Contents

McDonalds Malaysia Corporate Responsibility Report 2009 About the Report About McDonalds Malaysia Food, Nutrition, Supply and Halal Commitment to Environment People Commitment to Community Summary Contact Details

About the Report

This is the first Corporate Responsibility Report from McDonalds Malaysia. The content of this report is limited to the activities and responsibilities of McDonalds Malaysia only. The choice of content has been determined with reference to our stakeholders areas of interest and focuses on the subjects with the greatest impact on our customers, employees, neighbors and suppliers. The key external stakeholders that are anticipated to use this report include environmental organizations, dieticians and nutritionists, government authorities, media, education and employment organizations, business partners and our customers who are particularly interested in our sustainability performance. McDonalds Malaysia is fully owned by McDonalds Corporation. Around 90% of its restaurants in Malaysia are companyowned while the remaining are owned and operated by local franchisees.

About McDonalds Malaysia

The story of McDonalds first began in 1955 when Ray Kroc opened the first restaurant in Des Plaines, Illinois. It then grew on to be a worldwide corporation spanning 117 countries and serving more than 60 million customers everyday. In December 1980, Golden Arches Restaurants Sdn. Bhd. (GARSB) won the licence to operate McDonalds in Malaysia. The first McDonalds restaurant subsequently opened its doors at Jalan Bukit Bintang on 29 April 1982. The global business is managed by McDonalds Corporation as distinct geographic segments: United States; Europe; Asia Pacific, Middle East and Africa (APMEA); Latin America; and Canada. McDonalds Malaysia operates under the umbrella arm of the APMEA group. As of December 2009, McDonalds Malaysia has 194 restaurants located nationwide, serving 10 million customers a month and expanding at a rate of 15-20 restaurants annually. McDonalds Malaysia is fully owned by McDonalds Corporation, and the restaurants throughout Malaysia are either operated by GARSB or franchisees. McDonalds Malaysia and our franchisees employ more than 8,000 locals with 150 support staff at the headquarters managing the day-to-day operations of the business.

The key external stakeholders that are anticipated to use this report include environmental organizations, dieticians and nutritionists, government authorities, media, education and employment organizations, business partners and our customers.

About Mcdonalds Malaysia

Our Values
Our actions and decisions reflect tremendously on our values, which are a set of guidelines that we strongly believe in. They become our day-to-day basis on how we should operate, sincerely and responsibly. The following are the criteria in which we uphold when we conduct our business:

We place the customer experience at the core of all we do

We operate our business ethically

Our customers are the reason for our existence. We demonstrate our appreciation by providing them with high quality food and superior service, in a clean, welcoming environment, at great value. Our goal is outstanding QSC&V for each customer every time.

Sound ethics is good business. At McDonalds, we hold ourselves and conduct our business to the highest possible standards of fairness, honesty and integrity. We are individually accountable and collectively responsible.

We give back to our communities

We are committed to our people

We provide opportunity, recognize talent, and develop leaders. We believe that a diverse team of well-trained individuals working together in an environment that fosters respect and drives high levels of engagement is essential to our continued success.

We take seriously the responsibilities that come with being a leader. We help our customers build better communities, support Ronald McDonald House Charities, and leverage our size, scope and resources to help make the world a better place. We are committed to sustainable business practices and are determined to conduct our operations in a manner that does not compromise the ability of future generations to meet their needs.

We believe in the McDonalds system

McDonalds business model, depicted by the threelegged stool of owner/operators, suppliers, and company employees, is our foundation, and the balance of interests among the three groups is key.

We grow our business profitably

Our stakeholders support our ability to serve our customers. In return, we work to provide sustained, profitable growth for all members of our system and our investors.

We strive continually to improve

We consider ourselves a learning organization that is green and growing, which anticipates and responds to changing customer, employee, system and community needs through constant evolution and innovation.

Our Business Model The Three-Legged Stool

At the heart of McDonalds operations lies three essential players: our employees, our suppliers and our franchisees (sometimes referred to as owner/operators). This band of three is called the Three-Legged Stool, forming a close-knit foundation that supports our business. The three-legged stool functions as our core strength as a company. Each leg delivers its respective function equally, channeling a balance of interests that ultimately makes up our brand. Employees Support and deliver restaurant operations around the world Suppliers Provide food and packaging and other products and services Franchisees Own and operate the restaurants

The force behind our business

Currently, about 10% of McDonalds restaurants nationwide are owned and operated by local franchisees while the rest are managed by GARSB employees. About 7.5% of McDonalds worldwide restaurant business are owned and operated by independent business people. In Malaysia, we want to extend this opportunity to Malaysians interested in becoming our franchisees, running a quick service restaurant with the most reputable brand in the world. Under the conventional franchise arrangement, franchisees provide a portion of the required capital by initially investing in the equipment, signs, seating and decor of their restaurant businesses, and by reinvesting in the business over time. The Company owns the land and the building or secures long-term leases for the restaurant sites. The remaining of McDonalds restaurants are operated under other ownership structures, depending on what best serves the needs of a particular market. For example: Developmental Licensee (DL) Under this license agreement, a developmental licensee provides capital for the entire McDonalds restaurant business, including the real estate interest, and operates the business. Company-operated restaurants These restaurants are owned and operated by McDonalds subsidiary companies.

About McDonalds Malaysia

Global Restaurant Operations Improvement Process (GROIP)

To ensure we are meeting customer expectations, we initiated the Global Restaurant Operations Improvement Process (GROIP) to continuously measure and improve restaurant performance and accountability in McDonalds restaurants around the world. GROIP features on-site restaurant assessments that include ratings for quality, service (fast, accurate, friendly), cleanliness and treatment of employees. It also includes a focused verification of critical food safety procedures. Under GROIP, both franchised and company-operated restaurants are subject to periodic on-site performance reviews (announced and unannounced) and coaching on areas of opportunity. We also conduct monthly mystery shops, which assess both Drive-Thru and front counter performance based on our quality, service and cleanliness standards. Results of these mystery shops are shared with the restaurants for diagnostic purposes and determine performance incentives.

