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Best of Sustainable Supply 2014

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Best of Sustainable Supply 2014 ETHICAL | ENVIRONMENTAL | ECONOMIC Welcome to McDonald’s 2014 Best of Sustainable Supply. SUSTAINABLE SUPPLY STEERING COMMITTEE This year, we are delighted to honor 36 suppliers and 51 ASIA-PACIFIC, MIDDLE EAST, AfRICA: Brian Kramer projects that represent real innovation toward a more EUROPE: Keith Kenny, Jacqui Macalister sustainable supply chain. Innovation is key to our CSR and sustainability journey, and McDonald’s suppliers LATIN AMERICA: Leonardo Lima, Cristina Gomez-Garcia have an impressive track record of innovating for what NORTH AMERICA: Susan Forsell, Jeff Fitzpatrick-Stilwell, we call sustainability’s three Es: ethics, environment, and Jessica Droste Yagan economics. GLOBAL: Townsend Bailey, Michele Banik-Rake, Bruce Feinberg, Gary Johnson, Rona Starr All of their efforts are impressive, and the Best of Sustainable Supply helps us to identify the very best Fifty-one case studies highlighting EXECUTIVE & EXTERNAL SELECTION PANEL practices and innovations happening every day in our sustainable supply best practices BSR: Christine Bader supply chain, and to share that knowledge with other from around the world CONSERVATION INTERNATIONAL: Bambi Semroc suppliers. This year, we received 585 submissions, almost FARM ANIMAL INITIATIVE: Roland Bonney 40 percent more than last time. I’m delighted with the FORUM FOR THE FUTURE: Helen Clarkson increase, not just because we have even more outstanding TABLE OF CONTENTS initiatives taking place in our supply chain, but because GLOBAL ROUNDTABLE FOR SUSTAINABLE BEEF: Ruaraidh Petre of what it says about McDonald’s suppliers. Every year, Climate Change and Energy 4 GREENBIZ GROUP: John Davies our suppliers focus even more attention on sustainability, McDONALD’s CORPORATION: Francesca DeBiase, Bob Langert Water applying innovation to make a real difference for the 9 THE SUSTAINABILITY CONSORTIUM: Kara Hurst people, communities, animals and environment that touch Waste SUSTAINABLE FOOD LAB: Hal Hamilton our supply chain. And the benefits don’t end with us. Many 13 TECHNOSERVE: David Browning of these innovations can bring about more widespread Land and Biodiversity 16 change in our suppliers’ own industries and in broader WORLD RESOURCES INSTITUTE: Betsy Otto WORLD WILDLIFE FUND: Alex Bjork society. Human Health and Welfare 22 This year’s report again demonstrates that McDonald’s Community Impact 24 suppliers are world-class in their ability to provide a safe, sustainable, and assured supply of food and products Economics 28 SUPPLIER LEADERSHIP our customers love. We thank all the suppliers who McDonald’s works closely with suppliers to continuously improve the contributed and congratulate those who are recognized Animal Health and Welfare economic, ethical, and environmental impacts of our supply chain. Our 32 suppliers take this responsibility seriously and, in many cases, innovate here. toward a more sustainable supply chain. Visit these online resources for Index 35 more about some of our efforts around the world. We hope you find as much inspiration in their stories as we do. ETHICS, ENVIRONMENT, EcONOMICS IN OUR SUPPLY Asia-Pacific, Middle East, Africa: CHAIN Our Food Your Questions JOSE ARMARIO CORPORATE EXECUTIVE VICE PRESIDENT, WORLDWIDE SUPPLY CHAIN, ETHICS Sourcing from suppliers who ensure the health and safety Europe: Flagship Farms and McDonald’s DEVELOPMENT AND FRANCHISING of their employees and the welfare and humane treatment of animals in our supply chain. Agricultural Assurance Programme Latin America: Arcos Dorados Holdings Inc. ENVIRONMENT Working to ensure that our food, drinks and packaging and their production, distribution and use minimize (McDonald’s developmental licensee in Latin lifecycle impacts on the environment. America, and a publicly traded company) ECONOMIC Delivering affordable food while supporting equitable North America: The Road to Sustainability trade practices and investment in the communities where our and Our Food. Your Questions. suppliers operate. These case studies were chosen from nearly 600 supplier submissions by the Sustainable Supply Steering Committee and a panel of McDonald’s executives and external experts. We thank every supplier who took the time to tell us their story and remind us of the progress our entire supply chain is making toward sustainability. 