McDonald’s Shifts DEI Strategy Amid Legal Changes

McDonald's announced it was making sweeping changes to its diversity, equity, and inclusion policies, an effort to move the company further in line with its social and corporate objectives. The fast-food giant is ending its representation goal-setting framework and is canceling its Mutual Commitment to Diversity, Equity, and Inclusion (MCDEI) pledge for suppliers, which previously specified certain DEI commitments. Still, the company reaffirmed its commitment to fostering inclusion, which it called one of its core values.

The decision follows broader reassessments of DEI policies by U.S. corporations in the wake of the Supreme Court's 2023 ruling against Harvard University's race-based affirmative action admissions criteria. This landmark decision has increased scrutiny over the legality of race-conscious DEI practices in corporate America. In its letter to the employees, suppliers, franchisees, and other stakeholders, McDonald's explained its decision, saying that the firm had based it on a thorough Civil Rights Audit and an evaluation of the changing legal environment. In addition, McDonald's benchmarked its policies against the policies of organizations undergoing similar evaluations and communicated with shareholders to have its strategy adjust to changing expectations.

Among the most significant changes, McDonald's stated it would not have specific representation targets, including its previous commitments to reach 45% women in global leadership positions and 35% underrepresented groups in U.S. leadership by 2025. The MCDEI pledge, launched in 2021, will also be phased out. This had been a requirement for suppliers to have DEI strategies, increase representation, participate in talent development, and report on their progress.

Instead of setting numerical targets, McDonald's will focus on embedding inclusive practices into its daily operations and having more integrated discussions with suppliers on how inclusion impacts business performance. In this regard, the company's diversity team will now be referred to as the Global Inclusion Team, reflecting a broader and more holistic approach to inclusion in its operations.

Despite these changes, McDonald's reported several key areas of inclusion in its progress. The company reported that 30% of its U.S. leadership roles are held by individuals from underrepresented groups, and it has achieved gender pay equity across all markets and at every organizational level. McDonald's also met its supplier diversity goal, with 25% of its U.S. spending directed toward diverse-owned suppliers. Moreover, the company also mentioned record growth in applicants of its franchisee from underrepresented backgrounds, showing efforts to improve the inclusivity of its pipeline for franchisees.

In a letter, McDonald's expressed pride in its inclusion-driven achievements and reaffirmed its commitment to economic impact, innovation, and growth across its ecosystem. "We are proud of the work that we do at McDonald's.". It will continue to drive the business results through all three legs of the McDonald's stool-people practices, robust supply chain fueling economic impact and innovation, and building a strong franchisee pipeline thriving in communities we serve and fuel our growth," the company said in the statement.

Stepping back from specific DEI goals and supplier pledges, McDonald's intends to integrate inclusion more organically into its business practices. This will be accomplished by linking inclusion to business results and reframing its approach to representation, the company will manage the challenges that the current legal and societal context presents while retaining its position of leadership in making corporate America a more equitable and diverse place.