference).

Take the issue of "McJobs" -- the allegation he framed as "McDonald's offers low-paying, dead-end jobs." Since this is such a big issue, it seems curious that wage rates appear in the company's corporate responsibility report under "Other issues," and no figures are quoted. Equally, there appear to be no figures supporting Skinner's argument that starting at McDonald's is a great first step on the career ladder.

Similarly, the most prominent figures in the "Balanced Lifestyles" section seem to undermine his comments about helping to increase milk consumption, showing that replacing Sprite with milk in a chicken nugget meal significantly increases fat and cholesterol and provides more protein than a six-year-old needs in a day.

But this is only McDonald's second such report, and it takes time to move beyond principles and policies to focus on performance. Next year, perhaps, we will see the company providing figures to back up his BSR claims, in line with his very apt comment that "the more you open the doors of your business, the more you gain credibility and trust."

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Roger Cowe is director of Context, a CSR consultancy.

This column has been reprinted courtesy of Ethical Corporation. It was first published on Nov. 20, 2005.

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