2 • Introduction Introduction • 3 CATEGORY CATEGORY WINNER WINNER COMBINATION TRAILER INNOVATION GREENHOUSE GAS EMISSIONS INVENTORY AND INNOVATIVE TRUVIA® SUstAINABILITY PROGRAM ACTIONS Richard Wilson Peter Dahm Logistics Director Mariana Regensburger Carlesso Truvia® Sustainability Manager Arla Foods Sustainability Coordinator Cargill Celulose Irani S.A. OPPORTUNITY: Dairies transporting both raw milk and finished dairy products OPPORTUNITY: Concerns about the environmental impacts of farming use two types of vehicles—tankers and refrigerated containers—requiring OPPORTUNITY: The cogeneration boiler Clean Development Mechanism and agricultural processing include the clearing of land, excessive use of more fuel and resulting in greater costs. In the United Kingdom, Arla Foods (CDM) project sought solutions to problems such as using energy from fertilization, pressure on freshwater supplies, and large carbon footprint faced the problem of trailers running empty after delivering the finished non-renewable resources, inadequate waste disposal, and forest-based of agricultural production. Under standard supply chain conditions and product. The company challenged the logistics operations team to come up greenhouse gas emissions caused by the degradation of accumulated waste practices, Cargill’s stevia leaf extract produces 500 kilograms of CO2e per with solutions. in landfills, forests and industrial landfills. The wastewater treatment station metric ton of “sweet” (an assumed measure of 250 times the sweetness of sugar). The vast majority (99%) of ingredient product emissions are produced SOLUTION: Arla developed the dairy industry’s only combination trailer—half CDM project aimed to reduce greenhouse gas emissions, improve recovery during the farming and processing stages. Cargill supports the market milk tanker and half refrigerated container—expected to reduced both fuel of lost fibers in the production process, and improve efficiency in removing for products with minimal environmental impact by instituting long-term and carbon emissions. Arla worked in partnership with external suppliers the organic load. Previously, wastewater treatment consisted of a primary sustainability practices. Crossland Tankers to produce the milk tank and Gray & Adams for the treatment with only one decanter and a secondary treatment that degraded refrigerated trailer, both long-time suppliers to Arla Foods. The new trailer organic material anaerobically, producing significant quantities of methane. SOLUTION: Since Cargill launched the Truvia® brand of stevia sweetener in is unique, conceived of an employee suggestion scheme and forged in an SOLUTION: The project developed the CDM of the cogeneration boiler and 2008, the company has sought to build a business founded on sustainability unprecedented collaboration between suppliers. the wastewater treatment plant (WWTP), including monitoring emissions and transparency focusing on three areas: sourcing responsibly, stewarding natural resources, and sharing in improving communities. Cargill developed RESULTS: The exterior view of the trailer is very similar to a standard double and reducing/removing greenhouse gases by using the annual inventory. The and launched the Truvia® sustainable agricultural standard in October 2011, deck trailer, with low-profile running gear and a lowered step-frame section inventory of atmospheric emissions helps the company identify and quantify the first ever in the stevia industry. A life cycle analysis identified the major on the bottom deck to accommodate the milk tank. The milk tank can hold all relevant sources of greenhouse gas emissions, evaluate the balance environmental impact areas in the Truvia® supply chain from the farming approximately 19,000 liters or the trailer can accommodate 85 milk cages or between emissions and removals and the possibilities of neutralization, and and harvesting of stevia leaves, to extraction, purification, and product 22 pallets. Each vehicle will reduce Arla’s fuel consumption by 60,000 liters assess the feasibility of new CDM projects. distribution. Four key areas emerged: greenhouse gas emissions, water use, per year, compared with two conventional tanker and refrigerated vehicles. RESULTS: Implementing the cogeneration boiler allowed the company to waste, and land management. The fuel saving translates into a carbon saving of 155 tons yearly. Therefore, eliminate seven old boilers and diesel fuel-based power generators, as well the total projected fuel saving per year for the 20 trailers is 1,200,000 liters, as the disposal of biomass waste in the landfill. The cogeneration boiler Cargill is committed to reducing its carbon footprint by 50% in 2015 from its translating into a yearly overall carbon reduction of 3,100 tons. In addition to generates renewable electricity and eliminates production of methane by 2010 baseline and becoming carbon neutral in 2020. Cargill’s sustainability the fuel/carbon benefits, one driver is able to undertake a combined route burning the biomass. Implementing the cogeneration boiler has resulted in goals include ensuring all processed water returns with its original quality and that would normally require two drivers, thus saving labor as well.
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