Supply Chain Human Rights
McDonald’s has a complex global supply chain with thousands of direct suppliers who employ over a million people in over 100 countries. With a supply chain of this scale, we have an important responsibility to only do business with suppliers that respect the fundamental rights of their employees and partners.
Human rights are universal rights intrinsic to every human being. While individual states have a duty to protect human rights, we also recognize that businesses like McDonald’s, and our suppliers, have a responsibility to respect them within our sphere of influence. We know we can be a force for good in communities and empower our suppliers to do the same, always considering the impact of our decisions so that we can stand by them with confidence.
At McDonald’s, we conduct our activities in a manner that respects human rights as set out in the Universal Declaration of Human Rights. Our commitment to respect human rights is defined in our Human Rights Policy (PDF – 91 KB), which applies to McDonald’s Corporation and our wholly owned subsidiaries worldwide. Our expectations of our suppliers around the world are outlined in our Supplier Code of Conduct (PDF – 1.4 KB) (“Code”).
The success of the McDonald’s System lies in our trusted relationships with suppliers. We expect all suppliers, regardless of the cultural, social and economic context, to meet our expectations of fundamental rights for all people as established by the United Nations Declaration of Human Rights.
In order to provide goods and services to the McDonald’s System, suppliers must meet our high standards, and direct suppliers are required to commit to upholding the standards contained in our Code. We expect, and provide guidance to assist, our suppliers to meet the standards for human rights, workplace environment, business integrity and environmental management contained in the Code. We also expect suppliers to implement their own management systems in these areas.
We expect that suppliers treat their employees with fairness, respect and dignity, and follow practices that protect the health and safety of people working in their facilities, in compliance with national and local laws. We also require our suppliers to hold their own suppliers to the same standards as outlined in our Code, and to create internal mechanisms and programs for handling reports of workplace grievances, including anonymous reporting.
Our Supplier Workplace Accountability Program
McDonald’s has a comprehensive Supplier Workplace Accountability (SWA) program, which supports compliance with the standards and expectations outlined in our Code. The SWA program aims to help suppliers understand our expectations, verify compliance and work toward continuous improvement.
The SWA program provides suppliers and McDonald’s Global Supply Chain team with training to understand human rights issues and our SWA program requirements. Built on a model of continuous improvement and education, SWA includes an online training platform where suppliers can access optional tools and resources that provide guidance on human rights issues.
Since the launch of the SWA program, McDonald’s has engaged with thousands of suppliers and facilities to ensure respect for human rights and manage risk. We are proud that many of our suppliers take their commitments seriously and, in some cases, have their own equally robust compliance and reporting programs that have been evaluated and approved as equivalent to McDonald’s SWA program. We have seen an improvement in compliance overall since the SWA program began and, as of April 2020, more than 4,000 facilities have participated in the program.
Verifying Compliance With Our Supplier Code of Conduct
Human rights due diligence is incorporated into the SWA program through on-site announced and unannounced audits conducted by third-party auditing firms that assess compliance with our Code. As part of the onboarding process to become a McDonald’s supplier, suppliers must complete the required steps of the SWA program (outlined below) to verify that they can meet our expectations.
We work with a number of third-party social compliance auditing firms around the world that have expert knowledge and understanding of local languages and cultures. On-site audits are physical inspections of the facility and include visits to worker housing and cafeterias. The auditing firms also conduct private worker interviews and review facility records and business practices. In addition, they check the supplier’s compliance with each aspect of the Code, such as verifying that all workers are of legal age to work. As well as maintaining legally accepted age verification records, suppliers are also expected to invest in remediation systems in the event an under-age person is hired, to assist in their return to their school or support any other solution that serves the child’s best interest.
Instances of noncompliance are shared with the supplier, who must then produce and complete a corrective and preventive action plan to address noncompliance. The plan must provide specific time frames within which corrective action will be taken, root causes analyzed, and policies and procedures updated. In instances of significant noncompliance, suppliers are subject to a follow-up audit.
McDonald’s SWA program is designed to support suppliers in meeting our standards. However, there are circumstances under which McDonald's will remove a supplier from the supply chain to address instances of significant noncompliance with the Code.
McDonald’s Process for Verifying Compliance
Step 1: Online training to help suppliers understand what is expected of them.
Step 2: Suppliers complete a rigorous annual self-assessment questionnaire to appraise their current systems and practices. This results in a report indicating areas for improvement.
Step 3: Third-party firms conduct announced and unannounced audits.
Step 4: The auditing firm shares any noncompliances with the supplier, who is then required to produce an action plan to address the noncompliance.
In the case of serious noncompliances, a follow-up audit will be carried out to monitor progress. Ultimately, McDonald’s may remove the supplier from the supply chain.
