I have been working in corporate citizenship for two decades, so I have seen the good, the bad the ugly – and learned a lot on the way. Here’s my top ten list of observations to pass on based on McDonald’s own journey thus far:

1. Create a CSR strategic framework
Society was much simpler, from 1955, when McDonald’s was first established, to the late 1980s. We built the “trust bank” by being community leaders, giving back, and having programs that were fun and engaging for our customers.

Then came the late 1980s and 1990s. Society changed and the Internet became a force of nature. McDonald’s was under attack by activists who thought we created too much garbage, hurt the planet, and exemplified the perceived evils of globalization.

By 2000, we learned we couldn’t be reactive anymore. We needed to play offense and get strategic with our CSR efforts. We created several governance bodies and structured processes to help us identify, manage and progress on a variety of social and environmental issues in a strategic manner.

Currently, we have six areas of focus. We are a food business, so nutrition and sustainable supply chain are important. People fuel our business, so people and community are also priorities. Then there is our responsibility to the environment. And at the core of everything we do is a commitment to sound governance and ethics.

2. Sustainability isn’t an initiative
CSR is not a program, initiative or function, but a mindset that is incorporated into every aspect of business planning and operations. At McDonald’s, this comes quite naturally because our values are at the core of everything we do and from the beginning we’ve been committed to doing the right thing. Our founder, Ray Kroc, said, “If we treat our customers right, take care of our franchisees, and always do the right thing—then we will make money and profit.” To me, this statement is equitable to a definition of CSR. If you live and put your values into practice every day, you will end up being a sustainable organization.

3. CSR starts at the top
CSR has to be driven by the top boss and senior management. Otherwise, CSR is peripheral and subject to measures of convenience. Management needs to integrate, allocate the necessary resources, and have it placed in strategic plans. Jim Skinner is our current CEO. He has led a tremendous turnaround over the past seven years. And his leadership on CSR is strong and unwavering. He put CSR right into our business plan. We call it our Plan to Win. Smack dab in the middle it says, “We are going to be a socially responsible company.”

4. Aim for the Smart Zone
It is a real stereotype to think that being socially responsible is a high cost. If you control your own strategies, most CSR efforts bring forth efficiencies, measures that use less resources, or bring a connection or relevance to consumers.

So aim for the Smart Zone. Merely following the law and regulations will merely make you a follower. The sweet spot is staying ahead, but staying smart at the same time.

For example, we have our big suppliers report their environmental performance – the amount of energy, water, and waste produced per pound of product sold to us on an annual basis. We do this so that we can work with them on continuous improvement, but we also initiated this for cost saving reasons. Less energy, water and waste should equals lower cost of production – and we are seeing that in the results.

5. Anticipate and manage emerging issues
No one likes to manage a crisis, so the idea is to stay to ahead of the curve and identify the issue when it is just starting to emerge, in academic studies or from NGO initiatives. This is easier said than done. My experience in business tells me that most business leaders are focused on the here and now or the very near future. However, waiting is a mistake. When you do, you lose control and end up being pushed into a reactive position, and that is never a good thing in business.

6. Manage the open and transparent society
With the power of the Internet, there is now a very radical transparency. People can get information and use this publicly in a matter of seconds. Take this seriously and dedicate resources to providing good and accurate information to as many stakeholders as you can.

7. Manage your planet footprint
We see managing our footprint as a business necessity to ensure we will have the resources we need to be in business well into the future. Good science tells us that we are straining our natural resources. Some estimates say that it will take ten more Earths to supply the needs of the population in just 40 years. We only have one Earth, and we all need to remember that.

8. Get engaged; don’t operate in an island
Smart companies develop a sophisticated stakeholder engagement plan that includes experts, NGOs, customers, media and others who can provide expertise and credibility. At McDonald’s, we’ve worked with a range of outside stakeholders over the years – Environmental Defense Fund, Conservation International, Greenpeace and others – to develop policies and programs that can improve our social, environmental AND business performance.

