Ethics and Environmental Policy: McDonald's Corporation - Essay Example

 Ethics and Environmental Policy: McDonald's Corporation Abstract This project will focus on McDonald's Corporation in order to address the organization's probable motives for many of its environmental initiatives. Historically, and in recent years, the company has established policies designed to reduce its output of solid waste and alter its purchasing habits to include more eco-friendly supplier products. Primarily, this work highlights the ethical ramifications for shareholder and stakeholder perceptions, as well as this author's assessment, of how McDonald's conducts its business in terms of environmental policies. The question as to whether this business entity can be reasonably considered unethical, despite its compliance to environmental regulations, will be answered within this work. Ethics and Environmental Policy: McDonald's Corporation and Motives for Regulation Compliance In 2005, fast-food giant McDonald's Corporation reported revenues of $20.46 Billion USD and, despite its extensive consumer reach to consumers in over 119 countries (Wikipedia.org), has recently been plagued with stakeholder criticism regarding its ethical motives for environmental protection initiatives. In fact, according to a consumer poll conducted by Fraser Consultancy targeted at over 1,300 consumers, McDonald's has been named the most unethical firm in the world because of its business conduct and its negative impact on the environment (Gilbert, 2006). McDonald's Corporation describes itself as a business with an extensive record of industry leadership regarding environmental protection and as an organization that has expanded recycling efforts to reduce solid waste through the utilization of renewable resources. The likely assumption then, in light of McDonald's self-assessment, would be that the business entity is securing the interests of its stakeholders and promoting ethical policies regarding environmental protection objectives. However, substantial evidence exists that the majority of McDonald's environmental improvement policies are not proactive, ethically-minded approaches to reduce its negative impact on the environment, rather, its objectives are to satisfy its objectives for regulations compliance, profit, and as damage-control tactics in response to negative public opinion. With this unethical determination in mind, this evidence pointing toward unethical business practices will be explored in depth. Founded in 1970, the Environmental Protection Agency (EPA) was established in order to coordinate federal environmental responsibilities and to regulate negative impacts to the environment (Clarkson et al, 2004). In response to the EPA's initiatives for industries to cut down on packaging by weight, volume and toxicity, McDonald's replaced its polystyrene foam containers with a paper sandwich wrap; thus achieving a 70% reduction in landfill waste (Marenghi, 1992). According to McDonald's, its efforts have earned awards and recognition from significant organizations representing environmental interests (RMHC.com). In an era where excessive landfill waste and the necessity for recycling efforts are substantial concerns to the public, due to the toxic attributes of waste and disposal both in ground water and the air, McDonald's has significantly reduced its negative contribution to packaging refuse output. However, people are increasingly recognizing that ethical environmental behaviour within corporations is essential if our endangered global environment is to be preserved for future generations and firms that do not behave in an ethical manner are often finding themselves on the losing end of costly litigation stemming from corporate environmental oversights (Edur, 2000). The implication: The general public demands ethical compliance to environmental regulations, as part of a company's true value system, to ensure that the organization is taking steps to preserve nature. McDonald's Corporation undertook its polystyrene reduction campaign on the heels of new EPA guidelines and not as a proactive approach to waste management, indicating that the effort was not part of fulfilling a values-based environmental objective, but simply to comply with EPA regulations. Though a substantial improvement tactic was implemented which promoted a more positive outcome to reducing landfill waste, McDonald's continues to illustrate that the majority of its environmental campaigns are to control damage to its reputation and reduce potential negative effects to earning profit. Though stakeholders can rejoice in the positive results of decreased pollution, many individuals must also recognize that mere compliance to environmental regulations does not necessarily indicate an ethical objective, rather, a policy to avoid excessive corporate fines and penalties. The question arises, then, as to why we should care about McDonalds' impact on the environment. McDonald's doesn't often receive positive press, though it strives mightily to shed its image as a despoiler of the environment with varieties of good works (Financial Times, 2006). One example occurred in recent years where McDonald's was set to cut down acres of rainforest and met with protest of its land-clearing objectives. In response to the negative publicity, the company established the "McDonald's Orang-utan Rainforest" habitat at the Sydney, Australia Taronga Zoo so as to show its "jungle-friendly" mentality (Financial Times, 2006). In yet another scenario, though the outcome favoured environmental initiatives, the organization highlighted its primary objectives as that of establishing increased positive public image without addressing an ethical standpoint regarding deforestation. In 1991, McDonald's illustrated its somewhat unethical stand toward environmental issues by opposing a plan to radically change