In November 2010, the who’s who of the global beef industry gathered in Denver, Colorado to form the Global Roundtable for Sustainable Beef.
McDonald’s was there along with Walmart, JBS, Cargill, the World Wildlife Fund and around 350 others including farmers, ranchers, processors, wholesalers, retailers, restaurateurs, academics and government officials. They had one aim – to determine if there was any common ground on which to define “sustainable beef”.
It’s widely agreed that beef has a sustainability problem.
According to the FAO, livestock production accounts for 14.5% of greenhouse gas (GHG) emissions. Of that, beef’s environmental effect dwarfs that of other meats such as chicken and pork, accounting for 41% of the livestock sector’s GHG emissions. Red meat requires 28 times more land, 11 times more water and produces five times more climate-warming emissions than pork or chicken.
But one of the biggest contributors to the emissions is not entirely the cattle’s fault. Close to half of beef’s environmental impact comes from the arable crops grown (cereals, soya and maize corn) and fed to cows.
A big issue for the Big Mac
McDonald’s is the world’s largest restaurant chain, with 34,500 restaurants worldwide where it feeds 69m people every day.
The company has built its brand around the success of its iconic Big Mac, of which McDonald’s sells over 75 every second. A Big Mac is at the tail end of one of the world’s more complex supply chains.
McDonald’s doesn’t buy beef directly from ranchers or slaughterhouses.
McDonald’s first direct contact with meat comes when it buys finished frozen burger patties from approximately 20 processors around the world.
In between are the cattle and dairy farmers, the feedlots, the ranchers, the processors, the wholesalers and the distributors. In fact, its beef may change hands four or five times from farm to finished frozen burgers.
For McDonald’s, to purchase verifiable and sustainable beef, it would require that every link of the supply chain is covered
McDonald’s is the largest purchaser of Irish beef, purchasing 40,000t per annum. If it were a country, it would be the fourth largest buyer of Irish beef after the UK, France and Italy. Globally, it is one of the largest buyers of beef and purchases approximately 2.5% of all beef from the EU alone.
Why does McDonald’s want sustainable beef?
Keith Kenny, vice-president of sustainability at McDonald’s, says: “The food industry is one of the most scrutinised industries in today’s world”.
He explains that never before has the customer placed such an emphasis on where food comes from. So how is it going to feed a growing population with an ever-increasing appetite, in particular for protein, and is the current food supply chain sustainable? He says that the lure of menu items and visually appealing products has been somewhat diminished by consumers’ demand for promises in regards to animal welfare improvements and environmental stewardship.
Beef is at the heart of the McDonald’s brand, having five $1bn beef brands, and it has been identified as a growth platform for McDonald’s.
But Kenny points out that “beef also represents about 28% of the company’s carbon footprint”. This is the big challenge, he adds, and “the company knew to satisfy its future appetite for beef, it needed to be more sustainable and needed to change how it sourced its beef”. Its vision was to buy 100% verifiable, sustainable beef in the future. However, it understood that this was going to take time.
But when a multinational food giant like McDonald’s identifies sustainability as a key part of its brand, the industry starts to listen.
According to Kenny, it became clear to McDonald’s that sustainable beef was going to be unique in different markets around the world due to the fact that beef production, and its associated impacts, vary greatly between countries.
Members of the Global Roundtable for Sustainable Beef eventually agreed that sustainability centred on environmentally friendly production with the idea of working the land more efficiently and producing more with less while ensuring economic viability. It even published a set of principles and criteria for defining sustainable beef production.
Sustainability for McDonald’s
As Kenny points out, McDonald’s was determined that sustainable beef was the way forward. But what exactly did sustainable beef mean? It decided to develop a set of principles which outlined five key improvements to reach its end-goal of sourcing a portion of its beef from sustainable suppliers in its top 10 markets by the end of 2020. It still does not define what that portion will be.
This is understandable given the supply chain is made up of many diverse parts.
