Pressured to Cut Plastic Use, McDonald’s Aims to See What Works and What Doesn’t

McDonald's Corp. said it would release a report next year examining the pros and cons of reusable packaging in its restaurants worldwide, addressing an environmental predicament as European laws have begun to force the fast-food titan to offer its fare in more durable containers.

The Chicago-based company is already serving fries, Happy Meals and drinks in reusable containers for meals served on-site in its French outlets, and upon request for drinks and ice cream sold at its German stores. The McDonald's report will draw on those experiences and others to assess the opportunities, risks and environmental impact of reusables, a McDonald's spokeswoman said. The company said it would also "assess reuse in comparison to additional circular solutions, such as advancing recycling of McDonald's packaging, which is primarily fiber-based."

McDonald's effort comes as governments and investors are increasingly pressuring companies to restaurants to cut plastic waste, which has led fast food chains to consider reusing, and eventually recycling, plastic utensils, cups and other tableware. But such solutions aren't always effective at curbing environmental waste, whether because they rely on consumers to regularly participate or because the recycling infrastructure is limited.

A weekly look at environmental, social and governance issues and strategies for corporate decision makers.

McDonald's commissioned an industrywide study on reusable packaging in Europe that published in February. That report, carried out by consulting firm Kearney Inc., highlighted a host of issues with the containers.

Among them, the report said a reusable cup, made of bulkier plastic than a disposable, needs to be used 50 to 100 times to make it preferable to a single-use cup from a plastic-waste standpoint. It also outlined a range of problems for informal dining companies, including the higher cost of durable plastic, the in-store collection of the containers, plus the energy and water needed to wash them.

"Reusable packaging is one potential solution when applied correctly, but sustainable packaging is complicated," said John Blake, senior director analyst at Gartner Inc.'s supply chain practice, who wasn't involved in the report.

Mr. Blake said complicating factors could include the need for consumers to return the durable containers so they can be washed and eventually recycled properly to ensure they aren't mixed with single-use packaging and other trash. They would need to be reused many times to be environmentally helpful.

"There is no easy ‘one size fits all’ solution for sustainable packaging," Mr. Blake said. "Industries must test and pilot multiple paths in their sustainable packaging road map and this should include reuse as well as reduction and recycling."

Many companies have ambitious targets to reduce their packaging. But in 2021, Gartner said most of those companies are expected to miss their most aggressive 2025 packaging goals. Two of the main barriers are a general lack of recycling infrastructure and the difficulty of either recycling or finding alternatives to single-use, flexible plastic packaging, Mr. Blake said.

In 2018, McDonald's published its sustainability strategy and targets, which included moving to 100% renewable, recycled or certified sources for packaging by the end of 2025. It has largely transitioned to paper-based packaging, but still uses disposable plastic for lids and packets and has protective coatings on its paper cups.

In Europe, laws are increasingly restricting single-use packaging. Starting this year, France has required restaurants that seat 20 or more people to serve food in reusable packages for those eating in-store. Also this year, Germany mandated reusable options for takeaway from food sellers with five or more employees and at least 80 square meters, or 861 square feet, of space.

Although no large-scale reusable packaging laws exist in the U.S., a handful of states including California and Colorado have placed producer-paid fees on disposable packaging to boost recycling rates.

Last year, McDonald's received a shareholder proposal from the nonprofit group As You Sow asking the company for a report on the environmental benefits of alternatives to single-use plastic. The proposal won about 42% support from stockholders. While such votes aren't binding, support of over 30% is a signal that companies should take action, investors say.

This year, As You Sow filed a new proposal requesting McDonald's report on the environmental benefits of reusable packaging, but withdrew it ahead of the company's annual meeting after McDonald's told them it would publish such a report. A McDonald's spokeswoman said the company had planned to carry out its study before the As You Sow proposal.

The same proposal has been filed for shareholder votes at the annual general meetings of KFC owner Yum Brands Inc. and Burger King owner Restaurant Brands International Inc. this year.

"We continue to learn from our reusable packaging system pilots and are focused on implementation of our policy to address this important issue," a Yum spokesman said.

A Restaurant Brands International spokeswoman said the company has also piloted reusable packaging at Burger King and Tim Hortons and will share more details on its progress in a report this spring.

Write to Dieter Holger at [email protected]

Corrections & AmplificationsMcDonald's Corp. doesn't put individual burgers in reusable containers for meals served in its French outlets. An earlier version of this article incorrectly said it did. Separately, in Germany, reusable containers are available on request for drinks and ice cream. An earlier version of this article didn't specify which items were available in reusable packaging in Germany. (Corrected on March 27)

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Corporate leaders reveal their attitudes about managing ESG third-party risks and how those potential threats relate to assessment maturity, data quality, and reporting.

The Loan Programs Office plays a critical role financing commercialization of clean energy innovations that are mature from a technology standpoint but not when it comes to accessing to capital.

Companies can leverage their existing governance and control activities to establish controls over sustainability reporting. COSO's generally accepted framework can help.

The Wall Street Journal news department was not involved in the creation of this content.