All of the GROIP performance data are captured in our Global Data Warehouse and then reported by restaurant via a Performance Matrix. Everyone responsible for the performance of the restaurants has access to the information. The information is used by the system to help determine which restaurants and areas we need to focus on to help drive continuous improvement. It is also used to identify people with leadership potential. An annual employee satisfaction survey elicits valuable feedback from restaurant employees. In the end, the GROIP is all about the customer. Our customers expect a quality experience every time they decide to visit us. By constantly working to make sure that every aspect of a visit is a good one, we will increase loyalty, confidence and customer satisfaction. Our customers have told us that the better job we do at meeting or exceeding their expectations, the more often they will visit us.

The information is used by the system to help determine which restaurants and areas we need to focus on to help drive continuous improvement.

Our Business Conduct

At McDonalds, we are individually accountable and collectively responsible. Our Standards of Business Conduct are our blueprint for living up to this responsibility. These Standards provide clarity, guidance and resources on a wide range of issues for operating on a daily basis with fairness, honesty and integrity. The Standards are updated regularly since published more than 40 years ago, including enhancements such as: Affirmative statements on McDonalds policies related to human rights and the right to association Explanation of special responsibilities of supervisors and officers and a greater emphasis on our policy protecting our employees who report wrongdoing against retaliation An expanded explanation of our anti-bribery and anti-kickback policies The duty of investigations employees to cooperate use of in internal electronic

Description of communications

appropriate

Importance of protecting confidential information and privacy of employee, franchisee and customer data

Each with its own role

Employees at McDonalds are always encouraged to speak honestly and openly. They are expected to raise questions or issues and, where appropriate, utilize the McDonalds Business Integrity Line a telephone line reserved for employee calls about ethics and compliance issues. The Business Integrity Line is on call 24 hours everyday by an outside firm experienced in handling sensitive calls. Interpreters and reversal of charges are both available for countries outside of the U.S. One of the most critical elements of the McDonalds compliance program is the employee training and education under applicable laws, regulations and company policies. McDonalds provides training on the Standards of Business Conduct, as well as topics including anti-trust, confidentiality, e-compliance, mutual respect, privacy, records management and trademarks. The company also conducts anti-corruption training for employees outside the U.S. We have also expanded our compliance efforts to be more collaborative and global in scope. One of the most effective tools we have introduced is compliance service visits. These visits present unique opportunities for compliance staff to collaborate with our worldwide employees and business partners in identifying and responding to specific risk areas that are unique to certain countries. We have also rolled out an expanded due diligence program, which involves cross-functional collaboration to ensure that the company is making well-informed decisions about business relationships. We communicate our anti-bribery policy to our suppliers, contractors, agents and partners and require them to certify that they will abide by all applicable laws and regulations.

Strengthening Our Ethics and Compliance Program

Food, Supply, Nutrition and Halal

Food, Supply, Nutrition and Halal

We know we have a responsibility to partner with suppliers that operate ethically, and to leverage our influence as a purchaser to help shape social, environmental, animal welfare, food safety and quality issues. We fully adhere to our stringent International Food Quality and Safety standards, as well as to the local governments requirements. We are constantly evaluating options that McDonalds in other parts of the world has successfully introduced as well as looking at how other industries locally are managing sustainability issues that are common to our business.

Food Safety

When it comes to the safety and well-being of our customers, they become our first priority. We maintain rigorous, sciencebased standards and evaluations in critical areas throughout our food supply chain. Our food suppliers must have food safety management systems in place, including Quality Assurance Program (QAP), a verified Hazard Analysis Critical Control Point (HACCP) plan and crisis management, food security and other applicable programs. In 2007, we updated our Supplier Quality Management System to align food safety and quality expectations into one global document. In addition to developing and implementing our own policies and programs, we have been leading the effort to harmonize food safety standards and audits within the food industry by working with the Global Food Safety Initiative (GFSI). This will reduce redundant audits and enable our suppliers to focus more resources on continuous improvement.

Safety Practices in Restaurants

Apart from maintaining optimum food safety standards with our suppliers, hygiene practices at McDonalds extend right down to all restaurants in Malaysia.

Restaurant cleanliness and maintenance

Planned maintenance is performed according to the Planned Maintenance Calendar on all equipment used for cooking, holding or storing foods to ensure proper working order. Tables are wiped clean every morning with a sanitizer solution and thereafter every time each table is cleared. Sanitized towels used at the food preparation tables for thorough cleaning are used only once and thereafter placed in the soiled towel bucket. The water filtration system in our restaurants is capable of removing 99.9% of particles greater than 1 micron (including bacteria) from the water. All food handling trays, utensils and utensil holders are disassembled, cleaned and sanitized at least every 4 hours. Clean towels are kept in sanitizer solution at proper concentration to ensure a ready supply of sanitized towels.

Employees
All restaurant crew members are trained and certified in-house in basic hygiene practices, sanitation and food safety. McDonalds managers and crew are required to wash their hands at least every hour with Anti-Microbial Handwash. All restaurants crew members must get typhoid jabs.

Handling of raw and cooked foods

All food delivered to the restaurant is inspected routinely before acceptance. Internal cooking temperatures of beef patties are checked twice daily to ensure that they are cooked right for consumption. Raw food is stored in walk-in freezers in a systematic manner according to their sensitivity to temperature fluctuation. Raw eggs are stored in the chiller at 1 4C with a shelf life of 14 days and a secondary shelf life of 30 minutes once they are taken out of the chiller and stored at room temperature. Yellow Hutzler spatulas are used for breaking raw eggs yolks when cooking and white Hutzler spatulas for removing cooked eggs to prevent cross contamination. All raw food is handled using disposable gloves of a different color from gloves for cooked food or condiments. Any cooked food held in holding cabinets must be at or above 60C. Time control is used for products at the preparation table. For example, 30 minutes for eggs and 2 hours for onions, lettuce and tomatoes.

Food, Supply, Nutrition and Halal

Great taste comes from great quality, and great quality can be sourced from the finest and freshest ingredients.

Sourcing from the best

Great taste comes from great quality, and great quality can be sourced from the finest and freshest ingredients. That is why McDonalds demands the best from our food suppliers while following the strictest food safety and preparation standards. We work only with dedicated suppliers who meet our high social, environmental and animal welfare standards, namely leading companies such as Nestle, TPC Plus, Cargill, Dinding Poultry, Dutch Lady and Fonterra. We also work closely with the Malaysian government as well as experts around the world to ascertain the most effective and advanced programs and policies that prevent our food safety standards from being compromised. Our meat suppliers are ISO9001:2000 certified and awarded the Veterinary Health Mark by the Department of Veterinary Services, complying with all veterinary inspection regulations. In addition, McDonalds is the first Quick Service Restaurant in Malaysia to receive the Halal certification by JAKIM (Malaysian Islamic Development Department). Once the ingredients reach our distribution center, they are routinely subjected to a Quality Inspection Program to meet the right physical standards for freshness and quality. The ingredient supplies are again inspected at every restaurant, and then handled and stored in specially designed walk-in chillers and freezers set to precise temperatures.

