Business Practices that Comply with the Two Principles

Business Practices that Comply with the Two Principles

Introduction of the Two Rules

The United Nations Global Compact requires companies to uphold certain universal principles which are fundamental in their business operations. There are basically 10 principles under the compact. This paper will review the business practices that McDonalds applies in light of two principles. Principle number 1 requires companies to respect human rights in their operations.  Principle number 8 requires companies to be environmentally responsible.

Principle 1: Human Rights

Organizations strife to be socially responsible, and this can be practical through respecting human rights. Many companies have realized the significance of human rights to their overall business performance. Although companies have recognized the moral imperative in operating with due respect to human rights, indeed, many companies view human rights as core to improving their business performances. McDonalds has established a supplier code of conduct, which has an elaborate description of how suppliers ought to conduct themselves in their activities. For instance, suppliers are expected to ensure that no underage labor is used in the production and distribution of goods and services. Labor laws require that no child labor is used in any supply chain, and for this, McDonalds seems aware of and does not entertain suppliers who violate such fundamental rights of children. In addition, workers of the company are free to associate with whichever group they deem fit so long as it is a lawful association.

The Environment

Because of the nature of their business operations, most companies distribute their products directly to the markets. This means they have many vehicles, which in essence do harm the environment[1]. Some companies have undertaken a program of changing from using gasoline and diesel towards less harmful fuels like natural gas. Conventional sources of fuel have a significant effect on the environment. Therefore, the shift towards renewable energy sources of energy is warranted. For McDonald, clean energy is increasingly becoming the best option in reducing greenhouse gas emissions[2]. In 2000, the company started a process of reducing energy costs by 10% by 2008 in its Belgium operations[3] . This objective was boosted by the shift towards renewable sources of energy. Accordingly, McDonalds gathered participants in its networks to works towards this goal. Indeed, the company reduced energy costs by 20%. Therefore, the company is promoting a shift to safe and affordable sources of energy.

The company monitors its supply chain activities to ensure that operations comply with Rule 8. The guidelines for suppliers indicate that each one must ensure proper use of water resources. For instance, suppliers are supposed to use water wisely and in ways that eliminate release of wastes and by-products that harm water resources. Where possible, suppliers should recycle waste products, besides ensuring proper disposal of waste products[4]

Positive Lessons from the First Principle

The philosophy behind the UNGC is a belief in the advantages of open markets, which is the only solution to pull many people out of the miry pit of poverty. Respect for human rights opens the door for the disadvantaged to get meaningful employment. Secondly, a company can lose millions of dollars in compensations resulting from lawsuits occasioned by unfair practices. A good example is the suit filed by one of the employees, Beena Datt in 2007 claiming discrimination because of her disability[5]. The company was found culpable and ordered to pay damages to the aggrieved employee.

Positive Lessons from the Eighth Principle

A clean environment means good health to citizens. It can reduce costs incurred in mitigating global climate changes. However, the ideology of open markets might sound good; however, there it has inherent setbacks. For instance, enforcing the rules might be seen to be harmful to developing countries, consumers, and the environment. The Global Compact does not have any monitoring or enforcement mechanisms. This becomes a challenge since companies only enlist to follow the principles without making any concrete efforts or commitments to honor their part.

Business Practice Recommendation in respect of  Principle 1

Recommendation 1: McDonalds must see the need of respecting human rights and labor laws. These are very critical in modern times. As can be seen for the example of McDonalds, a legal challenge puts a company in a bad light besides huge compensations.

Recommendation 2: McDonalds should work hand-in-hand with government agencies to understand to understand areas that require improvements. This will minimize cases of lawsuits emanating for non-compliance with legal requirements.

Business Practice Recommendation in Respect of Principle 8

Recommendation 1: McDonalds must continue its efforts to ensure a clean environment. This will save the company and the economy millions of dollars that go towards global warming mitigation efforts.

Recommendation 2: McDonalds should move faster towards the use of alternative sources of energy such as solar energy. KFC has shown the lead by using solar wall as a strategy of shifting towards green energy[6]. Others like Burgerville are also using less energy in their operations[7]. There is a need for a paradigm shift from fossil fuels, natural gas towards green energy sources. This will effectively contribute to a reduction in global warming.

