An E. coli outbreak across multiple U.S. states has been directly linked to McDonald's Quarter Pounder sandwiches.

What was picked up on the Integrum ESG Platform?

On Tuesday 22nd Oct 2024, our real-time ESG tracker picked up this story for McDonald's Corp [NYSE: MCD] and as the red spike continued to grow an alert was sent out to our clients. The company's net real-time ESG score dropped to a low of negative 61.5%.

What actually happened?

The American Centers for Disease Control and Prevention (CDC) announced that they were investigation links between an outbreak of E. coli and McDonald's Quarter Pounder sandwiches. According to the CDC, at least 49 people in 10 states have been sickened, 10 of whom have been hospitalised.

The Quarter Pounder is the one sandwich that the company does not utilise frozen patties for, having used fresh meat for the product since 2018. The product and specific ingredients have been pulled from distribution across multiple states.

In a statement, McDonald’s said that it was taking ''swift and decisive action'' and that their ''initial findings from the investigation indicate that a subset of illnesses may be linked to slivered onions used in the Quarter Pounder and sourced by a single supplier that serves three distribution centers.''

How did investors react?

Closing at 314.70 USD, as the story spready the company's share price fell over 9% in after-hours trading to a low of 284.48 USD.

Investors will be looking at previous E.coli outbreaks, such as those suffered by Chipotle Mexican Grill [NYSE:CMG] and Jack in the Box [Nasdaq:JACK], with both companies at the time seeing sales decline as a direct result.

Can investors use ESG data to anticipate these events?

On 'Product Quality & Safety', Integrum ESG give McDonald's Corp an overall ESG risk score of a '1' (the second lowest score obtainable).

Indeed when comparing them to their sector peers, they are ranked only 37th out of 56 companies.

This poor ranking is due to a lacklustre awareness score (the qualitative data assessing how aware the company is of this issue in absolute terms) and a rock bottom performance score (the quantitative data assessing how the company performs relative it to its sector peers).

Poor quantitative disclosures are an issue for McDonald's across the board, with the company only scoring a higher than a '2' on performance for 6 out of 19 of the metrics they are scored on.

Investors investing in NYSE: MCD should utilise this material fundamental data alongside real-time alerts to properly incorporate ESG risk into their decision making, identifying these areas of concern early to make qualified and timely decisions on holding or trading.

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