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Quality Ingredients
100% Halal Beef
McDonalds import meat patties that are produced from 100% halal beef with no additives, preservatives or flavor enhancers. They are approved and packaged at McDonalds approved meat plants. Inspections are carried out before the beef arrives at the plants, followed by several separate quality checks by our suppliers.

Potatoes

Our French Fries are produced from only the best quality potatoes specially grown for McDonalds. The potatoes are blanched and processed so that maximum nutrients are retained.

Our vegetable ingredients are freshly shredded in our restaurants before they are used. The lettuce heads are Our chicken products are selected for their wholesomeness grown in Malaysia, Australia, USA and China while tomatoes and meet all our physical and bacteriological specifications. are locally sourced.

Vegetables

Halal Farm-Fresh Chicken

Fish

We use skinless fresh wholesome fillets of mild flavored white-fleshed fish for our Filet-O-Fish. Upon arrival at the plant in Malaysia, the fish blocks are stored in temperaturecontrolled environment to maintain their freshness. They are then cut, sliced, battered and breaded without added flavoring or coloring.

Apples

Our apple pies are made from real apple slices blended with cinnamon and then covered in crisp short crust pastry.

Oranges

Eggs

An excellent source of Vitamin C, McDonalds imports pure concentrated orange juice with pulp. No preservatives or sugar are added.

Only farm-fresh, premium quality eggs are used in Buns McDonalds egg products. The eggs are washed and cleaned McDonalds buns are baked locally and delivered fresh with a special detergent to remove bacteria, then coated with several times a week. a thin layer of food grade oil so that the eggs stay fresh and safe. Eggs are chilled and cracked open only before cooking Salt to ensure freshness and hygiene. McDonalds French Fries are salted as part of their preparation process but unsalted options are also available for those who are cautious about their salt intake.

Food, Supply, Nutrition and Halal

Sustainable Future

We strive to ensure that every step of the McDonalds supply chain contributes positively to the safety, quality, and availability of our final products. We also want our product ingredients to be produced in ways that contribute positively to the development of sustainable agricultural and food manufacturing practices. We have a large number of direct suppliers companies that make or deliver final products for our restaurants as wellas an even larger number of indirect suppliers companies and farms that grow or process the ingredients that are eventually delivered to our direct suppliers. We work closely with our direct suppliers to continuously improve the practices that impact their employees, their communities, the environment, their own suppliers, and of course, our customers. Examples of this type of work include our Social Accountability program and our Environmental Scorecard. Review of adherence to these programs, and others related to sustainable supply, are included in McDonalds Supplier Performance Index - the primary evaluation tool used to evaluate our suppliers overall performance in serving McDonalds needs.

Animal Welfare

McDonalds cares about the human treatment of animals, and we recognize that being a responsible purchaser of food products means working with our suppliers to ensure industry-leading animal husbandry practices. Our approach is based on our Animal Welfare Guiding Principles, which express our commitment to ensuring that animals are free from cruelty, abuse and neglect. Our practices are always driven by the latest available scientific research, advice from respected animal welfare experts (such as those on the U.S.-based Animal Welfare Council) and potential environmental and food safety implications. We audit all abattoir facilities for alignment with our Guiding Principles. We also continuously monitor research related to specific animal welfare practices (e.g., broiler stunning, laying hen housing and sow housing) to ensure that our system is aware of the most up-to-date best practices. We do this by consulting with animal welfare experts and actively supporting research.

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Halal Food Production

In February 1995, McDonalds became the first Quick Service Restaurant (QSR) to obtain Halal certification in Malaysia. When it comes to food production in a predominantly Muslim country, McDonalds adheres to the strict policies issued by the Malaysian Islamic Development Department (JAKIM). Therefore, all McDonalds Malaysia products are approved and certified safe and Halal. As a Halal food establishment, our entire food process chain fulfills the requirements as of the following: Our raw materials, processed products or additives are certified Halal. The preparation and handling of raw food meets Halal, hygiene and safety standards. Premises are constantly kept safe and clean with proper and systematic cleaning schedules. Equipments and utensils are cleaned every time before and after they are used, and are strictly used for Halal food cooking. Packaging materials are made of substances approved by Islamic Laws while the packaging process is handled with utmost hygiene care. Food storage is properly allocated according to wet and dry food materials. Our poultry products are sourced from a slaughterhouse that has Halal Certification from JAKIM. Halal slaughtering requires all animals and poultry to be healthy and free from wounds or diseases. The animals and poultry should be accorded with humane treatment prior to slaughtering and actions that cause stress or fear are prohibited. Halal slaughter is carried out according to the following regulations: Halal slaughter is performed by a Muslim who fully understands the fundamentals, rules and conditions related to the slaughter of animals in Islam. The animals to be slaughtered are Halal and can eaten by Muslims. The animal is fully alive at the time of slaughter. The slaughtering severs the trachea and esophagus. The carotid arteries and jugular veins will automatically be severed when both main vessels are cut off while the head is not severed completely to bring about immediate hemorrhage. Slaughtering is done only once and the bleeding must be spontaneous and complete. Dressing of carcasses commences after assuring that the animal is dead. Slaughtering tools and utensils are kept sharp and utilized only for the slaughter of Halal animals. The slaughtering is done after invoking the phrase Bismillah (in the name of Allah).

