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April 22, 2022

McDonald’s states Icahn’s demands on pork sourcing unviable

Icahn noted that McDonald’s failed to keep its commitment made a decade ago of not procuring pigs from suppliers that use crates.

US-based restaurant chain McDonald’s had stated that it would be logistically unviable, and place a greater financial burden on customers, to act on the call made by investor Carl C Icahn to stop procuring pork from suppliers that confine pigs in crates.

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A billionaire investor who owns around $50,000 worth of stake in McDonald’s Corportation, Icahn has urged the restaurant company to change its pork sourcing.

Icahn has also nominated two directors to the board to help track progress on the matter, reported Reuters.

Stating that it is cruel to keep pregnant pigs in sow stalls, the investor added that the restaurant company made a pledge a decade ago that it would responsibly source pork from suppliers that do not use gestation stalls.

In a letter to shareholders in relation to the filing of a definitive proxy statement with the US Securities and Exchange Commission, Icahn said: “Not only has McDonald’s failed to meet that commitment, but the Company is now misleading customers, employees and shareholders by distorting its purported progress.”

He said: “I want McDonald’s to be an environmental, social and corporate governance (ESG) leader in the restaurant and foodservice industry by setting verifiable targets for improved animal welfare objectives in areas where the Company currently exhibits grave shortfalls.”

Responding to Icahn’s statements, McDonald’s stated that it cares about the health and welfare of the animals in its supply chain, however, it objected to calls for new commitments.

The restaurant chain stated: “Despite McDonald’s progress on our commitment to source from producers who do not use gestational crates for pregnant sows, Mr Icahn has asked for new commitments. These include requiring all of McDonald’s US pork suppliers to move to ‘crate-free’ pork and set specific timeframes for doing so.”

McDonald’s noted that the definition of ‘crate-free’ as stated by the Humane Society of the United States (HSUS) is obscure, accounting for a niche market consisting of less than 0.1% of the country’s total pork production, which would pose a supply challenge.

The company added: “What Mr Icahn is demanding from McDonald’s and other companies is completely unfeasible. Based on current estimates, McDonald’s would require at least 300-400 times the animals housed today in ‘crate-free’ systems to keep our supply chain running. It also presents a cost challenge.“

In line with the commitment from 2012, McDonald’s noted that it currently pays a premium to buy group-housed pork.

“Sourcing from this niche market, as Mr Icahn, his director nominees – Maisie Ganzler and Leslie Samuelrich – and HSUS suggest, would significantly increase those costs, placing a burden on all aspects of our business, our supply chain and McDonald’s customers, while lacking the broad support of industry experts,” the restaurant chain pointed out.

The restaurant chain also noted that it sources approximately 1% of US pork production and does not own sows, or produce or package pork.

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How attractive are current investment opportunities in Europe?

Europe has been identified as one of the most favorable regions for investors, seeing high investment activity in the past year. Most of these investments have been through Debt Offering, valued at close to $700 billion. The region has provided attractive investments in a diverse set of companies. Companies who tend to major themes such Digital Media, Cloud, Artificial Intelligence, E-commerce, and Big Data are recording the highest number of deals, with Digital Media recording close to 2,000 deals. However, GlobalData’s whitepaper offers a full view of the market, analyzing less successful or attractive points of investment as well, examining statistics on Equity Offering investments and PE/VC deals. Understand how government agencies for economies around the world use GlobalData Explorer to:  
  • Track the M&A and Capital Raising volumes into their target market
  • Identify the top sectors in the target market attracting the investments
  • For any investment segment, identify the top Investors inside and outside the target economy that are already investing in the Segment
  • Assess and showcase the growth potential for various Industries in the target economy
Don’t miss out on key market insights that can help optimize your next investment – read the report now.
by GlobalData
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