Including the civil-rights audit proposal would interfere with McDonald’s business because the lawsuits involve related issues, an attorney for the Chicago-based fast-food giant said in a letter to the SEC dated Jan. 23. The company referred to pending litigation including lawsuits by 238 current and former Black franchisees claiming that unfair treatment and racism have steered them to low-volume restaurants.
“Issuing the report requested in the proposal would require the company to take action that would harm its legal defense in multiple pending lawsuits,” the attorney from Gibson, Dunn & Crutcher LLP said in the letter. “We respectfully request that the staff concur with our view that the proposal may be excluded from the 2022 proxy materials.”
McDonald’s declined to comment beyond the letter.
In November, an adviser to union pension funds called on McDonald’s to analyze how its policies are contributing to social and economic inequality. At the time, SOC Investment Group said the restaurant chain should oversee a third-party audit with input from franchisees, corporate employees, suppliers and customers, and that its reported diversity data excluded hundreds of thousands of restaurant employees at franchised stores.
“Today the company is resisting calls from shareholders and external stakeholders for a basic and necessary civil rights audit,” SOC Investment Group Executive Director
While some companies say civil-rights audits aren’t necessary, they’re becoming more common after the Black Lives Matter protests and movement that started in 2020. Last year,
McDonald’s has already made promises regarding diversity, saying it will increase minority representation in U.S. leadership roles to 35% by the end of 2025 from 29.1% in 2020, and it has also tied some executive pay to diversity targets. It’s revamping its domestic supply chain, as well, shifting more spending to women and minorities. This goal includes spending by franchisees, who own and operate about 93% of the company’s restaurants worldwide.
The burger seller also
(Adds comment from SOC Investment Group in sixth paragraph.)
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