its policies to include energy efficiency and to conduct an annual environmental audit. A group of specific shareholders, who at that time, owned 120,761 McDonald's shares, urged the reluctant company to adopt the initiatives but met with increased corporate resistance. Said Adriane Van Buren of the New York-based Interfaith Centre on Corporate Responsibility, "(McDonald's) has no commitment to public accountability for environmental impact, which is the main point of the shareholder resolution" (Wall Street Journal, 1991). McDonald's maintains a somewhat clear track record of establishing environmentally-sound objectives only when pressured by external forces. The stakeholder should be deeply concerned about an organization which implements eco-friendly objectives only after assessing the need to respond to publicized criticism. It has been said that the ends do not always justify the means, and this statement is no more appropriately applicable than to the environmental objectives (or lack thereof) of McDonald's Corporation. From a shareholder perspective, with the concern about McDonald's impact on the environment in terms of its lack of proactive policies, the potential for increased negative stakeholder perceptions of the business' ethical practices can dramatically impact a return on their investments. Therefore, it is abundantly clear that shareholders and consumers alike must demand more than compliance to environmental regulations, but insist that McDonald's illustrate a set of values which focus on prevention measures rather than post-action environmental tactics. When leadership at McDonald's were confronted with the consumer data that pinpointed the company as the most unethical firm in the world, within the same week of the report results, McDonald's launched a poster campaign to address the public's negative conceptions (Gilbert, 2006). In 2004, Morgan Spurlock's documentary film Super Size Me was released which suggested that McDonald's products were contributing substantially to the growing epidemic of obesity in America. In response, the company began marketing special adult Happy Meals which included step counters to help motivate users to increase their daily walking as part of the Go Active! Adult Happy Meals campaign (McDonalds.com). It is important to clearly highlight that the company takes steps towards satisfying negative public image as a primary goal, rather than assume a standardized set of ethical policies geared toward consumer protectionism; as well as environmental policies. An organization that maintains a somewhat regular track record of "damage control" ideology is a business entity that should be scrutinized by stakeholders when its similarly delayed environmental initiatives are prompted by negative press or protest of its business activities. Where some companies might grow pale at the prospect of releasing negative environmental data that is not currently required by any regulating body, others, such as Dow Chemical Co. have done just that (Staff Reports, 2000). Dow has begun establishing regular communication with its stakeholders that not only address its policies toward more eco-friendly business practices, but also highlights where its weaknesses in process lie so as to build a reputation of honesty in environmental reporting. In such a situation, this particular company might be considered as an ethical leader both in regulations compliance and as an organization that values ethical business practices in terms of its environmental awareness. In contrast, McDonald's, based on the aforementioned substantial evidence pointing toward a rather unethical set of environmental policies, might well be perceived as bluffing its values regarding corporate social responsibility and environmental protectionism. Ethics can best be described as a pattern of moral behaviour which is accepted by society as right versus wrong (Nickels et al, 2005). Is it ethically wrong for a company to refuse to comply with environmental regulations? In this researcher's opinion: Most assuredly. Should McDonald's refuse compliance to these regulations, then formulating the opinion of the company as unethical is rather simplistic. However, with the more abstract term of ethics representing a moral code of conduct, it would appear that McDonald's can, in this researcher's competent assessment, be considered unethical despite its positive impact on the environment and in spite of its willingness to comply to environmental guidelines. Bibliography Clarkson, Kenneth W., Miller, Roger LeRoy, Jentz, Gaylord A. & Cross, Frank B. (2004). West's Business Law: Text and Cases. 9th ed. Thomson South-Western p.878. Edur, Olev. (Jul/Aug 2000). 'Giving Back'. CMA Management. Hamilton: Vol. 74, Iss. 6, p.15. Financial Times. (Aug 29 2006). 'A Bin Too Far'. London (UK): p.10, Reprint. Gilbert, Helen. (Apr 27 2006). 'McDonald's Tops Index of Unethical Companies'. Supply Management. Vol. 11, Iss. 9, p.9. Marenghi, Catherine. (Jun 1992). 'Less is More: Stopping Packaging Waste at the Source'. Management Review. Vol. 81, Iss. 6, p.18. McDonalds.com. (2005-2006). 'Support for Physical Activity…it's what I do.' McDonald's Corporation Website. www.mcdonalds.com/corp/values/balance/physical_activity.html Nickels, William G., McHugh, James M. & McHugh, Susan M. (2005). Understanding Business. 7th ed. McGraw-Hill Irwin: p.102. Wikipedia.org. (2006). The Free Encyclopedia. 'McDonald's'. http://en.wikipedia.org/wiki/Mcdonald%27s RMHC.com. (2004-2005). 'Environment'. McDonald's Corporate Website. www.rmhc.com/corp/values/socialrespons/environment.com Staff Reports. (Mar 6 2000). 'Dow Social Reporting Raises Bar: Chemical Firm Voluntary Releases a lot of Negative Information'. Investor Relations Business. New York: p.1. Wall Street Journal. (Apr 18 1991). 'McDonald's Is Opposing Broad Environmental Plan'. New York, NY: p.B6. Read More