McDonald’s Urged to Assess Civil-Rights Impact in Race Audit
(Bloomberg) -- An adviser to union pension funds is calling on McDonald’s Corp. to analyze how its policies are contributing to social and economic inequality.
The restaurant chain should oversee a third-party audit that takes input from franchisees, corporate employees, suppliers and customers, SOC Investment Group recommends in a shareholder proposal sent Monday to McDonald’s board. While McDonald’s already reports diversity data for corporate staff and company-owned stores, that excludes an estimated 660,000 U.S. franchise workers, making it unclear how the company is addressing racial inequality, according to the proposal, which was seen by Bloomberg News.
“A civil-rights audit will help McDonald’s identify, remedy and avoid adverse impacts on its stakeholders,” SOC said. The firm, formerly known as CtW Investment Group, works with union-sponsored pension funds that hold about 2.5 million McDonald’s shares.
In a statement, McDonald’s said that its “focus will remain on continued action to accelerate meaningful and overdue societal change.” The company also said that it already holds its leaders accountable for maintaining equal pay for women and minorities, and for ramping up investments in diverse-owned suppliers.
“McDonald’s is serious about holding ourselves accountable to our public commitments to drive equitable opportunity for all,” the restaurant company said.
Reports on race are becoming increasingly common as businesses examine their operations amid a corporate reckoning on inequality. Citigroup Inc. agreed last month to a deep dive to determine how it may be contributing to racial inequity, following a similar move by money manager BlackRock Inc. last spring.
Some companies say civil-rights audits aren’t necessary. Goldman Sachs Group Inc. and Wells Fargo & Co. have said they’re already taking steps to address racial inequity.
SOC, which filed the Citigroup resolution, says its mission is to hold “corporations and their leadership accountable for irresponsible and unethical corporate behavior and excessive executive pay.” The group, which is affiliated with unions such as the Service Employees International Union, has recently called for changes at companies including Activision Blizzard Inc. and Rivian Automotive Inc.
McDonald’s has said it will increase minority representation in its U.S. leadership roles to 35% by the end of 2025 from 29.1% last year, and this year it tied some executive pay to diversity targets. It’s also revamping its domestic supply chain, shifting more spending to women and minorities. This goal includes spending by franchisees, who own and operate about 93% of restaurants globally.
The Chicago-based company meets or exceeds the makeup of the U.S. population in representation of Black, Hispanic and Asian workers at the management level, and for Black and Asian workers in professional categories, according to data compiled by Bloomberg from the company’s filing with the Equal Employment Opportunity Commission. Those figures only include company employees and not those who work at franchises in the U.S.
Still, McDonald’s has been criticized at times for its handling of race and social justice issues. Chief Executive Officer Chris Kempczinski is facing backlash from some community groups for comments he made earlier this year casting blame on the parents of two children who were killed in shootings. Kempczinski apologized in a video to employees, saying he would do “more listening and learning from more people whose life experiences are different from my own.”
Earlier this year, companies controlled by media mogul Byron Allen sued McDonald’s, claiming the fast-food chain is discriminating against Black-owned businesses. At the time, McDonald’s said it would more than double its national advertising spending with minority- and women-owned media businesses.
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