Strategy analysis of global beverage client- Pepsi

1. Sustainability
Leadership
A Case of PepsiCo

2. 2
ABOUT PEPSI
GOVERNANCE MODEL
INTEGRATED PERFORMANCE DAHSBOARD
TRIPLE BOTTOM LINE
POSITIVE WATER IMPACT
LAYS FOCUS: WATER STEWARDSHIP
OPERATIONAL WATER USE EFFICIENCY
VALUE CHAIN: STAKEHOLDER ANALYSIS
DUAL LOOP & STAKEHOLDER COMMUNICATION
GRI 303 & SUGGESTIONS
• CONTENTS

3. About the Company
3
Vision: Be global leader
in convenient food and
beverages by winning
with purpose
Mission: Create more smiles with
every SIP & every BITE
• PLANET: by conserving nature’s
resources.
• CUSTOMERS: driving innovation,
and delivering a level of growth
ASSOCIATES & COMMUNITIES:
creating meaningful opportunities
to work
• SHAREHOLDERS: delivering
sustainable top-tier TSR and
embracing best-in-class corporate
governance
Leadership Style:
Pepsico is focused on
unleashing the company’s
full potential by
sustainable accelerated
growth and implementing
a collaborative and
emergent leadership.

4. 4
Sustainability Reporting- GRI G4
Product development- WHO guidelines
Positive nutrition- Nutrition Greenhouse
(Europe), The Consumer Goods Forum (U.S.)
Sustainable development- UN SDG
(Sustainable Development Goals)
Palm Oil- RSPO
Human Sustainability- Labor Rights, Land
rights, Freedom of association
GOVERNANCE MODEL COMPLIANCES FOLLOWED

5. 5
Countries practiced 2025 SDG met
Savings incurred since 2011 Carbon footprint reduction
Compliances followed
7
8
11
2014
2015
2016
200
375
600
2014
2015
2016
(in $ million)
I
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G
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A
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D
P
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F
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D
A
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B
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• GRI G4
• WHO Guidelines
• Nutrition Greenhouse (Europe)
• The Consumer Goods Forum (U.S.)
• UN SDG
• RSPO
• Labor Rights, Land Rights, Freedom of association
Target: 50 million metric tonne
reduction in GHG emissions by 2030
SCOPE FOCUS AREA
Scope 1 & 2 Operations
Scope 3 Agriculture, Packaging, Transportation
0% 20% 40% 60% 80% 100%
Water sustainability
Physically certified Palm Oil
People Diversity
Human Prosperity initiatives
Added Sugar Reduction
Sodium Reduction
Saturated Fat Reduction

6. Triple Bottom Line
6
Planet

7. 7
“PepsiCo has announced that its
environmental sustainability
programs have saved the
company more than $375 million
since its goals were established in
2010.”
PepsiCo has reduced its water use
per unit of production by 23% since
2006, generating cost savings of
$17 million in 2014”
Increasing gender parity: “40
% of the global manager
positions are held by women.”
Promotion to Higher Levels:
“The global women promotion
rate was 23%.”
Prioritizing the employee
development:” 1.3 million hours
of learning”
In 2018, PepsiCo: Replenished more than 1.1
billion liters of water through watershed
conservation projects locally in high water-risk
areas around the world.
Reduced the use of unsustainable raw material.
In fact, “51% of the direct farmer-sourced
agriculture raw materials are sustainably sourced.
Reduced Scope 3 GHG emissions by
approximately 2.2 million metric tons. This
represents approximately 7% progress towards the
2030 target to reduce absolute GHG emissions
across our value chain.”
PEOPLE PLANET PROFIT

8. Pepsi sustainability agenda
8

9. Challenges concerning
“Positive Water Impact”
Water: main ingredient in many products + integral
component of the manufacturing operations.
● Challenge 1: scarcity of water;
● Challenge 2: worsening pressure on water
resources;
● Challenge 3: ⅔ of the world’s population → living in
water-stressed regions.
Strategies to implement:
1. Improve water stewardship across the business
(including regions where they operates);
2. Taking action on the value chain by protecting and
replenishing watersheds.

