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Power Points

A whole new way to love McDonald's: its climate goals

Plus, a potential new model of climate action for companies that have own franchises.

Last week, McDonald’s made headlines when the fast food giant inked its first major renewables procurement deal. 

The deal included two virtual power purchase agreements — 220 megawatts of wind and 160 MW of solar, both from projects in Texas — that collectively will provide enough energy to account for 2,500 McDonald’s restaurants' worth of electricity.

The details of the procurement echo many other large recent corporate renewable deals, which are becoming increasingly common. 

What sets McDonald’s announcement apart is how it fits into the fast-food giant’s larger strategy to reduce emissions throughout its value chain as part of its Science Based Target (approved by the Science Based Target Initiative) — and how a multinational sprawling brand can begin to think about its collective impact and opportunity.

Developing a science-based target 

Almost two-thirds of McDonald’s emissions are upstream (in its supply chain, mostly from packaging and beef) and downstream (in thousands of independent franchise locations, where individual owners make decisions about energy management and efficiency). So to calculate its science-based target, the organization had to look at a lot of factors. 

"When we think about the difference in decarbonizing our enterprise and value chain, it’s very much a system, collective-network effort," said Jenny McColloch, senior director of sustainability and corporate social responsibility at McDonald’s, in a phone interview. 

McDonald’s, which set a target in line with a 2-degree Celsius warming scenario, is the first restaurant to make such a commitment, according to the company. Science-based targets are externally validated by independent NGOs to verify the company’s strategies (which are self-selected) are consistent with climate science. 

When we think about the difference in decarbonizing our enterprise and value chain, it’s very much a system, collective-network effort.
The target — announced in 2018 — was a couple of years in the making. 

"The challenge for us is to model all these interconnected systems, so it did take time," McColloch said. "[I am] very much humble and appreciative that we have a long way to go with our partners to collectively make progress."

The corporation has a goal to reduce emissions by 36 percent in its restaurants and offices by 2030 (based on 2015 levels). Last week's renewable procurement deal takes the company 16 percent of the way to its target for its locations in the United States.

This commitment is separate from its target for emission reduction in its supply chain, which aims to reduce by 31 percent in the same time period.

"We’re taking responsibility for our scale," said Emma Cox, McDonald’s manager or North American sustainability. "We call [our system] the three-legged stool; we have our suppliers, our corporate and our franchisee. When we make such a bold commitment, like we did with the science-based target, we take responsibility for that as a system. If you’re going down this path, take responsibility for the system and try to find solutions that cover your system." 

Powering franchises 

McDonald’s is a many-headed beast, with a presence in 120 markets worldwide. 

In the United States alone, there are more than 14,000 locations, with 95 percent owned by individual franchise owners. After the initial set-up of individual locations — where the corporation informs design, lighting and cooking appliances, which the company says it bends towards its efficiency targets — McDonald’s has limited control and access to energy choices from individual restaurants. 

So determining — and influencing — the company’s downstream emissions is complicated. 

The company extrapolates energy consumption of many individual locations through models it developed to limit the reporting burden on franchise owners (which operate similar to a small business), while getting a good guess on the energy consumption across the brand. 

The company extrapolates energy consumption of many individual locations through models it developed to limit the reporting burden on franchise owners.
"One thing that is important is to not being afraid to estimate the footprint of the franchisees’ scope," McColloch said. "Looking at corporate-owned footprints when it comes to metrics like greenhouse gas emissions could be very misleading... In any GHG accounting, there is a lot of extrapolation and estimating and scientific modeling, so permission to do that modeling is accepted by the community."

McDonald’s approach potentially could be a model for other brands that operate using a franchise model. Starbucks, for instance, has strong renewable energy goals for corporate-owned locations, but most of its climate impacts are nested under its Scope 3 emissions, which include suppliers and licensees. 

Getting into renewable procurement 

While McDonald’s has dabbled in renewable deals in the European market, this month’s VPPAs mark the first major renewable energy contracts the company has disclosed. 

According to Cox, key to the McDonald’s path to procurement was engaging resources to learn from past deals. Strategies included engaging a consultant (in the case of this deal, CustomerFirst Renewables), joining the Renewable Energy Buyers Alliance to learn from peers and engaging NGO partners that understand the space well, such as the World Wildlife Fund. 

"It was a long process but rewarding in the end," said Cox, who said the company is looking for its next renewable deal. "We would like to keep the momentum going."

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