Benefits, Challenges and Implications for the Stakeholders

As highlighted above, the shift towards solar energy will leads to energy savings for the company. Besides, solar energy is a clean source of energy. This means zero emissions to the environment[8]. Therefore, resources that go towards reducing global warming and its threats will be allocated to other development initiatives. Governments will save money that would have gone towards mitigating global warming. There are also challenges for the UNGC as well as the companies that must adhere to the 10 Rules. Being a network of partners, the greatest challenge for the rules of the UNGC is to remain relevant. This is particularly so in addressing emerging issues of human rights and the environment such as the transition to green energy. The use of solar energy in the company’s operations means that those who work in the oil sectors will lose employment. Moving toward renewable sources of energy demands that governments and other stakeholders open up opportunities for job creations to absorb those who become jobless during the time of transition. Communities stand to benefits from a clean environment. In addition, the employees will have a peace of mind as the company will uphold human rights and respect labor laws. In addition, suppliers will be forced to adhere to strict regulations sticking to the set codes of conduct.

Conclusion

McDonalds has undertaken several practices to comply with the two principles as discussed. Respecting human rights open the doors for many people to gain meaningful employment. In addition, consideration of the environment can save a lot of money, which can be channeled to development activities. However, there several areas that McDonalds need to improve to avoid costly lawsuits. The company must engage its stakeholders to prevent any misunderstanding, which might cost the company dearly. Indeed, the set of recommendation, if adequately addressed by the company, will go along way in complying with the two principles.

 

Bibliography

Hennequin, Denis and Worevzek. 2010. McDonald’s Best Environmental Practices in Europe. www.best ofgreenmcdonladseurope.com (Accessed April 27, 2013)

Levant, Ezra (2008). The Human Right for McDonald’s Employees not to Wash their Hands. http://ezralevant.com/2008/04/the-human-right-for-mcdonalds.html (Accessed April 27, 2013)

McDonalds.com. Environment. http://mcdonalds.com.au/about-us/responsibility/our-environment (Accessed April 27, 2013)

Nakicenovic, Nebojsa, Grubler, Arnuf and McDonald, Ala. Global Energy Perspectives. Cambridge: Cambridge University Press

Pearse, Guy.  Green Wash: Big Brands and Carbon Scams. New York: Cengage Learning.

Smith, F. Andrew. 2012.  Fast Food and Junk Food: An Encyclopedia of What We Love to Eat, Volume 2. New York: ABC-CLIO.

Sukhatme, S. P. Solar Energy: Principles of Thermal Collection and Storage. New Delhi: Tata McGraw-Hill Education

 

[1] Nakicenovic, Nebojsa, Grubler, Arnuf and McDonald, Ala. Global Energy Perspectives. (Cambridge: Cambridge University Press) p. 121

[2] Hennequin, Denis and Worevzek. 2010. McDonald’s Best Environmental Practices in Europe. www.best ofgreenmcdonladseurope.com (Accessed April 27, 2013)

[3] [3] Hennequin, Denis and Worevzek. 2010. McDonald’s Best Environmental Practices in Europe. www.best ofgreenmcdonladseurope.com (Accessed April 27, 2013)

[4] McDonalds.com. Environment. http://mcdonalds.com.au/about-us/responsibility/our-environment (Accessed April 27, 2013)

[5] Levant, Ezra (2008). The Human Right for McDonald’s Employees not to Wash their Hands. http://ezralevant.com/2008/04/the-human-right-for-mcdonalds.html (Accessed April 27, 2013)

[6] Pearse, Guy.  Green Wash: Big Brands and Carbon Scams. (New York: Cengage Learning).

[7] Smith, F. Andrew. 2012.  Fast Food and Junk Food: An Encyclopedia of What We Love to Eat, Volume 2. (New York: ABC-CLIO), 170

[8] Sukhatme, S. P. Solar Energy: Principles of Thermal Collection and Storage. (New Delhi: Tata McGraw-Hill Education) 13

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