10. Positive Water Impact
10
Sustainable Development Goals - n°6
“clean water and sanitation” → by 2030:
“Substantially increase water-use efficiency across all
sectors and ensure sustainable withdrawals and supply
of freshwater to address water scarcity and substantially
reduce the number of people suffering from water
scarcity”
United Nations - Water:
• Lack of water access: 1st cause of child mortality
• Water is also at the heart of adaptation to climate
change
• Vital for reducing the global burden of disease and
improving the health, education and economic
productivity of populations

11. 11
Focus agenda: Positive Water Impact
Agenda Targets
Improving
OPERATIONAL
WATER-USE
EFFICIENCY
Improve water-use efficiency
of direct agricultural supply
chain by 15% in high water risk
sourcing areas by 2025
Replenishing
LOCAL
WATERSHEDS
Replenish 100% of the water
consumed in manufacturing
operations located in high-
water risk areas by 2025
Safe Water
ACCESS
By 2025, help provide access
to safe water to a total of 25
million people since 2006 in
the world’s most at-water-risk
areas

12. 12
PepsiCo
Portfolio

13. Initiatives for operational water-use efficiency
13
Improving water-use
efficiency
In Agriculture In Direct Operations
• Collaboration with farmers through
Sustainable Farming Program
• Local partnerships with farmers to
drive efficiency in fields
• Training the farmers on new skills &
technology
• Providing farmers the access to
more efficient irrigation technology
& equipment
• Supporting best practices &
enabling them to move to efficient
methods like drip irrigation from
old practices like flood irrigation
• Resource Conservation
(ReCon) program, uncovering
and sharing best practices in
operational efficiency from
the program across our
locations globally
• Minimal-Liquid Discharge
(MLD) systems
• Membrane Bioreactor (MBR)
systems
• Reverse Osmosis (RO)
systems
• Closed Circuit Desalination
(CCD) systems

14. “Specific initiatives for operational
water-use efficiency
14
In the supply chain
- New water treatment systems
- Use of splash cones in the crisps
production
=> Reducing water-use of 64%
In the farming process
- Moving to drip irrigation
- Use of cover crops

15. 15
Value
Chain

16. 16
Dual Loop

17. 17
THE DIALOGUE WITH STAKEHOLDERS

18. 18
Suggestions/ Possible Improvements
Improvements in Packaging :
- Use more environment friendly materials instead
of plastics which effects the marine life as well as
biodiversity on land. Materials which are bio-
degradable & are carbon neutral should be looked
at.
- Use of smaller packaging to increase the total
number of products delivered in one truck
Healthy Food Options:
Reducing the amount of saturated fats & the
amount of salts in their products to promote
healthier habits for children

19. 19
Initiatives and what is still to be done
Better specify the different
stakeholders and their
roles.
GRI 303 → A lot of room for improvement :
Better detail the
computation of the new
measures’ impact.
Provide more information
concerning the scopes
(geographical..).
Problem : Pepsi doesn’t have a genuine approach yet

20. Recommendations for PepsiCo
20
Our objective is to develop Lays as CSR brand to develop
the brand vision.
We are trying to move from structural (out of compliance)
to strategic (as a choice).
To do so we need to:
1. Instaure CSR as a core
mission not an external
objective
2. Engage stakeholders in the
different changes
3. Hire external and
independent experts to
validate our projects
4. Switch to transformational
leadership

21. Thank You
21

22. 22
References
• https://www.pepsico.com/docs/album/esg-topics-
policies/stakeholder-engagement-
table.pdf?sfvrsn=59f72216_6
• https://www.pepsico.com/docs/album/sustainabil
ity-report/2018-
csr/pepsico_2018_csr.pdf?sfvrsn=b23814c0_6
• https://www.pepsico.com/docs/album/sustainabil
ity-report/2018-csr/pepsico-2018-gri-
index.pdf?sfvrsn=876e4f3_4
• https://www.pepsico.com/docs/album/esg-topics-
policies/stakeholder-
engagement.pdf?sfvrsn=4f6b7d7c_6
• https://www.pepsico.com/sustainability/water
• https://sustainabledevelopment.un.org
• https://sustainabledevelopment.un.org/sdg6
• https://sustainabledevelopment.un.org/sdg3
• https://sustainabledevelopment.un.org/sdg10