Ethical Employment and Recruitment Practices
Fundamental to our Code is an expectation of ethical employment practices by our suppliers and their supply chain, including subcontractors and third-party labor agencies. Our Code clearly prohibits any form of slave, forced, bonded, indentured or involuntary prison labor, and prohibits suppliers and third-party labor agencies from retaining employees’ government-issued identification, passports or work permits as a condition of employment. We also expect our suppliers to provide their own internal reporting mechanisms, to ensure their employees have a safe and timely way to report workplace concerns without fear of retaliation.
On-site audits include a review of ethical recruitment practices to verify that workers are employed under voluntary conditions and have freedom of movement. This includes verification that:
- Workers are not charged illegal fees as a condition of employment.
- Worker contracts are in local language and signed by the worker.
- Suppliers do not retain workers’ government-issued identification, passports or work permits.
Our Supplier Guidance Document provides a step-by-step best practice process to help suppliers establish an effective grievance mechanism, guided by the UN Guiding Principles on Business and Human Rights. While we require suppliers to provide their workers with their own robust internal procedures to raise issues, our Business Integrity Line, and an email to reach the SWA global management team, are open to third parties, including suppliers and their employees, if they suspect or become aware of any alleged breaches to our Code. Our Code explicitly states that the supplier’s reporting program must protect the worker’s confidentiality and must prohibit retaliation in response to reporting issues.
McDonald’s Supplier Guidance Document is shared with all suppliers and provides detailed guidance on each aspect of the Code and how suppliers and their supply chains can meet our expectations. For example, the Supplier Guidance Document clearly explains that all suppliers should:
- Ensure that their hiring process and the hiring process of their recruitment agencies provide people employment under voluntary terms.
- Maintain legally accepted age verification records to demonstrate all workers are of legal working age when they commenced work.
- Respect the right to associate or not associate with any group of their choice, as permitted by law, without fear of reprisal, intimidation or harassment.
- Respect the rights of people to bargain collectively where such rights are established by law or contract.
Collaborating With Stakeholders
McDonald’s is committed to engaging with relevant stakeholders to continue to advance our approach to human rights, and we participate in relevant forums to track and address emerging risks. In 2019, McDonald’s convened a multi-stakeholder roundtable of human rights experts and advocates on the sidelines of the UN Forum on Business and Human Rights. Among the group were stakeholders from civil society, academia, the public sector, peer companies and international organizations. The group received an update on McDonald’s supply chain human rights activities and provided feedback and advice on how to advance the program.
We believe that real, systemic change throughout the supply chain requires partnership with industry. In 2016, we joined the ICTI Ethical Toy Program (IETP) for our Happy Meal toys scheme, bringing together industry partners to support a sustainable supply chain for the toy and entertainment industry. We also participate in initiatives such as AIM-PROGRESS, which supports responsible sourcing, and Business for Social Responsibility’s Human Rights Working Group (HRWG), which supports implementation of the UN Guiding Principles on Business and Human Rights in a shared-learning forum of more than 40 companies.
Leveraging Certifications Within Commodity Supply Chains
We are exploring ways to map the SWA program against commodity certifications to better understand which issues are being checked at the farm level. In addition, our 2020 commodity goals – for beef, chicken (including soy for feed), palm oil, coffee, and fiber – address human rights through certification schemes that help to provide human rights assurances deeper within our supply chain. These standards complement our overarching strategy:
We are working with our supply chain to expand programs that align with the Global Roundtable for Sustainable Beef (GRSB) principles and criteria, which include ensuring respect for people and communities.
Soy Used For Chicken Feed
We leverage ProTerra or Round Table of Responsible Soy (RTRS) certification standards, which have criteria regarding human and labor rights, abolition of any type of discrimination and forced labor, as well as establishing requirements for relations with neighboring communities and indigenous communities and their rights.
We are committed to sourcing Roundtable on Sustainable Palm Oil (RSPO) certified palm oil, which aims to strengthen social development, environmental protection and economic prosperity across the sustainable palm oil value chain. We also have expectations of our centrally managed suppliers of restaurant and par-fry oil to address human rights concerns.
Sourcing coffee certified to international sustainability standards such as Rainforest Alliance, UTZ and Fair Trade International and Fair Trade USA is key to our supply chain human rights strategy. In parallel with our certification work, we have also launched the McCafé Sustainability Improvement Platform (SIP) in partnership with Conservation International. These two approaches are complementary efforts, and we will continue to support both certification and direct collaboration with farmers as methods to achieve positive impacts.
McDonald’s leverages existing certification schemes, including Forest Stewardship Council® (FSC®), Programme for the Endorsement of Forest Certification (PEFCTM) and PEFC-endorsed national systems, which ensure the rights of forest-dependent communities are respected.
Supporting the Sustainable Development Goals
Through our efforts to respect human rights we aim to support the UN Sustainable Development Goals, a global agenda to end poverty, protect the planet and ensure prosperity for all, in particular:
Understanding and Assessing Risks
An important element of our human rights due diligence approach is understanding global and national human rights risks and using this information to evolve the SWA program. We assess the potential human rights risks of our supply chains through desk-based research, supply chain mapping and on-site audits, and stakeholder engagement.