However, it is making progress. McDonald’s started buying sustainable beef last year through a pilot programme in Canada, according to Kenny. He says a key part of what McDonald’s brings to the table is that it has very strong relationships with its suppliers, many of whom it has been dealing with for 30 to 40 years.
He insists this should allow it to make significant progress towards reaching its goal.
Sustainability principles at McDonald’s centre on managing natural resources to enhance the health of the environment. This also takes into account the people and communities most affected by beef production and recognises the impact on the culture and health of a community.
Animal health and welfare is another key principle. Working to ensure the safety and quality of beef served is the fourth area while encouraging innovation to optimise production, reduce waste and add economic benefits is the final key element of sustainability at McDonald’s.
While aspirational and ambitious, McDonald’s realises it cannot fly the flag of sustainability for the sole benefit of itself. It has also set out to show that its goal of beef sustainability is more profitable for the producer as well as the retailer.
Does this mean that McDonald’s will pay a premium for sustainable beef? Kenny says McDonald’s are willing to invest in sustainable beef and have already demonstrated this by funding projects, such as flagship farms. He believes that sustainability will become a pre-requisite, a standard of doing business, similar to safety or quality standards.
He does not see it as a premium or a niche, but more a programme with mass market appeal.
He says that, fundamentally, the key goal is to show that sustainable beef practices are simply more profitable. He explains, if a farmer is more efficient, inputs are going to be less and therefore more money can be earned from the same cost. The company is funding research as well as monitoring its flagship farms to demonstrate this.
Flagship farms
The flagship farms do two things. Firstly, they provide the consumer with an image of where exactly McDonald’s beef comes from. More importantly, they are monitored to demonstrate excellent practice in at least one area of sustainability, while also operating to generally high standards in all other areas.
Ireland has three flagship farms, two beef farms and one dairy farm.
Flagship farmer Ray Dempsey, who farms at Coolderry, Co Offaly, says in a promotional video that “a farmer is a caretaker of the land and hopefully we (as farmers) can pass it on to the next generation in a better condition than which we got it. We have to look at the environment and how we can fit those aspects into our farming business.”
He goes on to speak of the environmental measures that he has taken on his farm before concluding: “If I don’t look after my animals then they won’t look after me.”
Kenny sums it up saying this represents everything that McDonald’s idea of sustainability stands for. He says that by engaging with local farmers, we can make an impact on efficiencies through improved feed conversions which drive profitability and reduce the carbon footprint.
It works in turn with Bord Bia on its Origin Green programme. The voluntary sustainability programme, adopted by Ireland, calls for food companies to develop individual sustainability plans that set out clear targets in areas such as emissions, energy, waste, water and biodiversity.
He says, at the time, this was a great leadership position taken by Bord Bia and the Irish Government, adding: “The fact Origin Green covers the entire industry in Ireland is quite simply incredible”.
He says it gives Ireland scale, and with its frequent audit cycle means that every farm is audited every 18 months.
“This gives us independent verification and confidence in the Irish supply chain,” according to Kenny. However, he adds that while it was innovative at the time, it will need more than an incremental improvement and now requires a step change to remain relevant and ahead of the competition into the future.
McDonald’s has undoubtedly put in place a detailed roadmap to reach the ultimate goal of sustainability, but to reach the level at which it can label a Happy Meal as fully sustainable will require a substantial period of time and management.
The company has promised by the end of 2020 to source beef from sustainable suppliers in its top 10 markets (which includes Ireland) and this will make up over 85% of its overall beef intake. It appears, however, for now, that the 100% sustainability goal for McDonald’s beef products will not be reached for at least a decade more.
What’s interesting with McDonald’s is rather than forcing its sustainability concept on a business and sector, it took it from a business view – how sustainability can make a business a superior performer. It wants to make businesses and farmers more profitable while being more responsible and aligned to its core values. This, it believes, will improve the sustainability of the entire chain.
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