9. Manage CSR globally
CSR is not the same in every country. What is important to the U.S. is different from Australia, China is different than Brazil. So CSR efforts need to be decentralized in a global enterprise. The values come from the top, but the strategies and tactics will vary in the various geographic operations.

10. Tell your story, but humbly
Lastly, and a lesson we are still learning at McDonald’s, is to tell your story, but do so in a humble way. People want to know two aspects of your business when it comes to telling your story:

The first is obvious: What are you doing? What programs and progress are you making to be a responsible company?

The second is not obvious, and most often ignored by companies. It is all about HOW you are trying to be a responsible and sustainable organization. How are you engaging with society? How are you overcoming barriers and challenges? How are you testing new ideas?

Communicate in equal doses, both the WHAT and the HOW.

Bob Langert is Vice President, Corporate Social Responsibility for McDonald's. His responsibilities with McDonald’s include social responsibility efforts, including McDonald’s social responsibility reporting; global environmental management systems and issues; global supply chain issues (e.g., sustainable agriculture, biotechnology, animal agricultural and animal welfare programs); issues management; and part of McDonald’s “Balanced, Active Lifestyles” team.

This article was first published on the web site of the Boston College Center for Corporate Citizenship.

For all the significant achievements companies are making as corporate citizens, the issue of their real impact on society - and what as a result society may actually need back from them - raises the question of whether we are adequately defining what is expected by being socially responsible.

A McDonald's Happy Meal

The issue of marketing to children really brings that into focus; with food marketing a timely lens, the issue of obesity a hot health care crisis, and McDonald’s handling of responsibility, as one of the world’s largest fast food chains, a case in point.

As background, McDonald’s Happy Meals for children with toys has come under attack. San Francisco is one of the cities that has voted to ban selling toys with fast food for children that exceed certain levels of salt, fat, calories and sugar.  McDonald’s was accused of deceptive marketing practices to children over the lure of toys as an inducement to buy Happy Meals. Healthy alternatives are available, apple slices in place of fries and milk instead of soda – if kids are willing to eat them. But, there is still the issue of high sodium content in burgers.

At McDonald’s May 17, 2011 shareholder meeting, activists focused attention on McDonald’s marketing to children. In February 2011, in anticipation of McDonald’s shareholder meeting, Corporate Accountability International launched a campaign to fire Ronald McDonald, the clown mascot for the last nearly 50 years, and encourage headquarters to stop marketing to children by delivering petitions to individual restaurants. They also asked the chain to address directly the relationship of fast food to obesity. Beginning the campaign in a Portland, Oregon suburb, by May they had gathered 20,000 parents’ and community residents’ signatures on petitions which they delivered to the shareholder meeting.

In Oregon, McDonald’s threw down the gauntlet, and affirmed Ronald’s job security, saying he is “the heart and soul of Ronald McDonald House Charities, which lends a helping hand to families in their time of need.” The response demonstrated how McDonald’s infuses the emotional and the marketing: Ronald, the symbol to families dealing with sick and dying children, is also the brand, signifying the food and fun atmosphere to eat it in.

A letter signed by 600 health professionals and organizations, critical of the link between fast food and obesity, was read at the shareholder meeting. It had run as full page ads in newspapers across the country. In addition, shareholder Proposal 11, by the Sisters of St. Francis of Philadelphia, requested McDonald’s undertake a report on its “policy responses to public concerns about the linkage of fast food to childhood obesity, diet related diseases and other impacts on children’s health.” The proposal was soundly defeated.

In his remarks at the meeting, CEO Jim Skinner asserted the company’s right to advertise freely, to offer its menu and lifestyle selections, and leave to parent’s the right to chose what their children eat, saying it is up to personal responsibility. McDonald’s Corporate Social Responsibility (CSR) information indicates the company serves “a balanced array of quality food products and provides the information to make individual choices.”

Marketing to children, whether the subject is food, toys, clothes or anything else raises enormous concerns for Susan Linn, director and co-founder of a national coalition of health care professionals, educators, parents and others called the Campaign for a Commercial-Free Childhood.