A key indicator of risk we use is the country of origin from which we are sourcing products or raw materials. For example, we use analysis of country-level human rights risks to help inform the audit cycles for our suppliers. Facilities situated in countries that are considered to be at high risk require more regular on-site audits, regardless of the outcome of previous audits.
Conducting a Human Rights Impact Assessment Along the Supply Chain
In order to uphold our high standards for respecting human rights, we knew we needed to better understand the human rights risk associated with the various commodities we source. In 2018, McDonald’s engaged an external provider to conduct a human rights impact assessment (HRIA) at the farm level. The assessment enabled us to identify that, of the commodities we source, palm oil, tea, coffee and timber present the greatest risk of exposure to human rights concerns, with occupational health and safety, migrant workers, and decent working time identified as the highest risk areas.
In addition to the farm-level commodity assessment, the HRIA also included a stakeholder consultation with key NGOs to understand how industry experts view the human rights risks associated with the production of the various commodities, as well as their observations on how the risks can best be mitigated.
The HRIA findings, and the corresponding recommendations, help us strengthen human rights management frameworks to better identify, assess, prevent, mitigate or remediate salient human rights issues. For example, as we update our sustainable sourcing policies for specific commodities, we consider these recommendations in informing our human rights due diligence requirements for suppliers.
We also use the HRIA findings to raise awareness of human rights risks among our supply chain staff who procure product for the McDonald’s system and have taken steps to strengthen risk management procedures and improvement plans.
By identifying the most salient human rights issues within these supply chains, we aim to strengthen our risk management procedures, develop appropriate improvement plans, and increase awareness of these issues within our business. In the spirit of ongoing collaboration, McDonald’s also shared the information from the HRIA with other brands that purchase similar commodities, and we are exploring further ways to work with the wider industry.
Supporting Family Friendly Spaces Program in China
McDonald’s works with partners and suppliers to support working parents in the supply chain as a member of the IETP. We encouraged Happy Meal toys suppliers to partner with IETP and their implementation partner CCR CSR to create Family Friendly Spaces at several facilities in China. These have subsequently had a meaningful impact on migrant workers. Across China, millions of workers have to leave their children in rural villages with family and friends while they are away working at urban factories. The program reunites some of these “left-behind” children with their working parents during the school summer holidays
In 2019, 10 toy facilities took part in the program. The 381 participating children, aged 3–12 years, attended factory-based childcare run by trained staff. The children took part in activities and day trips that helped broaden their horizons and strengthened parent-child relationships. An impact study of the wider program found that workers felt confident that their child was safe while they went to work and that the spaces allowed them to spend more time with their child. The study also revealed an 82% increase in worker satisfaction and a 13% increase in worker retention.
Continuous Improvement Through Supplier Workplace Accountability Program
The SWA program includes an online training platform where suppliers can access optional tools and resources that provide guidance on human rights issues. Additionally, in 2017 McDonald’s teamed up with other AIM-PROGRESS brands to provide optional training to suppliers on the importance of responsible sourcing. Through this coalition, suppliers around the world received training on critical human rights issues, including:
- Training suppliers in Malaysia on forced labor, grievance mechanisms and managing migrant labor in 2017.
- Sessions on health and safety, forced labor, working hours and social insurance for Chinese suppliers in 2018.
- Training on forced and child labor, wages and working hours, and health and safety for suppliers in Brazil in 2019.
Collaborating With Coffee Producers
Launched in partnership with Conservation International in 2016, the McCafé Sustainability Improvement Platform (SIP) is a framework to engage and guide our coffee supply chain in sustainable sourcing, as well as invest in coffee growers and their communities over the long term. We collaborate with coffee producers to design and implement programs and deliver optional tools and resources that aim to address needs specific to the farming community and improve farm performance.
McCafé also provides roasters who supply our coffee with guidance across four key elements they must achieve in order to have a SIP-approved program.
How McCafé SIP Works
Understanding who grows our coffee and identifying all farms and farmers participating in a SIP-approved program.
Identifying needs specific to the farming community and collaborating with them and local partners to provide relevant training and tools.
Tracking progress against globally recognized minimum requirements and continuous improvement indicators for sustainable coffee production.
Verifying data through third-party audits.
We created an Advisory Council to provide input on the strategic direction of McCafé SIP, with members including Conservation International, Rainforest Alliance, Committee on Sustainability Assessment (COSA), Sustainable Food Lab, Fair Trade USA and Solidaridad. The Council has introduced a set of minimum requirements focused on social and environmental impacts, such as human rights, health and safety, and deforestation, that all farms must meet and that will be assessed through third-party audits.
In partnership with COSA, we have also expanded performance metrics, which annually measure continuous improvement toward social, environmental and economic standards. Through analysis of these metrics, our roasters can better target investments in programs that support income diversification or food security and help to build the resilience of these communities.
Visit our Responsible Sourcing page to learn more about our McCafé SIP Program.
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