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CHUPINGUAIA, BRAZIL - JUNE 28: Bulls feed from a trough at a cattle feedlot in the Amazon on June 28, 2017, near Chupinguaia, Rondonia state, Brazil. Brazil is the world's largest exporter of red meat and poultry and annually exports more than $12 billion per year. (Photo by Mario Tama/Getty Images)
CHUPINGUAIA, BRAZIL - JUNE 28: Bulls feed from a trough at a cattle feedlot in the Amazon on June 28, 2017, near Chupinguaia, Rondonia state, Brazil. Brazil is the world's largest exporter of red meat and poultry and annually exports more than $12…

ARCO, McDonald’s Uruguay-base franchise, commits to sustainability

Arcos Dorados, McDonald’s biggest franchisee, renews its commitment to sustainable beef in Brazil, the world’s top beef exporter that is also the franchisee’s…

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Environmentally-aware McDonald’s lovers in Latin America can feel less guilty about biting into their burgers. The fast-food giant’s largest franchisee, Montevideo-based Arcos Dorados (NYSE: ARCO), announced that the franchisee will buy even more sustainably produced beef going forward.

Arcos Dorados, which began operating in 2007, is already in the middle of its sustainable livestock model, established three years ago. Since its establishment, the model has brought four times the amount of sustainable protein into the company’s production cycle, according to Arcos Dorados’ announcement. 

The criteria Arcos Dorados uses to define which livestock production is sustainable requires the livestock companies they work with to implement zero-deforestation plans, eliminate locations in protected or indigenous areas, not utilize slave or child labor, and agree to regular inspections. These conditions are not the only ones that meat suppliers must meet.

They will also see that the suppliers follow standards set up by the Brazilian Roundtable on Sustainable Livestock, an organization made up of individuals from the Brazilian cattle production.

Arcos Dorados Director of Sustainable Development and Social Impact Gabriel Serber said, “Our goal of progressively increasing the consumption of sustainable beef is one of the many ways we can drive change while positively influencing the market.”

The market that Arcos Dorados especially has its eye on belongs to the country where this sustainable commitment announcement was made: Brazil, with a population greater than 200 million people, has contributed to more than 40% of Arcos Dorados’ total revenues over the past five years according to the company’s SEC filings. By partnering with the suppliers operating within the borders of its biggest customer, Arcos Dorados entrenches itself deeper into the Brazilian economy.

By working with the Brazilian Roundtable on Sustainable Livestock, Arcos Dorados affects the meat supply chain in the world’s largest beef exporting country. The zero-deforestation criteria of Arcos Dorados plan will most likely decrease meat production-related deforestation in Brazil, about half of which is covered by the famous Amazon Rainforest.

The fast-food franchisee renews its commitment to sustainable operations in a period when Brazil is facing criticism for deforestation. June 2019 was the second consecutive month of rising forest destruction under Brazil’s president Jair Bolsonaro, according to the Guardian. The rate was 88% higher than in June 2018.

Arcos Dorados’ other criteria, the one requiring suppliers to eliminate locations in protected or indigenous areas, also counters a move recently made by Mr. Bolsonaro. Last month, the right-wing Brazilian president issued a decree under which decision-making regarding indigenous lands was no longer in the hands of the National Indigenous Affairs agency Funai but in the Ministry of Agriculture. 

“Reissuing this decree,” said Brazilian state Amapá’s senator Randolfe Rodrigues, “will put the fox in charge of the chicken coop.”

Fortunately for environmentally-aware folks concerned about Brazil, Arcos Dorados is not the only multinational corporation enacting green initiatives in the area. New York-based PepsiCo (NASDAQ: PEP) is also taking measures.

About a quarter of the company’s net revenue over the past five years has been from Brazil, according to the company’s SEC filings. With such financial stakes on the line, PepsiCo launched a campaign this year to entice recycling by offering ecoins. PepsiCo received Latin Trade magazine’s IndexAmericas Sustainability Award in April for its sustainable practices in Latin America.

Arcos Dorados and PepsiCo’s recent moves show that multinational corporations can use their powers for good. Some critics, though, may still be unimpressed, convinced that the costs outweigh the benefits when it comes to the giants.

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