PepsiCo Performance with Purpose

Introduction
PepsiCo has termed the strategy of combining sustainability practices into its business as Performance with Purpose. The company claims that its profitable growth (performance) is inherently linked to its ability to deliver on social and environmental objectives (purpose). PepsiCo has formulized sustainability practices under three heads

Human Sustainability
PepsiCo mostly deals with products which are used for human consumption hence its human sustainability practices are mostly about reducing the harmful effects that they may cause. Specifically, it aims to reduce the amount of saturated fat and sodium in key food brands and added sugar in key beverages brands. It also wishes to add whole food grains, fruits and nuts, seeds and low-fat dairy in its global product portfolio.

Environmental Sustainability
PepsiCo, majorly a soft drinks company, heavily relies on groundwater as its primary raw material. No surprises, then, that its environmental sustainability initiatives are built around efficient water use. It also aims to use at least 10 percent recycled polyethylene terephthalate (rPET) in its containers and also reduce the fuel use intensity. There are other sustainability practices also such as talent sustainability and incorporation of Global Reporting Initiatives (GRI).

Of Water and Potatoes

As per companys sustainability report, its reliance on food production and water resources as the raw materials is at the fore front sustainability practices to manage future resource risks. The company has knowledge about sustainable agriculture practices which it claims to share with farmers to improve efficiency. Here we will analyze some specific cases of environmental sustainability practices.

Being Water Positive

Pepsi has made claims that it has achieved positive water balance in India meaning giving back more water than it consumes. The company has gone on to the extent of putting the claim directly on its water bottles by means of advertisements which speak of the great deed Pepsi is doing for the water conservation in India. The need for such practices to sustain water arose when it received flak from all corners of India for harming the ground water tables and the amount of pesticides in its colas. Farmers in villages in India where Pepsi had bottling units claimed that Pepsi uses excessive water from their dry villages. There were evidences of water tables falling in villages near the Pepsis bottling plants. Villagers also claimed that it allowed pesticides in groundwater to get mixed with the soda it produced. The southern state of Kerala banned the manufacture and sale of all Coke and Pepsi products while

other states cut soft-drink sales in schools, colleges, and hospitals after a report on the level of pesticides in Pepsis soft-drinks was found to be 10 times higher than the accepted standards. The company claims to give water back through digging wells, harvesting rainwater and teaching locals better technology for rice and tomato production consuming less water. The company has gone to the length of building check dams for certain communities. The company has also reduced use of water in its bottling facilities through kaizen and other Japanese techniques. The advantage that company wished to derive from the programs was acceptability of its products and no resistance for its bottling facilities. However, to the critics Pepsis repeated slogan of Positive Water Balance hasnt gone really well. PepsiCos calculation of water usage in India is excessively on lower side. PepsiCo has failed to take into account the water used in their supply chain as "debits", PepsiCo readily accepts credits from outside their factories, and agriculture in particular when it comes to taking "credit" for water saved. The second point is of water scarcity which is a local issue. The company is depleting water resources in one area and buying water credits from distant areas to be water neutral.

Potato Chips
The company is using low carbon fertilizers not only to reduce its carbon footprint but also to produce more uniform and high yield potatoes. In India the company has partnered with farmers across many states for production of high quality potatoes. The company provides chip-quality potatoes to farmers along with information on best agri-practices and efficient water use. The company has also partnered with SBI to provide easy loan to farmers for potato production. PepsiCo then buys the potatoes from farmers. The company has invested in technologies that can sense the amount of moisture in the soil and accordingly forecast the need for irrigation thereby saving from unnecessary water wastage. It will also be linked to weather forecasting and thus would help in preserving water as well as reducing the risk of fertilizer and pesticides runaway into the water streams. PepsiCos efforts in sustainable potato farming seem to have positive environmental impacts though only on a smaller scale. On the one hand it is providing farmers with a somewhat secured income source while also promoting sustainable agri-practices on the other hand it can be viewed as Pepsis efforts to move towards the supplier side of the supply chain and thus reduce dependency on independent farmers.

References
http://www.businessweek.com/stories/2007-06-10/pepsi-repairing-a-poisoned-reputation-in-india http://pepsicoindia.co.in/purpose/environmental-sustainability/partnership-with-farmers.html http://www.guardian.co.uk/sustainable-business/pepsico-water-usage-potatoes-maung http://www.greenbiz.com/blog/2010/04/27/why-pepsico-building-dams-india http://www.pepsico.com/Investors/Sustainability-Efforts.html http://www.indiaresource.org/news/2011/pepsipositivewater.html