Company focuses on sustainability
Sheridan – With consumers growing concerns related to sustainability in mind, McDonald’s Vice President for Sustainability Bob Langert said, “Sustainability starts with the idea that we are all here to make the world a better place for tomorrow – better for us as people, for our livelihoods, for the planet and for the animals.”
Langert addressed the reasons that McDonald’s is targeting sustainability, particularly in the agriculture and beef industries, during the First Annual Ranch Sustainability Forum, held May 12-14 in Sheridan.
“Why are we upping our game?” he asked. “Our CEO really wants our leadership to take sustainability seriously, and he views it as a big part of our growth.”
In the last three years, Langert said sustainability has become a huge priority.
“Over the last three years, we have been developing a strategic framework for the company for corporate social responsibility and sustainability,” he said. “We launched it last week.”
As part of their goals, they define sustainability under five pillars – food and nutrition, sourcing practices, community, our people and the planet.
“We set up eight goals,” Langert explained. “Under food and nutrition, we plan to double the amount of fruits, vegetables, whole grains and low fat food that we sell, all by the year 2020.”
They have also targeted reduction of “negative” ingredients, such as sugar, sodium, saturated fat and others.
To address sourcing practices, McDonald’s is working to serve verifiable, sustainable food and packaging for everything they sell.
“For 2020, we plan to buy 100 percent verified sustainable coffee, fish, palm oil and fiber,” he commented, noting that today, 100 percent of their fish is sustainable. “We also set a goal to start buying sustainable beef by the year 2016.”
Additionally, McDonald’s will strive to reduce energy use by 20 percent by 2020 and to reduce water use, as well.
Langert said, “These are pretty ambitious goals. We are setting goals and targets for our company that have the most impact for society.”
While making improvements, Langert noted that company profitability falls right in line with increasing sustainability.
“Company management believes that growing a business involves sustainability,” he said. “Our view of sustainability is also not just a do-good effort. It is a do-good effort combined with where we can do our business better.”
“We want to make the world a better place, but we want to sell more beef,” Langert said.
With an increase in sustainability, McDonald’s hopes to see an increase in the number of consumers and, as a result, profit.
However, increasing sustainability isn’t without challenges, Langert added.
“One of the challenges we face is that all of these issues are upstream,” he said. “Our impacts have to do with reaching out to the farmers and ranchers – not our direct suppliers.”
By maintaining their strong relationships, including the longstanding relationships with suppliers, he commented that they are more able to make changes.
“We don’t price shop for suppliers. They are long-term relationships,” Langert said, “so when we say we want an animal welfare program developed, they are willing to spend time and energy and to make investments to make it happen.”
Working downstream with consumers is also challenging, he said.
“Consumers are looking for something fairly simple, and sustainability is not understood well,” Langert said. “The American and global consumer doesn’t know what it means.”
McDonald’s strives to provide an easily understandable definition and help consumers to understand sustainability.
At the same time, modern agriculture is under attack, making it more difficult to sell the products of agriculture.
Beef has become the target of sustainability at McDonald’s for one big reason – McDonald’s is a beef company.
When they first started looking at sustainability, Langert surveyed eight major organizations, including Coca Cola, World Wildlife Fund, Greenpeace, Wal-Mart and others, who all identified that McDonald’s was founded as a beef company and should focus on improving their core product.
“We have a responsibility to be a leader with our core product because it’s a big part of our brand,” he said.
Since their formation, they have sold 5 billion burgers, and today, they buy two percent of the beef in the world.
“We want to make beef more relevant to consumers,” Langert added. “Consumers think our beef is poor quality – but it isn’t. We sell 100 percent beef. This all adds up to the idea that we have to promote the image of quality beef and sustainability to consumers.”
To implement their goals, Langert noted that McDonald’s is striving to utilize collaboration, rather than a top-down mandate.
“We want this to be voluntary, and we want the beef industry to want to do this,” he said. “We have a clear vision of what a sustainable supply chain is, and it is very holistic.”
He noted that focusing on ethics, the environment and economics to accomplish their goals.
“We have put all of our chips into supporting the work of the Global Roundtable for Sustainable Beef – an organization with over 40 organizations involved, including producers, ranchers, beef industry members, companies and non-governmental organizations,” he explained.
“Most beef producers say they already are sustainable, and we know that. However, it isn’t good enough for consumers.” Langert said, “We have to prove everything we do. We can no longer say, ‘Trust me.’”
Langert added that McDonald’s sustainability goals seek to provide the proof for consumers to establish sustainable production and business.
McDonald’s Vice President for Sustainability Bob Langert said that the average customer comes to McDonald’s only 2.5 times per month.
Over 70 million customers visit the fast food giant each day, but Langert noted that they hope to attract more millenials to their business.
“The customer of the future wants sustainability and nutrition,” he said. “Our customer cares a lot about the food, where it comes from and how everyone is treated. They care a lot – and we know it.”
Brand perception and brand health are defined by consumer perceptions.
“We are a $100 billion company in value, and about half of that is through the value of our brand,” he explained. “Maintaining brand trust is one of the top four priorities for our company.”
“We measure brand health as short-term and long-term,” he said. “We are not perceived well, and in most categories, fewer than 35 percent of consumers feel good about coming to McDonald’s.”
Only 26 percent of people who visit McDonald’s feel good about what they eat.
“Twenty percent of consumers are fans of what we do, 30 percent are very critical of what we do, and the vast majority, 50 percent, are neutral,” he explained. “We are taking at look at the neutrals and thinking about where we have the chance to make them big fans.”
“We need to improve our brand health,” Langert commented. “For every one percent increase in brand health, our sales increase by two percent.”
“We want everyone in beef production and farming to realize that what farmers and ranchers do add to the trust people have in our supply chain,” he added.
Langert noted that consumer’s greatest concern is the food.
“Food is our greatest priority,” he said. “The quality, sourcing and nutrition of our food are at the top of consumers’ minds.”