A group of influential institutional investors and treasurers are demanding action from McDonald’s and Wendy’s. In letters sent this week, these investors managing large union pension funds told the two major restaurant chains they must do more to stop child labor occurring at their franchised locations.
The correspondence came from investors representing over $2 billion invested in McDonald’s and more than $400 million invested in Wendy’s. Given the substantial sums involved, the companies will need to take the demands seriously.
The investors’ letters used strong language. They told McDonald’s and Wendy’s to adopt a strict zero-tolerance policy against child labor across all franchised restaurants within their brands. Zero-tolerance means not permitting it under any circumstances.
The letters also stated McDonald’s and Wendy’s should engage independent third parties to evaluate human rights issues like child labor at both their franchisee-owned restaurants and suppliers. Third parties are external experts who can conduct impartial investigations.
The institutional investors pointed to a recent report finding McDonald’s and Wendy’s had among the highest numbers of child labor violations per restaurant documented since 2020. McDonald’s alone had over 2,300 violations reported since 2013.
While acknowledging the violations occurred at franchised, not corporate-run locations, the investors maintained McDonald’s and Wendy’s still hold responsibility. They need to better oversee franchisees on labor compliance issues.
The investors want the companies to strengthen training, auditing and enforcement to detect and halt child labor across all franchised locations. They called for unannounced inspections by outside experts and protected ways for workers to confidentially report any violations.
The institutional shareholders also believe executive pay should be tied to franchised stores abiding by labor laws, not just corporate establishments.
So far, McDonald’s claims child labor incidents are “rare” and that most teen employees have age-appropriate jobs. But the investors, with their considerable funds at stake, state the violations remain too numerous. Wendy’s is yet to respond to the investors’ demands. With billions under management, these shareholders possess major influence McDonald’s and Wendy’s may be compelled to acknowledge if they want to retain support.
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