Food, Supply, Nutrition and Halal

Our Filet-O-Fish burger represents great strides towards assuring sustainability of our supply over the last several years.
Sustainable Fisheries
Our Sustainable Fisheries program defines sustainability standards that guide all of our purchases worldwide for wild-caught fish. That is why our Filet-O-Fish burger represents great strides towards assuring sustainability of our supply over the last several years. Worldwide, McDonalds Japan and McDonalds Thailand advised their suppliers in 2007 to cease purchasing Russian Alaskan Pollock (RAP) for the production of Filet-O-Fish because those fisheries did not address sustainability concerns. Suppliers to McDonalds China transitioned away from RAP in 2008, so none remains in our system today. Our fisheries guidelines were developed in partnership with Conservation International and our key fish suppliers, and are currently implemented collaboratively with the Sustainable Fisheries Partnership. The guidelines outline clear, measurable criteria that rate currently approved and potential future fisheries with the latest information. Ratings address three criteria: Fisheries management practices Compliance and monitoring Fish stock status Biomass levels Marine environment and biodiversity conservationProtecting vulnerable marine habitats This system is designed to help identify areas for improvement and provides McDonalds with a sustainability snapshot for key source fisheries. If a fishery shows signs that something may be amiss, we first support improvements, but if those improvements are not made within the agreed timeframes, we will cease sourcing from that fishery. Our Global Fish Forum a mix of McDonalds supply chain and sustainability leaders, fish purchasing managers from our local markets and representation from the Sustainable Fisheries Partnership reviews the ratings, shares updates on global sourcing, investigates alternatives for stressed species and develops recommendations for future species usage.

External Validation

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McDonalds standards are consistent with the Marine Stewardship Councils (MSC) Principles of environmentally responsible and sustainable fishing. The vast majority of McDonalds fish is already sourced from MSC certified fisheries. Working with the Sustainable Fisheries Partnership, McDonalds is supporting efforts of remaining supply fisheries to seek additional verification of their own sustainability through MSC or other credible, third party certification programs.

Nutrition & Well-being

McDonalds is committed to the well-being of our customers. We work together with our employees, franchisees and our suppliers to serve a balanced array of quality food products, and provide the information needed to make individual choices. There is an increasing concern about obesity rates and related risks to well-being among consumers, governments, NGOs, and health and nutrition experts. We take these issues seriously and we are working to do what we can as a company to positively influence the situation. We know we cannot address the problems alone, but we are committed to being part of the solution.

Engaging with Experts

The McDonalds Global Advisory Council (GAC) is an international team of independent experts assembled by McDonalds to provide us with the professional guidance in the areas of nutrition and childrens well-being. The Council plays a vital role in helping us to continuously evolve our thinking and approach in these areas. Members provide us with valuable insights, direction and recommendations about how to continue delivering a more beneficial experience to children and families. Since 2004, the GAC has provided McDonalds guidance on key areas such as: Global nutrition labeling McDonalds What I Eat, What I Do childrens well-being platform Potential risks and issues in the marketplace Future trends In Malaysia, we have been providing nutrition information of our products since 2003 through our website, restaurant leaflets and traymats. We have worked with the Health Ministry of Malaysia to ensure that we comply with their Recommended Nutrient Intake (RNI) and the Nutrition Information requirement for adults and children. We are committed to providing information to our customers to help them make informed decisions of their food choices.

Food, Supply, Nutrition and Halal

A Holistic Approach

As a Quick Service Restaurant where families and children gather alike to have tasty and wholesome meals, we have taken it upon ourselves to launch a set of comprehensive commitments that epitomizes a holistic approach to our customers well-being.

Quality and Safety

This is the first priority across all McDonalds markets and in every McDonalds [Link] are committed to uphold these standards and pursue additional policies and procedures to ensure the safety and quality of McDonalds products for all consumers.

Happy Meal Choice

Adjusting to the taste preferences and dietary needs of consumers is an ongoing priority for the entire McDonalds system. Choice in a Happy Meal is exceptionally important. We offer a wide choice of food and beverages to our customers to suit their needs.

Responsible Marketing

McDonalds airs advertising only during television programs that are watched by both parents and children. Advertisements are not broadcast during programs designed solely for viewing by children. In addition, we organize various physical activity programs like the Olympic Day Run to encourage children to engage in sport.

Environmental Responsibility

Preserving the environment is a priority for the entire McDonalds system. We continue to make enhancements in all aspects of our operations to minimize environmental impacts.

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McChicken
Serving Size = 156g 2130 Adult
kcal Calories 19% 395 46.3g 14.4g 17.2g 1.5g

Carbohydrates 16% Protein Fat Salt 25% 29% 25% % RNI

Nutritional Information

The ability to read and understand nutrition labels is essential to making informed dietary choices. As such, McDonalds was one of the first restaurant companies in the world to provide customers with nutrition information about the products we offer. Since then, the ways we make our nutrition information available have evolved with emerging technology. Since 2003, we offered it on in-store traymats and brochures. Then we began offering it on our website and subsequently, on our packaging materials. Our expansion of alternative sources of nutrition information helps customers make informed choices based on facts, not perceptions.

The Nutrition Information Initiative (NII) and Beyond

McDonalds completed its rollout of NII to 20,000 restaurants worldwide, providing easy-to-understand and globally relevant bar chart icons to illustrate the number of calories, fat, sodium/salt, carbohydrates and protein in most of the core products. The development of this iconic approach to communicating nutrition information involved extensive research and consultation with our Global Advisory Council, the McDonalds Europe Nutritionist Steering Group, other independent experts and government officials. We also solicited customer perspectives on the user-friendliest ways to communicate nutrition information. The resulting format enables customers to grasp, at a glance, how our food can fit into a balanced diet. For example: The format focuses on the five elements experts agree are most relevant to consumer understanding of nutrition. For each element, the percentage of the daily recommended intake the product provides is indicated. The format is icon-based and designed to be understood independent of language. Although it provides a global model, it is flexible enough to be adapted to local needs, customs, menus and regulations.

Food, Supply, Nutrition and Halal

We remain confident that as customers learn more about the nutrition profiles of our food, it will positively reflect on our commitment to serving responsible food.

Informing Customers in the Future

We are constantly reviewing the effectiveness of the NII and exploring alternatives to make nutrition information practical for todays consumer. Many McDonalds local business units are already using the latest advancements in technology to make nutrition information even more widely available. In several of our markets, customers can create their own McDonalds meal and get its nutrition facts all with a few key strokes on a computer. McDonalds Japan uses a code on packaging that allows customers to access nutrition information via web-enabled cell phones. While we continuously work internally and with outside experts to develop better ways to communicate nutrition information, we are also committed to complying with local laws and regulations that lead to alternative methods for informing consumers. We will continue to monitor the effectiveness of all approaches and we remain confident that as customers learn more about the nutrition profiles of our food, it will positively reflect on our commitment to serving responsible food.

