McDonald’s Asks SEC to Omit Racial Audit From Annual Proxy

McDonald’s Corp. is asking the U.S. Securities and Exchange Commission to omit a shareholder proposal for a racial audit from its annual proxy, citing pending lawsuits by Black franchisees and employees.

Including the civil-rights audit proposal would interfere with McDonald’s business because the lawsuits involve related issues, an attorney for the Chicago-based fast-food giant said in a letter to the SEC dated Jan. 23. The company referred to pending litigation including lawsuits by 238 current and former Black franchisees claiming that unfair treatment and racism have steered them to low-volume restaurants.

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In November, an adviser to union pension funds called on McDonald’s to analyze how its policies are contributing to social and economic inequality. At the time, SOC Investment Group said the restaurant chain should oversee a third-party audit with input from franchisees, corporate employees, suppliers and customers, and that its reported diversity data excluded hundreds of thousands of restaurant employees at franchised stores.

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While some companies say civil-rights audits aren’t necessary, they’re becoming more common after the Black Lives Matter protests and movement that started in 2020. Last year, Citigroup Inc. agreed to a deep dive to determine how it may be contributing to racial inequity, following a similar move by money manager BlackRock Inc.

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