May 26, 2022

Release: McDonald’s investors demand openness, accountability

CHICAGO, ILLINOIS — If executives were hoping the announcement to sell McDonald’s business in Russia would distract from investor and public ire over the burger giant’s varied abuses of civil rights, public health, animal welfare, and the environment…Thursday’s tightly-controlled annual meeting proved quite the disappointment. An unusually large number of resolutions (see pages 91-115) on McDonald’s ESG failings were presented (official vote count pending).

The unifying theme of the meeting, if there was one? Investors are deeply concerned about the disconnect between McDonald’s stated values and its actual business practice. This is presenting liabilities investors would sooner not assume. For this reason, investors demanded—as they did prior with PepsiCo and McDonald’s supplier Coca-Cola—a full, unadulterated view of what the corporation is spending to influence policy globally.

“In most of the countries McDonald’s does business in, like my own, we haven’t any idea what the corporation is doing and spending to upend public policy,” said Palesa Ramolefo, a campaigner with the South Africa-based NGO Amandla.Mobi. “Today I told executives: if you have nothing to hide, then get out of the shadows. If you want to sell South Africans on your supposed concern for our communities, our well-being, and our brothers and sisters working for you, then show us you aren’t undermining your own sales pitch with your political chicanery.”

Ramolefo, who presented at the meeting on a shareholder resolution around global political transparency, questioned executives as to why South Africans deserved any less visibility into McDonald’s political spending than people elsewhere. She further questioned why investors deserved a view of political spending in one country but not another, given 62% of McDonald’s annual revenue is from overseas.

South Africa, as with many countries globally, has experienced the “McDonald’s effect” in recent years with the rates of diet-related disease ballooning as the chain and its junk food peers have proliferated across the country. To address the mounting public health crisis, organizations like Amandla.Mobi have advanced a range of proven health policies such as a soda tax, stronger nutritional labeling, and restrictions on junk food marketing. Policy victories have been limited and hard fought thanks to the political power and interference of the food industry.

Though—thanks to lacking political disclosure—McDonald’s exact role and influence is unclear, there are reasons to believe the corporation is a major political actor. For one, initial research into the major corporate actors behind policy obstruction has found McDonald’s supplier Coca-Cola is playing a major role. Second, South African President Cyril Ramaphosa is the former owner of 145 McDonald’s franchises. And third, McDonald’s political interference is well-documented in the U.S., where its political spending and trade groups have quashed policy progress on everything from worker pay to menu labeling for decades at a time.

“It’s not like McDonald’s doesn’t have a long and troubled track record of playing politics at the public’s, and even investor, expense,” said Ashka Naik, research director for Corporate Accountability. “When executives tell investors not to look at the books on McDonald’s global political activities, it’s not because there’s nothing to see.”

McDonald’s political activities, and that of Corporate America more broadly, have been under the microscope since the January 2020 insurrection and the subsequent GOP push to abridge voting rights. The role of McDonald’s dollars in both were cause for a temporary suspension of political spending. But the corporation’s crisis response has so far failed to spur a commitment to full political disclosure.

What’s further, concealment of political activities is also a significant liability to investors. As Vanguard, the largest issuer of mutual funds in the world, has put it, “poor governance of corporate political activity, coupled with misalignment to a company’s stated strategy or a lack of transparency about the activity, can manifest in financial, legal, and reputational risks that can affect long-term value.” And a recent investor statement from the Interfaith Center on Corporate Responsibility (ICCR), a coalition of investors representing more than $4 trillion in assets, noted that “corporate political spending has a destabilizing effect on the broader economic and cultural environment, inhibiting the long-term sustainability of business…” Indeed members of the ICCR and 25 investors, representing over $140 billion in assets, are now lending their support for an open letter to food and beverage industry executives to step up their global disclosures.

“Disclosure across all markets should be a fundamental part of a corporation’s license to operate,” said Brianna Harrington, shareholder advocacy coordinator for Harrington Investments, the sponsors of the resolution. “Because transparency laws are weak—often thanks to lobbies funded by corporations like McDonald’s—does that mean investors should be blind to the risks posed?”

The global transparency resolution is pioneering in that it demands an accounting of not just direct political spending and activities (lobbying, campaign contributions, et al), but of all the tactics corporations leverage to peddle influence from bankrolling junk science to charitable giving that afford an undeserved halo of healthfulness to corporations fighting lifesaving policies. Its demand that transparency extend to their membership and spending on trade groups, as well as to every country in which the corporation does business, is similarly trailblazing.

McDonald’s opposition to the resolution is nonsensical, given the corporation claims:

  • “McDonald’s expenditures related to public policy and political influence outside the U.S. are limited.” If this is in fact true, it’s puzzling that something so easy to disclose would be grounds for opposing greater transparency.
  • Its “policy engagement outside the U.S. is focused on promoting shareholder value” and “[o]ur Board provides effective oversight…both within and outside the U.S.” Why then is McDonald’s so afraid of letting its investors be the judge of as much?
  • It is “a top company for political transparency and accountability.” It bases this claim on a ranking system that looks singularly at U.S. federal campaign contributions and lobbying disclosures, as well as the fact that its competitors and suppliers are similarly lacking.

The resolutions and broader investor actions facing food and beverage transnationals is part of a broader trend to compel Big Business to level with investors around corporate political spending.

“Making the invisible visible is the first step toward advancing a call demanding corporations stop interfering in our policies and politics once and for all,” said Naik.

Contact Nick Guroff at 617-784-4753 or [email protected] for media inquiries.

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