“There is no ethical, moral, social, or spiritual justification for targeting children in advertising and marketing, said Linn recently at a Conscious Capitalism Conference. Linn, who also teaches psychiatry at Harvard Medical School, cited obesity and a number of other issues impacting children and society that stem from targeting kids, including youth violence, sexualization, underage drinking and smoking, excessive materialism and the erosion of creativity.

“Kids are inundated with advertising in a way never before, she said in an interview. “I don’t believe in any advertising to children.”

The food industry has been effective in limiting the Federal Trade Commission’s ability to regulate marketing to children, and unless Congress changes the rules, companies self-regulate. I asked Linn what protection the Children’s Food and Beverage Initiative provides. Linn indicated it didn’t provide any because it has no actual authority and the standards are voluntary.

The Coalition advocates that children be able to develop a healthy relationship to food, but McDonald’s, Linn says, entices kids not because of the food but because of the toys and the message of happiness that is part of their advertising.

Marketing to children is inherently deceptive because kids take things literally and media characters play a big role in their lives, Linn says. They don’t understand persuasive intent until they are eight years old; and the brain’s capacity for judgment isn’t developed until their 20s which makes them very vulnerable as marketing targets.

Of course parents are accountable for educating their children about responsible choices and healthy foods. And, they have the choice not to take their kids to McDonald’s. Except...if you serve more than 64 million people in 117 countries each day and many of your restaurants are open 24/7, the chain has created a compelling draw.

Add to that, a recent report by Yale University’s Rudd Center for Food Policy and Obesity that more fast food marketing dollars for toys are being spent (to get kids in the door) while marketing efforts to promote healthy meals haven’t really increased.

I asked Cheryl Kiser, the former managing director of Boston College’s Center for Corporate Citizenship for her take on marketing to kids. “CSR has had an enormous influence helping companies reduce their global footprint by addressing human rights and other issues,” said Kiser, now the managing director of Babson College’s Lewis Institute. But “companies are socializing kids and the imprint on those kids is not necessarily creating common good outcomes.”

“Having a young over-sexualized population of kids who have no awareness of the implications or consequences of their choices is unhealthy," she adds. “Foods appealing to kids because they are tasty, high fat and zero nutrition is also unhealthy.  When we start to imprint early in behaviors and consumer choices things that don’t lead to personal and common good, and that need to be corrected in teen years by good CSR programs, is CSR doing its job?"

Photo by franzconde via Flickr

Gael O’Brien is a Business Ethics Magazine columnist. Gael is a thought leader on building leadership, trust, and reputation and writes The Week in Ethics.

When the Environmental Defense Fund (EDF) first fought for a ban on the pesticide DDT more than 40 years ago, the  non-profit organization went to court and fought hard.  Back then, says Fred Krupp, the organization’s president, “the motto was ‘Sue the Bastards.’”

Times have changed.  In its drive to combat climate change, EDF now assigns staff members to a place like Bentonville, Arkansas, corporate headquarters of WalMart, the world’s largest retailer.  “I think we are the only national environmental group that has a staff stationed full-time in Bentonville,” says Krupp. “We walk in and out of the WalMart offices going to whatever meetings we want, really, to advise them on how to take their immense supply chain and get them to be greener.”

While the tactical makeover did not happen overnight, the environmental group still frequently has to defend this new business model for a non-governmental organization (NGO). “The whole idea is to change the world,” says Krupp. “If you want to change the world, it’s important to work with some of the big forces in the world.”

Impact on Supply Chain

Speaking at the The Economist Corporate Citizenship 2010 conference in New York, Krupp described how former WalMart CEO Lee Scott, concerned several years ago about the retailer’s image on labor issues, “recognized that the environment was a big issue and wanted to get ahead of it.”

To help educate Scott on climate change, Krupp says, he and Scott took a trip to the White Mountains of New Hampshire “to learn about global warming and how it was affecting maple trees up there,” as well as a separate trip to Kansas to visit with farmers.  Along the way, according to Krupp, Scott “had this epiphany that getting ahead of these issues actually could be a good offensive strategy, and good for business.”

