Just when you were going to give up on corporate America in steps Carl Icahn, the billionaire entrepreneur and, it seems, humanitarian! Teaming up with the Humane Society of the United States, Icahn recently attacked the animal welfare policies of one of the biggest meat and pork consuming companies in the US, McDonalds. The activist investor proposed two new board members for McDonalds, escalating his demands that the company force its pork suppliers to stop keeping sows in cages so small that they can’t lie down or turn around. The burger chain’s board responded that it expects that, by the end of the year, 85% to 90% of its U.S. pork will come from “sows not housed in gestation crates during pregnancy.”
But first a lesson in commerical Pig Farming 101. Pigs make for delicious breakfast sausage and bacon, so we need lots and lots of them to satisfy McDonalds's hungry customers. Thus pigs are inseminated for reproduction constantly. Once pregnant they are moved into "gestation crates" --a metal cage that is so tight, a pig can?t even turn around. These female pigs will spend their entire pregnancies trapped in a gestation crate. They are thus forced to stand in one position for months. Even McDonald's has accepted the curelty of such treatment, but this is the cheapest way to make sure the pig stays safe for pigbearing. In 2012 McDonalds announced that pigs would be "moved away" from the crated sows. But as is almost always the case with corporate America, there were caveats. One loophole in McDonald's pledge required “confirmed pregnant sows”, meaning that until the pig is confirmed to be pregnant with an ultrasound she is kept in the crate.
The commercial pig farming industry is up in arms regarding this push to ban gestation crates, as the industry cares nothing for the animals that it exploits for greed and profit. The cost proposition of breeding and raising pigs without gestation crates is unacceptable to the industry, as it would increase the cost of bacon and thus less people would purchase a McDonalds bacon cheeseburger, and then the pig farmer would sell less and make less money.
Icahn charges that crates engender “unnecessary suffering,” justifying a push into the boardroom. And his cause is drawing support from some other investors who look at the McDonald's environmental, social and governance policies. Furthermore, California and the European Union are considering bans on gestation crates, but again, the word "considering" when it comes to animal welfare is akin to a huge landmine. They consider for years and do nothing, mostly being a big PR stunt. What is not a PR stunt is Icahn's move to force two more members onto McDonald's board that have allegiances to him. That's fighting fire with fire. Corporate America meets its indivisible conqueror.
Kiran Aziz, head of responsible investment at Norway’s largest pension fund, Kommunal Landspensjonskasse, said Monday he considers it “appalling” that McDonald’s hasn’t fully ended the practice. “We strongly welcome this renewed attention and we strongly urge other shareholders to look into this very closely,” he said. “The welfare of livestock is rising up the ESG agenda at a rapid pace and we hope to help accelerate this.” “Until these practices are banned, it is a duty for a global and enormously wealthy corporation like McDonald’s to outlaw this with immediate effect,” followed Aziz, of Norway’s KLP, which holds a total of $72 million in McDonald’s stock and bonds.