Introduction
PepsiCo Inc. is an American multinational food and beverage corporation, formed in 1965, with the merger of Frito-Lay and Pepsi-Cola company, has it’s headquarter in New York, United States (Official website of PepsiCo, n.d.). The company specially deals with manufacturing, marketing and distribution of beverages, grain based snack foods and other products. PepsiCo has expanded from Pepsi to a broader range of food products and beverage brands, presently the company has 22 brands, and PepsiCo's brands had generated retail sales of more than $1 billion apiece and net revenues of $43.3 billion in 2012. The business has its product distributed across 200 countries (Official website of PepsiCo, n.d.). PepsiCo is the second largest food and beverage company in the world based on the net revenue, and largest food and beverage company within North America.
The situation the firm encountered in the emerging economy
PepsiCo sales bottled drinking water, and uses India as a dumping ground for those bottles. An anti-Pepsi sentiment is strong, since the company entered, as Pepsi is polluting the country’s environment by dumping the plastic waste, and other issues also created a bitter feeling towards PepsiCo (Huber, 2010). The investigators from the Greenpeace's International Toxic Trade Project has discovered the involvement of Pepsi in producing and disposing of plastic wastes in India. The bottles which are used to pack the bottled water is almost made of plastics containing bisphenol-A (BPA), a chemical which contributes to cancer, when consumed with water, and it is hazardous (Leonard, 1994). Pepsi manufactures the single use plastic disposal bottles in India, which are exported to USA and UK, but on the other hand the toxic by-products of plastic remains in India, and the used bottles will be again sent to India for the process (Leonard, 1994).
The nature of the ethical dilemma the firm had to resolve
India bears the burden of environmental and health issues from plastic production and wastes, on the other side the consumers in the industrialized countries will continue disposing the huge quantities of unnecessary wastes, without absorbing the side effects in the form of health and environmental issues (PepsiCo’s Journey Towards an Ethical and Socially Responsible Culture, n.d.). India is exploited, while the consumers of the developed countries get all the benefits (Leonard, 1994). The consequences of this ethical dilemma was huge for PepsiCo, and Pepsi officials acknowledged the waste is exported to India, but claim it is all recycled.
Industry and products involved
PepsiCo is involved in the whole process and the product involved is its packaged drinking water. The empty and disposable bottles of PepsiCo are being dumped in India, which is resulting in the pollution of the environment. This contamination is proving to be a big health hazard for the Indian mass.
Countries involved
The nations that are involved are USA, Australia, European Union, Canada and the Arab States, who treats India as the dumping ground for all forms hazardous toxic wastes (Zimmer, 2009). PepsiCo uses India for dumping the empty bottles. These are exported from different parts of the world, from the developed countries. According to the report of Greenpeace, more than 100,000 tons of toxic waste entered India in the year1998-1999 (Zimmer, 2009).
What the firm stand to lose
The use of packaged drinking water is discouraged, people drink water from taps. The Indian Parliament has banned the sale of Coke and Pepsi products in its cafeteria, reduction in sales. People of India encouraged an anti-Pepsi campaign, they protested against Pepsi, by saying that they want safe drinking water, and not Pepsi (Leonard, 1993). Hundreds of protesters blackened out Pepsi billboards and succeeded in suspending the operation of the local Pepsi distributor. These ethical issues threaten the long term sustainability of the company.
The firm’s choices in dealing with the issue
When a country is not willing to accept wastes from the other parts of the world, the company has two options; it can either encourage the development of clean production technologies, which can help in the reduction of the hazardous waste production, or find another waste dumping ground, and it is seen that the company always goes for the second option (Huber, 2010). Pepsi exported the waste to India, and it is found that piles and piles of used soda bottles, were dumped in factories in South India, one of the factory dealing with these bottles is the Futura Industries in Tiruvallur, near Chennai (Leonard, 1994).
Resolving the situation
PepsiCo exported the waste to India, as it is cheaper to handle the waste in India, than to recycle it in the USA. Additionally, Pepsi is also aware of the environmental damages created due to these plastic bottles, therefore the company escapes from its responsibility in dealing directly with the problems (Mehta, 2007). Pepsi only pays India for processing the bottles.
PepsiCo resolved the case by recycling the wastes. As per a report, Futura Industries had imported a total of 10,000 metric tons of plastic waste from Pepsi since 1992, but only 60 to 70 percent of those wastes could be processed within the plant, the rest plastic garbage which were imported were not recyclable (Mehta, 2007). This resulted in a massive pile of plastic discards, "recycling," the plastic waste which could be reprocessed is washed, chipped and melted to convert into polyester made by Indian Organic Chemicals, Ltd. , (IOCL), which is Futura's parent company (Leonard, 1994). Combining the imported waste into the production process lowered the cost of polyester production.
Recommendations and Conlcusion
PepsiCo should look into this matter, as it is of serious concern. The company has no right to pollute the environment of India, and make the Indian people suffer. A suggestion, the company can use some other environment friendly material for packaging, and minimise the use of plastic, the company should be encouraged to use a material that can be recycled, and used again for the same purpose. The second option is the company should stop exporting all the waste to India, and find some areas in the developed countries to dump them as they can’t avoid their responsibilities in this aspect, India is a cheaper country, does not mean that PepsiCo will take the advantage of it and exploit the country and its people. As PepsiCo is also continuing its business in India, it should take some responsibility towards the country (PepsiCo’s Journey Towards an Ethical and Socially Responsible Culture, n.d.). Moreover, the garbage which is still there should be taken care of and moved to some other place, which is outside the locality, and where it will not affect the environment.
It is just unfair for the developing countries, as they already have sufficient problems in dealing with their own plastic wastes, it is not logical that they will also import other people’s garbage. Pepsi’s behaviours, as a beverage giant, are considered to be unethical as it makes India bear the impact of environmental and health problems from plastic waste. While consumers all over the world will continue purchasing products from Pepsi and disposing its plastic bottles in India. It is India which suffers from these consequences.
Reference
Huber, M.K. (2010). Bottled Water: The Risks to Our Health, Our Environment, and Our
Wallets. Paper presented at School of Public and Environmental Affairs. Retrieved from http://www.indiana.edu/~spea/pubs/undergrad-honors/volume-5/huber_marguerite.pdf
Leonard, A. (1994). Dumping Pepsi's Plastic. Retrieved from http://www.multinationalmonitor.org/hyper/issues/1994/09/mm0994_06.html
Leonard, A. (1993). South Asia: The new target of international waste traders. Retrieved from http://www.multinationalmonitor.org/hyper/issues/1993/12/mm1293_08.html
Mehta, S. (2007). Bottled Water Boycott Highlights Waste, Resource Depletion. The News
Standard. Retrieved from http://newstandardnews.net/content/index.cfm/items/4748
Official website of PepsiCo. (n.d.). Retrieved from http://www.pepsico.com/
PepsiCo’s Journey Towards an Ethical and Socially Responsible Culture. (n.d.).
Daniels Fund Ethics Initiative University of New Mexico.
Zimmer, M.M. (2009). Quenching america’s thirst for bottled water: How corporate and
nonprofit campaigns can join forces to Improve the environment. Retrieved from http://www.american.edu/soc/communication/upload/09-Zimmer.pdf
