McDonald’s says it will conduct a civil rights 'assessment'

The company said it has engaged a third party to conduct the assessment, appearing to stop short of the audit shareholders narrowly voted to approve last month.
McDonald's civil rights audit
Photo courtesy of McDonald's

McDonald’s on Thursday said that it has hired a third-party firm to conduct a civil rights assessment, though it appears to be stopping short of conducting the audit that shareholders approved at the company’s annual meeting last month.  

Shareholders narrowly approved a proposal for a civil rights audit. According to a federal securities filing on Thursday, the proposal received 273.8 million votes in favor, compared with 217.2 million votes against.

Yet more than 70 million shares either didn’t cast a vote or abstained. Overall, the proposal won approval by 55% of shareholder votes cast, but 48% of all shares.

McDonald’s said it has already started taking steps to abide by the request. “Diversity, equity and inclusion are at the heart of McDonald’s core values,” the company said in an email. “We are committed to providing equitable opportunities for our employees, franchisees and suppliers. While we are proud of our progress, our efforts are ongoing, and we will continue to focus on actions that have meaningful impact.

“Consistent with these efforts, we have engaged a third party to conduct an assessment.”           

McDonald's would not provide any details as to the difference between the assessment the company plans to conduct and the audit that shareholders approved. But by definition, an "audit" is an official inspection while an "assessment" is an evaluation. 

The proposal was the only one of several to receive a shareholder OK at the company’s annual meeting. Shareholders turned back proposals that would request a report on reducing plastics and another one on antibiotics. They also voted against reports on lobbying activities and one on global public policy. Shareholders also voted against a proposal modifying the threshold for calling a special meeting.

But the vote on the civil rights audit received the most attention before the meeting. The social investment firm, SOC Investment Group, proposed the audit.

McDonald’s had initially requested that the proposal not be included in the proxy vote, citing several discrimination lawsuits filed against the company by current and former franchisees, employees and some vendors. The U.S. Securities and Exchange Commission denied the request.

“SOC Investment Group would be pleased to work together with McDonald’s to flesh out the civil rights audit,” Dieter Waizenegger, executive director of SOC, said in a statement. He noted that McDonald’s “must commit to selecting an independent, credible organization with a strong civil rights background. We also hope that the company will take shareholders’ and other stakeholders’ feedback throughout the process.”

“McDonald's can call it what they want, but it's substance we're after,” he said in another statement on the company doing an assessment, rather than an audit. “Shareholders have spoken and the company has an obligation to fulfill our call for a third party, independent audit of its practices and policies.”

McDonald’s is hardly the first company to be asked by shareholders to conduct civil rights audits. They’ve become increasingly common at U.S. companies amid growing activism by social investing groups and others pushing more environmental, social and governance (ESG) issues.

It’s not even the first restaurant to do one. Starbucks has done these assessments in each of the past three years from former U.S. Attorney General Eric Holder. The reports came after a Starbucks manager called police in 2018 after two Black men waiting for a business meeting refused to leave the store, leading to their arrest.

That report recommended more training to prevent bias and harassment, strengthen language on discrimination and take more steps to work on community engagement efforts, among other things.

McDonald’s shareholders voted in favor of the civil rights audit at the same meeting that the company’s board of directors easily won re-election for all 12 seats despite a push by the activist investor Carl Icahn, who wanted two seats on the board over the company’s use of pork from suppliers that use gestation crates.

Neither of Icahn’s nominees, Maisie Lucia Ganzler and Leslie Samuelrich, received more than 2% of the vote.

UPDATE: This story has been updated to correct that McDonald's is planning a civil rights assessment rather than an audit. It has also been edited to add more reaction from SOC. 

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