WalMart’s current sustainability initiatives are having a major impact on the retailer’s suppliers, according to Krupp. Flat-screen televisions are still sold at WalMart, for example, but now they are energy efficient. “WalMart has something very precious that these vendors want, which is shelf space,” Krupp says.  WalMart and EDF are being “inundated” with phone calls from suppliers who say that if the new standards determine "whether or not we get shelf space, we want to know what we can do to meet or exceed expectations.”

EDF generated headlines in 2007 when it endorsed the purchase of TXU, the giant Texas utility company, by private equity firms Kohlberg, Kravis, Roberts & Co. and Texas Pacific Group for $45 billion.  In return for that endorsement, KKR and TPG agreed to several conditions, including reducing the number of new highly-emitting coal-driven power plants to be built by TXU from eleven to three, as had been planned by TXU’s previous management.   EDF’s relationship with KKR and TPG has grown since then, Krupp says, to involve other companies in the private equity firms’ portfolios.

McDonald’s and FedEx have also worked closely with EDF.  The McDonald’s engagement first involved reduction of packaging but later addressed the issue of antibiotics in chickens used by the fast food chain in its sandwiches.  Working with their suppliers and the pharmaceutical industry, McDonald’s was able to cut the volume of antibiotics it used by 90 percent, according to Krupp.  FedEx worked with EDF to find ways to reduce emissions from its worldwide fleet of delivery trucks, resulting in 96% less soot and 50% more fuel efficient vehicles, Krupp says.

Free Advice

While EDF believes NGO-corporate partnerships can be productive long-term, they don’t always work out.  An attempt to work with General Motors over a decade ago on environmental impact fell apart  fell apart because “they weren’t ready at that time,” according to Krupp.

In the case of McDonald’s and antibiotics, Krupp says, “the beauty of it is that we didn’t have to go to Congress, we didn’t have to beg a politician to help us…When we have a huge outscale impact by working directly with a company, that’s the way to be truest to the people who donate money to us because we’re getting results without the vagaries that have been known to happen sometimes in Washington.”

EDF does not accept money from any of its corporate partners.  “We thought it would be better for us, and better for the companies we work with, to keep our good name and reputation, and to be above reproach,” Krupp says. At McDonald’s, “we wouldn’t even accept a free hamburger in their restaurants.”

To accommodate the increased workload from the corporate engagements, EDF has grown from about 40 employees twenty-five years ago to more than 400 now.   The current annual budget of about $120 million is funded through private contributions from foundations and more than 700,000 individuals; corporate donations total less than $500,000 annually, according to Krupp.

Asked which companies might be next on EDF’s target list, Krupp declined to be specific.  “If you think about the biggest companies in the world, that have the most impact on climate,” he says, “those are the ones we want to work on…work with, and on.”

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McDonald's Corporation released a 2009 Corporate Responsibility Report focusing on the company's practices in "sustainable supply chain, nutrition and well-being, environmental responsibility, employment experience, community and corporate governance and ethics."

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The company said highlights include:

• Sustainable Supply Chain – In 2008, 98% of the whitefish sourced for McDonald's Filet-O-Fish sandwiches originated from fisheries with favorable sustainability ratings
• Nutrition and Well-Being – All nine of McDonald's largest markets* offer a fruit and/or vegetable option for Happy Meals, such as fruit bags, cherry tomatoes, corn cups and Apple Dippers
• Environmental Responsibility - In McDonald's Europe, more than 80% of used cooking oil is converted into biodiesel fuel
• Employment Experience – More than 80% of company-owned restaurant employees in McDonald's nine largest markets say they would recommend working at McDonald’s to a friend
• Community – Since 2002, McDonald's and its customers have raised nearly $150 million to support the work of Ronald McDonald House Charities through our annual fundraiser, McHappy Day, to help children and their families in need around the world

The full report can be downloaded here.