Human Rights (2024)

Supporting Suppliers

McDonald’s has a complex global supply chain with thousands of direct suppliers employing thousands of people in over 100 countries. We believe a supply chain of this scale gives us an important responsibility to do business with suppliers that respect the fundamental rights of their employees and partners.

We have supply chain standards that address:

Nondiscrimination.
Maximum working hours.
Underage labor.
Freedom of association and the right to collective bargaining.
Corporal punishment/disciplinary practices.
Safe working conditions.
Forced labor.

The success of the McDonald’s System lies in our trusted relationships with suppliers. All suppliers must, regardless of the cultural, social and economic context, commit to upholding the standards contained in our Supplier Code of Conduct. This includes meeting our human rights, workplace environment, business integrity and environmental management standards. We provide guidance to help them do so, but also expect suppliers to implement their own management systems in these areas.

To evolve our human rights policies and programs, we have developed a thorough strategy for identifying potential human rights issues in our supply chain, drawing on data from a wide range of sources. This includes a supply chain human rights assessment, third-party audits of suppliers, media monitoring and relevant stakeholder engagement.

We expect suppliers to 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.

Human Rights Impact Assessment Along Our Supply Chain

To uphold our high standards for respecting human rights, we need to better understand the human rights risk associated with the various commodities we source. In 2018, we engaged an external provider to conduct a Human Rights Impact Assessment (HRIA) at the farm level. The assessment enabled us to identify that, of all 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 most salient risks.

In addition to the farm-level commodity assessment, the HRIA also included a stakeholder consultation with key nongovernmental organizations (NGOs) to understand how industry experts view the human rights risks associated with the production of these commodities, as well as their observations on how the risks can best be mitigated.

The HRIA findings, and corresponding recommendations, helped us strengthen human rights management frameworks to better identify, assess, prevent, mitigate and remediate salient human rights issues. For example, as we update our sustainable sourcing strategies and policies for specific commodities, we use these recommendations to inform our human rights due diligence requirements for suppliers.

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 the local language and signed by the worker.
Suppliers do not retain workers’ government-issued identification, passports or work permits.

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 and verify compliance.

The SWA program provides suppliers and McDonald’sGlobal Supply Chain team with optional training to understand human rights issues and SWA program requirements. Built on a model of continuous improvement and education, it includes an online training platform where suppliers can access optional tools and resources that provide guidance on human rights issues.

Global training modules launched in 2021 focused on: Health and Safety, Involuntary Labor (including recruitment and fee reimbursem*nt) and Underage Labor.

McDonald’s alsooffersoptional suppliers live training sessionswithexternal human rights and supply chain experts.The Companyhas partnered with other brands and external consultancies across the industry to develop and train suppliers.

Additionally, McDonald’s Supplier Workplace Standards and Guidance Document (SWSGD) 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.

Compliance and Remediation With the Code

Human rights due diligence is incorporated into the SWA program. As part of the onboarding process, prospective suppliers must complete the required steps of the SWA program to verify that they can meet our expectations.

Initially, online training is offered to help suppliers understand what is expected of them. Suppliers also complete a rigorous annual self-assessment questionnaire to appraise their current systems and practices. This results in a report indicating areas for improvement.

The next step of the process involves independent third parties conducting announced and unannounced audits. We work with several social compliance auditing firms around the world that have expert knowledge and understanding of local languages and cultures. On-site audits include physical inspections of the facilities, worker housing and cafeterias. The auditing firms also interview workers 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. In the event an underage person is hired, suppliers are expected to invest in remediation systems, such as assisting in their return to their school or supporting any other solution that serves the child’s best interest.

Instances of any noncompliance are shared with the supplier, which must then produce and complete a corrective and preventive action plan. This must outline 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. We prioritize continuous improvement, capacity building and corrective actions. However, in certain circ*mstances, such as instances of significant noncompliance with the Code, McDonald’s may remove a supplier from the supply chain.

Grievance Mechanisms

Guided by the UN Guiding Principles on Business and Human Rights, our SWSGD provides a step-by-step best practice process to help suppliers establish an effective grievance mechanism. We require suppliers to establish internal grievance mechanisms and 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 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.

Leveraging Certifications

The SWA program is complemented by additional mechanisms to partner and collaborate on a risk-based approach toward high-risk sourcing regions or commodities. While we continue to work in partnership with suppliers, advisors and NGOs to continuously evolve and improve our approach to assessing and addressing human rights issues in high-risk commodities, we also ensure we are sourcing our largest food and packaging volumes through internationally recognized third-party certification schemes that respect human rights and communities alongside environmental standards in their certification process.

Beef

We are working with our supply chain to expand programs that align with theGlobal Roundtable for Sustainable Beef (GRSB)principles, which include ensuring respect for people and communities.

Soy (for Chicken Feed)

We leverageProTerraorRound Table on 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.

Palm Oil

We are committed to sourcingRoundtable 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.

Coffee

Sourcing coffee certified to international sustainability standards such as Rainforest Alliance, UTZ and Fairtrade International, and Fair Trade USA is key to our supply chain strategy. In parallel with our certification work, we have also launched the McCafé^® Sustainability Improvement Platform (SIP) in partnership withConservation International. These two approaches are complementary, and we will continue to support both certification and direct collaboration with farmers as methods to achieve positive impacts.

Fiber

McDonald’s leverages existing certification schemes, includingForest Stewardship Council^®(FSC^®),Programme for the Endorsem*nt of Forest Certification(PEFC) and PEFC-endorsed national systems, which ensure the rights of forest-dependent communities are respected.