Trans Fatty Acids (TFA)

In response to customer requests, and as part of our ongoing dedication to offering quality products and balanced choices, McDonalds have substantially reduced the trans fatty acids (TFAs) in food offerings across the country by working with our suppliers to develop and test many different cooking oil options. In Malaysia, we use palm oil that do not undergo hydrogenation process produced by Cargill Palm Products for our French Fries, fried chicken and fish products, fried pies and other promotional fried products. Trans level analyses have confirmed that the level frequently detected in the non-hydrogenated oil products used ranged from 0% to 0.3%. In line with Malaysian Food Act 1983, the oil supplies used can be considered as low trans products. Therefore, McDonalds customers can be assured that trans level will not exceed 0.5%.

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Commitment to Environment
As a global corporation spanning 31,000 local restaurants in 117 countries, it is imperative that we direct our journey towards environment sustainability. We are improving our environmental performance and as we listen and learn, we see more opportunities emerging to progress our sustainability efforts. Like many individuals and other businesses, we are much more aware of the impact our operations have or could be having on our land, air and water. Our position as a leading quick service restaurant brings with it significant responsibility to promote change and implement improved business practices. Over recent years we have implemented a suite of effective tactical environment management initiatives. We have been working hard to minimize our impact on the environment and identified the need for a more cohesive and comprehensive environmental strategy to guide our actions in the future. This strategy will reflect the importance of climate change in our plans and actions and provide us with a sustainable business model for our operations moving forward.

Energy & Water Usage

Climate change is a crucial issue, generating growing interest from many sectors of society from individuals and NGOs, to governments and corporations. The urgency of this issue means that everyone has a role to play in reducing our impacts, including companies like ours. McDonalds has been working to minimize our environmental footprint by initiating energy conservation measures 30 years ago. Since then, we have continued to seek methods to improve our environmental performance not just because it is the right thing to do, but also because it is smart business. Efficiency and innovation are natural by-products of thinking green. When we conserve energy, produce less waste and minimize resources used by our suppliers, we use less and spend less. McDonalds restaurant use of electrical energy and natural gas accounts for the bulk of our direct greenhouse gas emissions. More efficient use of these resources helps us save money and reduces our environmental impacts. Within the restaurant, our two key areas of focus are the heating and cooling systems and the cooking appliances, which together account for approximately 80% of a typical restaurants energy use. McDonalds Malaysia ensures that all restaurants are installed with power system stabilizers to provide improved stabilization of the system. Power factor correction boards are also utilized to channel improved power factor and reduce energy costs. To date, our efforts have resulted in electricity savings of 5% - 8% per month over the last four years.

Commitment to Environment

Recycling

While our primary focus is on reducing waste at the outset, we continue to seek ways to incorporate reuse and recycling into our restaurant operations. One of the biggest challenges to recycling for McDonalds and the food industry as a whole is that food packaging is not widely accepted by recyclers. As a result, the majority of our recycling currently involves behind-the-counter materials, and thats where we see the greatest opportunity for continued improvement.

Recycling Cooking Oil

We practice an environmentally friendly approach in the disposal of our cooking oil, by accumulating oil waste and supplying it to environmentally supportive manufacturers. They in turn will recycle these materials into household items such as soaps and candles. More than 12,000 kilograms of used cooking oil is recycled every month by McDonalds Malaysia.

Product Packaging

Packaging is such a critical part of our brand not only for food quality and safety, but also in its visibility to our customers. Minimizing the environmental impacts of our packaging starts in the design phase of packaging development. We focus on minimizing the weight and maximizing the use of recycled materials in our packaging. More than 60% of our product packaging is made from paper instead of plastic or polystyrene. And we will continue to look for ways to include sustainable designs in our packaging in the future.

Rainwater Harvesting

With water being one of the most important resources in the world, we have developed a system at our Drive-Thru restaurants to harvest rainwater in our efforts to recycle this precious resource. Rain gutters are placed on the roofs of our restaurants to channel rainwater to a storage tank. The water is then used to maintain the cleanliness of our Drive-Thru lanes, and to water the plants at our premises. An estimated 500 gallons of pipe water nationwide is saved monthly through this exercise.

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We support fundamental human rights for all people. That is why we make people a priority.

People
It should go without saying that we support fundamental human rights for all people. We comply with employment laws in every market where we operate, and we will not employ underage children or forced laborers. We respect the right of employees to associate or not to associate with any group, as permitted by and in accordance with applicable laws and regulations. Delivering on responsible food and customer expectations demands an engaged, committed and talented workforce. We know this, and so do McDonalds franchisees. People are absolutely fundamental to our brand and to building our business. That is why we make people a priority. Having been awarded Hewitts Best Employers 2009 in Malaysia is proof that we pay strong emphasis on the core of our business our people. In addition to that, we have also won the bronze award in the HR Excellence Category at The Malaysia HR Awards 2008/09 for outstanding achievements in human resource management by organizations and individuals.

Our Approach

We take a modern, strategic approach to address the challenges. Business is strong, and we need high-performing employees to help us continue that trend. Our operations span a range of cultural environments that makes us diverse by design. Hence, our people policies and programs are designed to meet employee needs through three strategic priorities respect, commitment enhancement and talent management. Maintaining a stable and qualified workforce, especially at the restaurant level, is a challenge in the 21st century global economy. The mobility of todays workforce and poor perceptions of employment in some area of the quick service industry present special challenges for McDonalds. As a company, we continue to be adversely impacted, in some markets where we operate, by the negativity associated with the term McJob. So we recognize that we need to distinguish ourselves as a great place to work, both at the staff level and in our restaurants.

We take a flexible approach to employment as part of our commitment to diversity. Positive steps are taken to ensure that job satisfaction and developmental potential are enforced regardless of gender, age, race and creed.
Equal Opportunities
At McDonalds, we are committed to providing a working environment where everyone can be treated with dignity and respect. We promote equal opportunities at all work levels to ensure that our employees enjoy a harmonious work environment that is free from harassment, bullying and discrimination. We take a flexible approach to employment as part of our commitment to diversity. Positive steps are taken to ensure that job satisfaction and developmental potential are enforced regardless of gender, age, race and creed. Career promotions are solely based on merit as we believe that individual performances and abilities should be duly recognized.

Women at Work
We are a strong advocate for the advancement of women in the workplace and have been hiring women at work since the founding of our first restaurant. A large proportion of our workforce is made up of women, constituting 53% of Restaurant Managers, 41% Operations Consultants, 28% Operations Managers and 53% Heads of Department. Our current Managing Director, Ms Sarah Casanova has been with McDonalds for 18 years and has had seven different assignments in four different countries, won numerous accolades for her exceptional leadership and outstanding performance, including the Presidents Award in 1995 and the Charlie Bell Award in May 2009. She has also served six years as Dean of Hamburger Marketing University. McDonalds Malaysia also participates in the APMEA (Asia Pacific, Middle East and Africa) Womens Leadership Network, which promotes the development and retention of women executives. In July 2009, APMEA held its first ever Womens Leadership Network conference in Singapore, overseeing a total of 270 high achieving women throughout the organization attending the event, of which nine were female employees of McDonalds Malaysia. By understanding that women have different needs, we have created an inclusive and supportive environment where ample opportunities can be developed to the highest potential, enabling many women to return to the workforce while achieving a balance between work and personal commitments.

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People

Development Opportunities

The best people lead to the best business results. We want to ensure that we have leaders who can take McDonalds into the future. To be a talent magnet, we have to provide opportunities to learn and grow. We have invested significant resources in programs to address this priority, including our own learning academies known as Hamburger Universities, and a Leadership Institute for McDonalds leaders around the world. These programs are part of a comprehensive global talent management strategy designed to ensure that we have a constant stable of high-performing, committed leaders, a diverse pool of candidates for the future and a culture that both requires and supports learning and development.

Training and Development at Restaurant Level

Crew training begins on the very first day of work. New hires, crew and crew trainers are involved in a carefully planned crew development curriculum. Lessons begin with crew orientation, and gradually progressing towards the introduction of Crew Development Program (CDP) and Crew Trainer Development Program (CTDP), instilling the very basic roles and responsibilities of each and every crew on facets of quality, service, cleanliness and value. More than 85% of our restaurant management staff started off as crew members. Restaurant Management Curriculum helps train managers to be fully responsible for the restaurants they are in charge of. The curriculum includes self-study, in-store training and classes that prepare them for a bigger role in the store, which will eventually lead to a restaurant manager position. The four components of the curriculum are: Shift Management - This teaches the basic knowledge and skills to run a restaurant shift Systems Management - This includes role-playing, discussions and interactive exercises in and out of the restaurant setting. Restaurant Leadership Practices - A five-day program that simulates the complexities of a real restaurant environment and reinforces the concept of decision making and building a high-performing team. Business Leadership Practices - This course is designed for restaurant managers who have been on the job for about a year. It trains participants to acquire the skills necessary to successfully develop a restaurant business plan that will meet the goals set by the region, division, country and their own restaurant organization.

Hamburger Universities

As of today, we have seven Hamburger Universities (HUs) around the world. They are state of the art training centers for restaurant employees and corporate staff. Since its inception, Hamburger University training has emphasized consistent restaurant operations procedures, service, quality and cleanliness. The curriculum is comprehensive, thought-provoking and the perfect foundation for building a successful career. The fact that our Oak Brook Campus Hamburger University is the only restaurant company training academy awarded college credit recommendations by the American Council on Education (ACE) is indicative of the value Hamburger Universities bring to our system and our employees. ACE recommendations mean that credits earned at Hamburger University can be applied toward a college degree. 100% of the restaurant manager and mid-management curricula are eligible for a total of up to 46 credits approximately two years of full-time college study. Over the years, McDonalds Malaysia sent its Restaurant Managers to Hamburger Universities located in the United States, Australia and Korea.

McDonalds Leadership Institute

In mid-2006, we officially launched the McDonalds Leadership Institute, a virtual learning community with guidance and resources to support and develop employee leadership and talent. It gives McDonalds leaders opportunities to grow and develop through structured learning with other leaders, to participate in challenging development experiences and to access a wide variety of development tools and best practices resources. The Leadership Institute helps them develop critical leadership skills needed to address major short and long-term business challenges that are affecting the corporation. Under the auspices of the Institute, accelerated leadership development programs for high-potential directors and officers are offered annually across all areas of the world. As the end of 2007, 184 employees from 43 countries had participated with more than 40% of those who graduated receiving promotions.

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Celebrating Unique Talents

At McDonalds, it is not all about working. Building a caring, warm community for employees is important to us. McDonalds offers a variety of programs that franchised and company-operated restaurant employees can participate in to grow and develop, both personally and professionally. 2009 marks the third year that we held Voice of McDonalds, the largest global singing competition of its kind. Open to all McDonalds crew members and managers in 117 countries, the contest allows participants to showcase their vocal prowess and compete for a $25,000 prize. In 2009, more than 3,600 talented employees from 53 countries worldwide entered the contest. As part of our Olympic sponsorship, we honored the hard work and exceptional service of our restaurant employees by bringing our best to serve the worlds best at the Games. Nearly 1,400 of McDonalds top-performing crew members were chosen to experience first-hand the fun and excitement of the 2008 Olympic Games in Beijing and serve the worlds top athletes, coaches, officials, media and spectators at four McDonalds Olympic restaurants.

Voice of McDonalds Singing Competition

McDonalds Champion Crew

Results showed that McDonalds engagement score has been steadily rising, garnering 61% in 2007, 65% in 2008 and subsequently 81% in 2009
Since June 2007, McDonalds Malaysia engaged Hewitt Associates to conduct the Employee Engagement Study in order to better understand what employees think and feel about the company and various aspects of their job. Through the findings of this study, McDonalds is looking forward to fact-based direction in creating a high-performing work culture to better attract, attain, retain and motivate the workforce that delivers superior business results in line with its vision statement and goals. McDonalds would like to: Conduct an all employee engagement study to have a clear understanding of employee needs. Identify the necessary gaps in engagement in order to place the right action to improve. With the findings of the study, enhance the Employer Brand that will articulate the employment experience. Have concrete action plans to achieve its objective to become an Employer of Choice. In order to conduct the study, an 8-step engagement process was put to action: Conduct Engagement Survey Analysis / Review of Results Communication of Results Action Planning Action Implementation Ongoing Communication Conduct Engagement Pulse Check Monitor and Refine Actions Results showed that McDonalds engagement score has been steadily rising, garnering 61% in 2007, 65% in 2008 and subsequently 81% in 2009.

Hewitt Best Employers in Malaysia 2009

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Commitment to Community

Commitment to Community
For McDonalds, giving back comes in many shapes and sizes. It can be a local franchisee sponsoring a youth sports organization. It may bring to mind our renowned and longtime support of Ronald McDonald House Charities. It can include Olympic sponsorship and feeding the athletes. Whatever shape it takes, the intent remains the same to make a positive difference in the lives of our customers and the communities where we operate. Giving back has been fundamental to our business since Ray Kroc founded McDonalds more than 50 years ago. Our communities give us so much in return by increasing our brand visibility and strengthening our relationships with our stakeholders. We use three key strengths our scope, our people and our profits to make a meaningful and lasting impact on the global communities where we live and work.

Children & Family

Toy Safety
Nothing is more important to us than the safety and wellbeing of our customers. The most vital aspect to know is that our Happy Meal toys are safe. Happy Meal toys are backed by a proactive safety program that starts with the design, long before a toy makes it to production. The creative process, including ideas and sketches, starts with McDonalds safety-approved suppliers about a year in advance. Our safety engineers are involved from the very beginning of the process to make sure McDonalds safety standards are complied with. Next, a hard model is made in grey resin. These models are examined repeatedly by experts to identify and resolve any potential safety hazards. Then molds are made and sample toys are produced. If the appearance and quality are approved, more safety tests are performed by McDonalds approved third-party safety laboratories. Once full-scale production begins, these third-party safety laboratories monitor and test the product throughout the entire manufacturing process. Testing may be performed hourly, daily or weekly, depending on the production cycle. Upon completion of manufacturing and passing results of all safety tests, the toys are shipped to distribution centers in the United States, Hong Kong and Europe where they await their official launch date in the restaurant. When it comes to toy safety, we take nothing for granted and remain ever vigilant watching every step of the process.

Ronald McDonald House Charities

The Ronald McDonald House Charities Malaysia (RMHC Malaysia) was established as a non-profit organization in 15 February 1990 as part of the 280 local RMHC chapters worldwide, with the mission to create, find and support programs that directly improve the health and well-being of children. RMHC Malaysia strives to enrich the lives of the less fortunate children and encouraging them to achieve their fullest potential by helping them in three main areas of health, education and welfare. RMHC Malaysia is a registered society with the Registrar of Societies. It is a tax-exempt body and all donations above RM50 are issued tax-exemption receipt organized by the Inland Revenue Board of Malaysia. The day-to-day administration of RMHC Malaysia is undertaken by three full-time executive staff. A committee comprising a President, a Vice President, a Secretary, an Assistant Secretary, a Treasurer and 5 committee members, all of whom are office bearers of RMHC Malaysia, provide the overall directions and supervision in the conduct of the activities of RMHC Malaysia. All the office bearers are non-paid volunteers. In addition to the office bearers, RMHC Malaysia also appoints an external auditor and several advisors who help guide the society. The supreme authority of the society is vested in a general meeting of the members that is held annually. An election of office bearers is held at the annual general meeting. RMHC Malaysias efforts are realized through its members, McDonalds staff, customers and suppliers. McDonalds customers are a major contributor to RMHC Malaysia through the little coin boxes that are placed on the counter of every McDonalds outlet. RMHC Malaysia also organizes various fundraising events such as the RMHC Malaysia-Tropicana Charity Golf Championship, RMHC Malaysia Charity Bowl and RMHC Malaysia Charity Hunt. All administration and management costs are borne by McDonalds Malaysia, enabling 100% of all donations to be channeled towards charities and sponsorships.

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Commitment to Community

The main objective of the house is to provide temporary accommodation to families who have traveled far to seek medical treatment for their children.
The Ronald McDonald House at Pusat Perubatan Universiti Kebangsaan Malaysia (PPUKM)
The Ronald McDonald House is located on the premises of the Pusat Perubatan Universiti Kebangsaan Malaysia (PPUKM) and was built at a cost of RM2 million. Officially opened by on 21 June 1999, the facility has 19 bedrooms with attached bathrooms and common areas such as the kitchen, dining area, TV lounge and laundry room. The main objective of the house is to provide temporary accommodation to families who have traveled far to seek medical treatment for their children. The costs of pediatric medical treatment can be costly for some families, and putting up at hotels or motels would only add to the financial and emotional burden. The Ronald McDonald House helps relieve these families of unnecessary burdens and allow families of similar situations to find support and comfort in each other. To date, 500 families have benefited from this Home Away From Home concept. Funding for the Ronald McDonald House is from RMHC Malaysias various fund raising activities. Ongoing support in the form of donations of food and drink is provided by companies like Nestle, MacFood and Havi Food.

Ronald McDonald Sensory Room

RMHC Malaysia has initiated an ongoing project to establish Ronald McDonald Sensory Rooms in centers for children with learning difficulties. The Ronald McDonald Sensory Room can be found in eight locations: The Society for the Severely Mentally Handicapped Selangor and Federal Territory (SSMH) in Petaling Jaya, Selangor Bethany Home in Hutan Melintang, Perak Agape Centre in Sibu, Sarawak Persatuan Sindrom Down Malaysia (PSDM) in Ampang, Kuala Lumpur Yayasan Orang Kurang Upaya Kelantan (YOKUK) in Kota Bharu, Kelantan Taman Sinar Harapan, Kuala Terengganu, Terengganu National Autism Society of Malaysia, Kuantan Center, Pahang Spastic Childrens Association of Johor, Johor Bahru The Ronald McDonald Sensory Rooms are equipped with multi-sensory equipment from the United Kingdom, which stimulates the five primary senses in an atmosphere of trust, relaxation and fun. It has been proven to be beneficial to special children as it improves attention span and reduces hyperactivity. Over time, this would help these children in their cognitive skills and build self-confidence.

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Gift of Smile

Children born with cleft lip and palate and from lowincome families have a reason to smile again under the Gift of Smile Campaign, in cooperation with Pantai Hospitals Sdn. Bhd. and McDonalds Malaysia, where these children can undergo corrective surgeries at no cost. To date, there are almost 12,000 babies born with this congenital defect and have yet to undergo corrective surgery due to financial constraints, parental ignorance of available cure and in some cases, societal beliefs. It is our goal to instill public awareness and provide the opportunity for medical aid. Since then, 200 children suffering from this condition has been supported by the program and now lead normal, healthy lives.

Tunas Wawasan

In 27 April 2001, RMHC Malaysia expanded the Tunas Wawasan sponsorship program nationwide with the cooperation of the Ministry of Education. Under the expanded program, two students from lowincome families in each state of Malaysia are selected every year to receive the scholarships throughout their secondary school years. The monetary support consists of monthly allowance for meals in school in addition to an extra sum every beginning of the year for transportation, school uniforms and school fees. With an annual intake of at least 28 new students a year, RMHC Malaysia strives to enable these students to concentrate in their studies with the financial support provided, so that they would have the chance to excel in their studies and be future leaders in the community. Up until now, 400 children have benefited from this program.

Commitment to Community

Community Sponsorship

McDonalds has a long history of sponsoring global events and supporting local outreach programs that create strong, relevant connections with our customers everywhere. The flexibility of the system means that each restaurant can contribute locally in a way that is most relevant and appropriate for themselves and their community. In addition to larger state and national sponsorships, thousands of contributions are made by McDonalds restaurants to their local community, with many of these programs focused on promoting physical activity and encouraging children to be active. We will always look for opportunities to further our involvement in the community and to create and support initiatives that benefit our society, no matter the scale.

Balanced Active Lifestyles

Customer expectations and needs about nutrition and balanced lifestyles are changing with times and we are evolving along with out customers. We are committed to our Balanced, Active Lifestyles efforts that inspire and motivate our customers to live healthy and balanced lives. Our Balanced Active Lifestyle initiative focuses on three key areas increasing menu choice, providing convenient access to nutritional information and encouraging physical activities.

Olympic Games
We have been a proud supporter of the Olympic Movement for 40 years. As a system, we believe in the spirit of the Games and their unique ability to engage the world in a way that is constructive and inspirational. We recognize the power of the Games to reinforce excellence, unity and achievement among the people the world over. Our goal is always to bring that spirit to our customers. Here is a brief history of our commitment to the Olympic Games: 1968: McDonalds began support of the Olympic Movement by airlifting burgers to U.S. athletes competing in Grenoble, France, where they reported being homesick for American burgers. 1976: McDonalds became an Official Sponsor of the Olympic Games at the 1976 Olympic Games in Montreal, Canada. 1998: McDonalds officially provided food service for athletes at the Olympic Winter Games in Nagano, Japan for the first time. This was also our first opportunity to bring the fun and excitement of the Olympic Games to our customers around the world through our official global sponsorship and local promotions. 2000 and beyond: McDonalds continues our Worldwide Sponsorship of the Olympic Games and our commitment to serving food to millions of athletes, coaches, their families and fans. The Beijing 2008 Olympic Games marked McDonalds sixth Olympic Games as a Worldwide Partner and seventh as the Official Restaurant of the Olympic Games. McDonalds current sponsorship will continue through the 2012 Games in London.

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Champion Kids

We created the McDonalds Champion Kids program to engage young people worldwide in activities that reinforced sport, fitness and fun. This grassroots outreach program provided more than 200 kids from around the world with the opportunity to travel to Beijing and report their stories and experiences back to their local communities and hometown news outlets. Children from more than 40 countries had a chance to see the games, meet Olympic athletes, visit historic sights and interact with children from different cultures around the globe. Fourteen-time Olympic gold medalist Michael Phelps served as McDonalds Global Ambassador for the program. As part of our tradition of supporting football, we have served as an Official Partner of the FIFA World Cup since 1994. As a FIFA World Cup Sponsor through 2014, we continually bring the worlds passion for football to life for millions of fans through special creative promotions, contests, ads and in-store activations in more than 100 countries in the world. The centerpiece of our FIFA World Cup sponsorship is the Player Escort Program. Through this initiative, more than 1,400 children from ages 6 10 have the privilege to realize their dreams by escorting the worlds finest football athletes hand-in-hand onto the field before all official FIFA World Cup matches. Kevin Khoo became the first Malaysian child chosen as a Player Escort at the 2006 FIFA World Cup Germany.

FIFA World Cup

Commitment to Community

Grassroots Community Support

Giving back has always been fundamental to our business since Ray Kroc founded McDonalds more than 50 years ago. Our communities give us so much in return not just by supporting our business but also by increasing our brand visibility and strengthening our relationships with our stakeholders. McDonalds uses three key strengths our scope, our people and our profits - to make a meaningful and lasting impact on the global communities where we live and work. The real strength of McDonalds community involvement lies with GARSB and our franchisees who provide grassroots support to their local neighborhoods. Day in and day out, we make a solid effort to contribute positively to our communities in dynamic ways, among those include: Supporting health, recreation, and other community programs, Providing aid during natural disasters and other emergencies, and Contributing to local community development. For instance, McDonalds Mutiara Damansara and McDonalds Section 3 organized a charity car wash to raise funds for Rumah Ilham and Rumah Anak Yatim & Miskin AlMunirah respectively. Cars were charged RM10 per wash to raise funds on top of further donations accumulated from McDonalds customers and store profits. McDonalds Gombak repainted the Nurul Al-Qanaah Home in Gombak. The crew also helped in changing the rubber mats and curtains, cleaning the compound and sponsoring the orphans a Happy Meal lunch. Meanwhile, McDonalds Damansara Store Managers and crew did their part by visiting the Yayasan Anak-anak Yatim Pinggir Taman Tun Dr. Ismail to repaint the home premises. On 28 May 2009, McDonalds Section 14 lent a helping hand to the rescue workers of the tragic Jaya Supermarket collapse, where six lives were lost. The store provided a free flow of Orange Bowl as soon as the rescue work started and served supper and breakfast to the rescue workers. The team continued to provide Orange Bowl and burgers until the rescue work ended on 30 May 2009. On 5 December 2009, RMHC Malaysia and McDonalds Kuala Terengganu embarked on a flood relief mission to deliver supplies in aid of thousands of the flood victims who have been evacuated to Gong Badak, Tok Jiring and Bukit Guntung Relief Centers. RMHC Malaysia and McDonalds Kuala Terengganu delivered supplies such as school stationeries, school bags, diapers, baby wipes and toiletries.

McDonalds uses three key strengths our scope, our people and our profits - to make a meaningful and lasting impact on the global communities where we live and work.

Summary

Corporate responsibility is all about finding the intersection of doing good for society and for our business. At McDonalds, we strive to fulfill our responsibilities in each sector of our system, and have made tremendous progress in them. In spite of our achievements, we will remain dedicated in pursuing continuous improvement and engage our stakeholders to work together to explore future opportunities for brand excellence.