McDonald’s will no longer set goals for representation in hiring and will no longer require its suppliers to sign mutual commitments to diversity, equity and inclusion as part of a set of changes in its inclusion practices announced on Monday.
In a system message, the fast-food giant’s executive leadership team, led by CEO Chris Kempczinski, also said that it is pausing external surveys and will now refer to its diversity team as its “global inclusion team,” which McDonald’s says “better aligns with the team’s work.”
But the Chicago-based company said that it remains committed to inclusion. McDonald’s said it will continue to report its demographic information as part of its annual Purpose and Impact report.
McDonald’s introduced what it called a “golden rule,” in which “everyone” is treated “with dignity, fairness and respect.” The company established a set of principles to evaluate its work along those lines.
Rather than setting representation goals, McDonald’s said it will focus on embedding inclusion practices into its everyday processes and operations.
It is also retiring its mutual commitment pledges with suppliers to focus on “a more integrated discussion with suppliers about inclusion as it relates to business performance.”
The company made the changes after it completed a civil rights audit last year, and following the Supreme Court ruling that declared unconstitutional race-based affirmative action programs at colleges and universities.
McDonald’s started tying executive pay to the hiring of women and people from underrepresented groups in 2021. At the time, the company promised to feature women in 45% of leadership roles by the end of this year, while 35% of people in leadership roles would come from underrepresented groups.
But DEI policies have been subject to a growing amount of court action in the aftermath of the Supreme Court ruling. Many U.S. companies have pulled back on their own diversity, equity and inclusion (DEI) goals over the past year and a half amid a backlash from conservative groups or because of election concerns.
The National Legal and Policy Center has submitted a shareholder proposal to McDonald’s urging the company to revisit its DEI goals and executive pay incentives.
A group of 19 civil rights organizations last year urged corporations to keep up with their diversity efforts.
“Abandoning DEI will have long-term consequences on business success—ultimately shirking fiduciary responsibility to employees, consumers and shareholders,” the letter said. “Businesses that fail to include women, people of color, people with disabilities and LGBTQ+ people neglect their financial duty to recruit and retain top talent from across the full talent pool and limit their company’s performance overall.”
The issue may be more vital for McDonald’s, in particular, which courts a wide range of consumers but has faced numerous legal challenges in recent years over its alleged treatment of Black franchisees, workers and suppliers. The company faces a trial in a discrimination lawsuit filed by media mogul Byron Allen, for instance.
McDonald’s noted that more than 30% of its U.S. leaders come from underrepresented groups and that it has achieved gender pay equity at all levels. The company added that 78% of employees scored the company positively in its “Inclusion Index.”
The company said that it has reached a goal of using diverse-owned suppliers for 25% of its supply spending. And it noted that it recruited the largest number of registered applicants for new franchisees from people in underrepresented groups in its history.
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