Corporate Social Responsibility (CSR) is a critical public relations aspect that enables business organizations to win customer loyalty, increase sales and enjoy higher profits in the long run. Founded in 1965, PepsiCo has experienced remarkable growth to become one of the world’s largest food and beverage companies (PepsiCo, 2012). The company sells some of its leading brands such as Pepsi-cola, Tropicana, Frito-lay and Quaker in more than 200 countries around the world. This paper presents a brief analysis of PepsiCo and its corporate social responsibility activities, while evaluating the company’s operations based on the ten principles of the United Nations Global Compact.
An analysis of PepsiCo’s corporate social responsibility
PepsiCo has established business in more than 200 countries has an employee base of more than 200,000 people and retails more than $98 billion annually (PepsiCo, 2012). This enormity presents PepsiCo with the capacity to support several different CSR initiatives. Based on UN Global Compact principle on supporting and respecting the safeguarding of internationally acclaimed human rights, PepsiCo endeavors to provide products that are safer for consumption (United Nations Global Compact, 2012). PepsiCo has made changes to its product line by incorporating healthier products by reducing fat, sugar and other unhealthy ingredients in its beverages (Market Watch, 2009).
PepsiCo also subscribes to the second principle of UN Global Compact that involves avoiding complicity in its operations. This is enshrined in the organization’s ethical operational procedures such as making donations to relief funds and conducting research into safe drinking water in China and setting up educational programs in places such as Mexico where exercise and nutrition are enhanced (PR Newswire, 2012).
The third and fourth principles of UN Global Compact relate to social responsibility in respect to improving the welfare of employees and the elimination of forced labor. PepsiCo supports the welfare of its employees by enhancing cultural diversity in its workforce and upholds the right of association of its employees. PepsiCo employs people on their own volition without any form of coercion (Westchester County Business Journal, 2012). The company also maintains excellent rapport with its employees by offering management courses at its Pepsi University so as to enhance their leadership competencies. Employees, who demonstrate outstanding commitment to their duties, receive scholarships to study at Pepsi University.
PepsiCo adheres to the fifth and sixth principles of the UN Global Compact principles by refraining from child labor, employing people based on merit and their qualifications and proper remunerations. The company management also has structures to deal with bribery and conflicting interests in its human resources department.
The seventh of the UN Global Compact principles relates to environmental protection and conservation. This implies that businesses ought to promote a precautionary approach to environmental challenges through implementing cost-effective measures. Proper governance and recycling of its waste has enabled the company to gain the confidence of its stakeholders (Geiselman, 2007). There is an intertwined relationship between the eighth and ninth principles with regards to environmental responsibility. To address rising concerns over environmental pollution from its packaging materials, PepsiCo launched the Supplier Diversity Program in 1983 to help control environmental pollution from non-biodegradable packaging materials. PepsiCo has spent over $2.1 billion in the program where they engage the minority and women in the collection of used bags which they eventually turn into compostable tote bags for sale (Geiselman, 2007). The Sunchip bags decompose when they are exposed to a type of acid found in plants. The company has also reduced plastic usage in beverage containers leading to significant reductions in waste dumped in landfills (Thurman & Vest, 2010).
In spite of recording tremendous success in some of its CSR initiatives, a couple of the initiatives have served to undermine UN Global Compact principles. In India, PepsiCo targeted at utilizing minimal low-cost, water purification methods to save money to improve the wellbeing of the local people. The company was criticized for using water that allegedly contained toxins to prepare its beverages. The water was said to contain pesticides that contribute to breakdown of human immune system and also cause cancer (Daniels Fund Ethics Initiative, 2012). This led to the ban of PepsiCo products in India until sometime in 1990s when the company reviewed its operations and reverted to using high quality water. Lately, the company has implemented water recycling techniques to treat and reuse water within its products
PepsiCo has also been accused by many health experts and consumer groups as contributing to obesity in some countries. Many social activist groups claim that PepsiCo’s CSR strategies have not addressed the manner in which its products contribute to obesity. In March 2010, PepsiCo announced that it would pull off all “highly-sugared” drinks from primary and secondary schools. The company did this in order to curb rising cases of obesity in children attributable to overconsumption of sugars. Many people viewed this as a negative corporate social responsibility stunt. They argued that children already accustomed to taking highly-sugared PepsiCo drinks such as Frito-Lay would still consume the drinks once out of school.
Though PepsiCo introduced a “natural sugar” soda to deal with the fears that high-fructose corn syrup has on health. Health experts insist that it is not only corn syrup that is harmful to health but sugar in all forms. Besides stopping the supply of highly-sugared drinks to schools, PepsiCo ought to have comprehensively reviewed all its drinks, lowered the high-calories in its products while adding nutritionally beneficial ingredients to its products.
In 2009, PepsiCo launched an iphone app for its AMP Energy Drink. The company launched the AMP Up Before You Score Campaign using mobile phone applications. The concept of the application was to help men “score” by classifying women into 24 groups. Men would then be given clues about the things each woman enjoys doing, her personality, and even allowing personal conversations. A man would score by managing to convince a particular type of woman after which he would create a “brag list” full with names, dates and details. He would then upload this information onto their twitter and/or facebook profiles. The Corporate Social Responsibility fun activity was meant to spice up the dating scene. However, the stunt was received with widespread protests by various activist groups while thousands of Twitter and Facebook users condemned the campaign as offensive and insensitive to women.
Conclusion
Though some controversies have rocked the CSR strategies by PepsiCo, the company has been hugely successful in implementing ethical CSR initiatives around the world. The company has achieved these while keeping to the UN Global Compact principles on businesses and their role in society.
References
Daniels Fund Ethics Initiative, (2012) PepsiCo’s Journey Toward an Ethical and Socially
Responsible Culture. Daniels Fund Ethics Initiative, University of New Mexico.
Retrieved 30 October 2012 from http://danielsethics.mgt.unm.edu
Geiselman, B (2007). PepsiCo goes green(er). Waste News. 5/14/2007, Vol. 13 Issue 1, p23-23
PepsiCo (2012). Retrieved from: http://www.pepsico.com/
Market Watch (2009). COMPANY SPOTLIGHT: PEPSICO. Market Watch: Drinks. Nov2009,
Vol. 8 Issue 11, p.28-36
PR Newswire (2012). PepsiCo Receives 2012 Stockholm Industry Water Award at World Water
Week. PR Newswire US. 08/28/2012.
Shutstack, M (2012). Giving back is part of the PepsiCo playbook. Westchester County Business
Journal. 6/25/2012, Vol. 48 Issue 26, p28-29.
Thurman, M & Vest, D (2010). Coca-Cola and PepsiCo in South Africa: A Landmark Case in
Corporate Social Responsibility, Ethical Dilemmas, and the Challenges of International
Business. Journal of African Business, July-December 2010, v. 11, iss. 2, pp. 235-51
United Nations Global Compact (2012). The Ten Principles. