Can McDonald's lead in green?
McDonald's Corp. (NYSE: MCD) is finally sowing deeper green roots.
The Oak Brook, Ill-based company over the last several years has launched a wide variety of environmental policies and programs; everything from reusing air conditioning condensation to water company plants to repurposing McDonald's advertising banners into tote bags.
McDonald’s now has key partnerships with environmental organizations like the World Wildlife Fund and the Environmental Defense Fund and last month it launched a pilot program to phase out polystyrene beverage cups.
The international food service icon recently released a report, 2012 Global Best of Green, a collection of its best environmental practices. The report highlights recent progress in eight categories including energy, packaging, anti-littering and greening the workplace.
As McDonald's ramps up its actions, it joins other industry heavyweights incorporating concerted sustainability efforts in their business models. Both Subway and Starbucks (Nasdaq: SBUX), for example, have gained attention for their work in sustainability.
According to Subway, last year the combined impact of sustainability initiatives in Canada and North America resulted in the elimination of 104,586 metric tons of carbon dioxide.
"Which is the equivalent of taking 20,616 passenger cars off the road for a year," the Milford, Conn., company brags on its website.
Last year, Starbucks was No. 7 on the Environmental Protection Agency’s National Top 50, a list of leading renewable energy purchasing organizations.
Robert Kuhn, president of Kuhn Associates Management Advisors, said that if McDonald's wants to begin to lead in the food industry's sustainability efforts, it's on the right path.
"They're clearly trying to gather data on their environmental impact and that's a good thing, because that's where it starts," he said.
Overcoming unique challenges will also be a part of increasing McDonald's sustainability efforts.
"The challenge is that the company has a huge footprint," Kuhn said. "They're operating in different countries that have different cultures. That's not the easiest thing in the world to deal with."
The franchise business model may also pose as a challenge for the company. More than 80 percent of McDonald's restaurants worldwide are owned and operated by independent franchisees.
"There may be areas of the business that, because of the franchise model, they may not have complete control of," Kuhn said.
Kuhn said he expects the food industry to continue building on new environmental policies and practices.
"I think that all consumer-facing food companies, including McDonald’s, will continue to assess their businesses in terms of sustainability, picking off low-hanging fruit wherever possible," he said.
As the food industry continues to build on its environmental practices, new sustainability leaders will eventually shake out, said Kuhn.
"I believe that McDonalds will be one of those leaders, but Starbucks, Subway and some food companies further up the chain (e.g., Chiquita Brands) have also emerged as leaders in sustainability," he said.