“McDonald’s’ Board of Directors … is failing shareholders and stakeholders by presiding over animal welfare violations, supply chain lapses and what I perceive to be a hollow environmental, social and governance (‘ESG’) agenda,” he wrote. “A company’s reluctance to improve policies and verification methods represents a serious risk to a business, its bottom line and the world around us.”
Icahn said he holds only 200 shares in the company, McDonald’s noted at the time.
“While the company looks forward to promoting further collaboration across the industry on this issue, the current pork supply in the US would make this type of commitment impossible,” McDonald’s said.
The letter outlined clear demands, including a commitment to removing the use of gestation crates entirely from McDonald’s supply chain by the end of next year, among other things.
Making the changes demanded by Icahn would increase prices for customers, the company said in a statement responding to the filings.
“McDonald’s today pays a premium to purchase group-housed pork in accordance with our 2012 commitment,” the company said, noting that switching to a system that would meet the standards Icahn outlined Thursday “would significantly increase those costs, placing a burden on all aspects of our business, our supply chain and McDonald’s customers.”
From the company’s perspective, “what Mr. Icahn is demanding … is completely unfeasible,” it said.
McDonald’s added that it “cares about the health and welfare of the animals in our supply chain and has long led the industry with our animal welfare commitments.”
‘Hypocrisy’ on Wall Street
For Icahn, this isn’t just about pigs. His battle is also about Wall Street’s overall commitment to sustainable practices.
“I want to shine a light on what may be the biggest hypocrisy of our time,” Icahn wrote. “A large number of Wall Street firms and their bankers and lawyers appear to be capitalizing on ESG to drive profits without doing nearly enough to support tangible societal progress … clearly, the ESG status quo on Wall Street needs to change.”
He added that “if the ESG movement is to be more than a marketing concept and fundraising tool, the massive asset managers who are among McDonald’s’ largest owners must back up their words with actions.”
McDonald’s annual shareholder meeting is scheduled for May 26. It reports earnings next week, on April 28.
— CNN Business’s Julia Horowitz and Alicia Wallace contributed to this report.
