Activist Icahn takes on McDonald’s over animal welfare

Battle over fast food retailer’s failure to phase out practices by agreed deadline, animal rights group says

Activist investor Carl Icahn has launched a highly unusual board fight at McDonald's to demand the fast-food chain end the practice of keeping pregnant pigs in its supply chain confined in small crates.

In a statement on Sunday, McDonald’s said Mr Icahn had nominated two board directors as part of a campaign related to “a narrow issue regarding the company’s pork” processing. Mr Icahn has asked McDonald’s to require that all its US pork suppliers have “crate-free” pigs and set specific deadlines.

McDonald’s pledged in 2012 to phase out the use of gestation stalls for pregnant sows in its US pork supply chain in 10 years. By the end of 2022, the company expects to source 85 to 90 per cent of its US pork from sows no longer confined to gestation crates, and completely eliminate this sourcing by the end of 2024, the fast-food chain said on Sunday.

But the Humane Society of the US, an animal-rights activist non-profit group, has questioned the company's commitment. In a shareholder proposal filed in November, the group said it appeared McDonald's was planning to reduce how long it let suppliers lock pregnant sows in stalls, rather than end the practice entirely.

Gestation crates

"McDonald's in 2012, in working with Carl Icahn and the Humane Society of the US, pledged to eliminate gestation crates," said Josh Balk, vice-president of farm animal protection at the Humane Society. "Instead, they are allowing pork producers to still confine pregnant pigs for six of the 16 weeks of their pregnancy."

“[McDonald’s] pledged to get rid of the practice, not still allow six of the 16 weeks to still be confined. We are talking about a month and a half of each pregnancy cycle never being able to turn around.”

Mr Balk said he has been “friendly” with Mr Icahn for more than a decade.

“He is absolutely – to his core – someone who will fight to prevent cruelty to animals,” Mr Balk said. In the past few weeks, Mr Icahn got involved with the gestation crates issue again with McDonald’s and decided to launch the proxy fight, he said.

McDonald’s on Sunday said it disagreed with the Humane Society’s characterisation “of our industry-leading pledge” from 2012.

A spokesperson for Mr Icahn did not immediately have a comment on Sunday. Speaking on Bloomberg TV last week, Mr Icahn said he was close to starting the McDonald’s board fight. “We’re not going to fool around with them any more,” he said.

Fighting back

McDonald's fired back, criticising Mr Icahn for owning a company – Illinois-based Viskase – that produces and supplies packaging for pork and poultry.

“It’s noteworthy that Mr Icahn has not publicly called on Viskase to adopt commitments” that McDonald’s has adopted for its pig supply, the company said.

McDonald’s said it would be “impossible” to fulfil Mr Icahn’s request. The change would go against “the veterinary science” and “would harm the company’s shared pursuit of providing customers with quality product at accessible prices”, it said.

Mr Icahn has nominated Leslie Samuelrich, president of Green Century Capital Management, a climate-conscious asset manager, and Maisie Ganzler, chief strategy officer at Bon Appétit Management Company, a restaurant company that offers food services.

Mr Icahn has said he owns 200 shares of McDonald’s stock, the company said. – Copyright The Financial Times Limited 2022

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