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Sep 16, 2013

Maccas Tecoma stoush could slime brand, expert tells global HQ

Paul Rogers, a leading social responsibility expert, has warned McDonald's that its ongoing dispute with protesters over a planned restaurant in Melbourne's eastern suburbs could irreparably damage the brand.

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A leading corporate social responsibility expert has written to McDonald’s US board and management alerting them to millions of dollars in brand damage stemming from the now-infamous Tecoma dispute, which went global over the weekend.

In a letter sent by environmental, social and corporate governance sage Paul Rogers to McDonald’s global directors and senior executives and obtained by Crikey, the fast food conglomerate is taken to task for pressing ahead with its plans for a 24-hour restaurant in Melbourne’s leafy east despite ongoing protests and petition action.

Protesters have flown to Chicago to brief senior executives about the dispute, which could turn into another McLibel after international media coverage in the Chicago Tribune and the local NBC station. The protesters will attempt to present a 100,000-strong petition to the company, run out of the exurb of Oak Brook, on Wednesday.

Rogers served for eight years as an ESG consultant at prominent advisory firm Regnan, coaching big ASX-200 firms on social engagement. He says the main risk for directors and shareholders is damage to the brand, with the Tecoma campaign picking up support from world-famous celebrities, including Jamie Oliver. Rogers wrote:

“Hopefully, McDonald’s global leadership team will demonstrate good corporate responsibility and risk management, and will arrange for senior management in Chicago to meet with the Australian delegation to discuss the case and receive the petition.  I strongly encourage you to address this issue and repair the significant damage to the company’s brand that the senior management of McDonald’s Australia is inflicting.

“Up until now, most Australians have viewed McDonald’s positively, and affectionately refer to your company as ‘Maccas’. I doubt very much that you or your shareholders would want to see the company’s reputation trashed by a single development. “

In 2004, San Francisco passed a law banning “formula retail” stores in some locations, and Rogers says McDonald’s will face more regulatory risk if community campaigns like Tecoma continue to cut through. He says meaningful community consultation in Australia over the plan was next to non-existent.

The high-level strategy represents the opening of a new front in the grassroots war against the burger giant, which also included an ad in the Tribune and this week the inflation of plastic kangaroos out the front of a downtown Chicago Hard Rock Cafe. Crikey revealed the looming Stateside assault on August 20.

McDonald’s board contains a bevy of corporate luminaries, including senior Nike executive Jeanne Jackson, Abbott Laboratories CEO Miles White and Levi Strauss director and Mattel CEO Robert Eckert. Crucially, 11 out of the 13 board members are independent. The company is chaired by Illinois society figure Andrew McKenna. Its CEO and president is Donald Thompson.

Rogers says he will establish contact with local top three McDonald’s institutional shareholders: Vanguard Group, State Street Corporation and BlackRock Institutional Trust Company. Rogers says the operation in Australia is a crucial arm for the firm, despite being responsible for a fraction of its annual profits approaching $US6 billion.

In addition to the financial impost, a secondary longer-term risk would be future government regulation from activists emboldened to lobby governments over inappropriate developments in their backyards. “A short-term investor might not be as concerned about the issue but an institutional investor would be,” he told Crikey. “They’ve got a good reputation in Australia but seem intent on undermining those years of goodwill.”

Rogers is a Brisbane-based research fellow in the Centre for Social Responsibility in Mining at the University of Queensland and has produced his analysis in a personal capacity. He is a former resident of Upwey and continues to own property in the area.

Meanwhile, McDonald’s Australia has quietly dropped its damages claim against the so-called “Tecoma Eight” protesters. Victorian Supreme Court Judge Emilios Kyrou will hand down a finding on Friday as to whether the group is “representative” of other protesters at the site accused of “trespass” or creating a “nuisance”. An injunction continues to be in place banning access to the construction zone.

McDonald’s global HQ did not respond to a series of questions by Crikey‘s deadline.

Andrew Crook —

Andrew Crook

Former Crikey Senior Journalist

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