Dive Brief:
- McDonald's asked the U.S. Securities and Exchange Commission on Sunday to omit a proposed racial audit, put forward by shareholders, from its annual proxy. The Golden Arches cites litigation by Black employees and 238 Black franchisees as the impetus for the request.
- McDonald's didn't offer comment beyond its response submitted to the SEC.
- "Issuing the report requested in the proposal would require the company to take action that would harm its legal defense in multiple pending lawsuits," McDonald's attorney from Gibson, Dunn & Crutcher LLP said in the letter to the SEC, Bloomberg reports.
Dive Insight:
Despite working to restore its public image over the past years, especially since former CEO Steve Easterbrook was ousted, McDonald's is still unable to shake reports of racism and sexism at the corporate and restaurant level.
CEO Chris Kempczinski also kicked up more controversy at the end of last year after a text exchange about shooting deaths of two children in Chicago were shared on social media. A letter from several advocacy groups called Kempczinki's messages "ignorant, racist and unacceptable coming from anyone, let alone the CEO of McDonald's, a company that spends big money to market to communities of color and purports to stand with Black lives."
The current request for a racial audit comes after the chain recently launched a number of initiatives aimed at improving diversity within the company.
These efforts include doubling its investment toward diverse media partners, tying executive compensation to diverse representation targets and allocating 25% of its annual U.S. supply chain spend for suppliers owned by women and minorities by 2025. McDonald's also recently rolled out a diverse franchisee recruitment initiative and pledged $250 million over five years to help candidates that face socioeconomic challenges.
According to Bloomberg data analysis of the chain's filing with the Equal Employment Opportunity Commission, McDonald's representation of Black, Hispanic and Asian employees at management levels and Black and Asian employees in professional categories meets or exceeds the makeup of the U.S. population.
Still, shareholders want more. SOC Investment Group recommended in a shareholder proposal in November that McDonald's should recruit a third-party to audit company policies and receive input from franchisees, corporate employees, suppliers and diners.
"A civil-rights audit will help McDonald's identify, remedy and avoid adverse impacts on its stakeholders," SOC said.
McDonald's already collects diversity data from corporate workers and employees at company-owned stores, Bloomberg reports, but this excludes employees at franchised locations, which make up a majority of its workforce.
