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The Golden Arches, Going Green?
By Michael Schweibinz

Globally, “going green” is evolving from a competitive advantage to a business necessity. For small enterprises, becoming more sustainable can be a relatively painless and seamless process. But for very large companies like McDonald’s, adaptation can be a daunting process.

In late September, McDonald’s agreed to replace its polystyrene foam hot beverage cups with paper-based cups at all 14,000 U.S. locations. This decision was the result of three years of effort on behalf of socially conscious investors by As You Sow. It’s a seemingly simple change, but with big ramifications.

Can this commitment to replace polystyrene foam cups with paper cups truly be considered a significant improvement? Yes, because when the world’s largest food franchise makes even such a small positive change such as this, the effect on the environment can be quite significant. True, paper cups still use a great deal of natural resources, chemicals, and energy in their production; however, they do not linger in the environment for hundreds of years.

Does such a move really provide McDonald’s with any kind of meaningful competitive advantage? Maybe, maybe not. At the current rate, McDonald’s not only trails smaller companies in the sustainability race, but also lags behind other big names in fast food.

As You Sow illustrates how Starbucks has a large lead on McDonald’s. Starbucks’s serves hot beverages in paper cups that boast 10% recycled paper fiber. And Starbucks has pledged to recycle “all post-consumer paper and plastic cups discarded in company-owned stores by 2015.” Further, Starbucks incentivizes customers to bring in reusable beverage cups for discounts. At the moment, Starbucks is running the sustainability race, while McDonald’s is merely lacing up its shoes.

Although the golden arches may be behind in their going green effort, the future may tell a very different story—especially when looking at the current and upcoming leaders of the company, and their goals.

According to J.C. Gonzalez-Mendez, Senior Vice President, Global Corporate Social Responsibility, Sustainability & Philanthropy, “McDonald’s footprint is significant. So too are the opportunities and expectations. With approximately 1.8 million employees working for McDonald’s and over 5,000 franchisees, thousands of committed suppliers and the more than 69 million customers who visit us every single day in 118 countries, we can use our scale, scope and talent to make a positive difference in the world. Together for good.”

Mention of specific companies or securities should not be considered a recommendation to buy or sell that security. Past performance is no guarantee of future results.

Posted: October 10, 2013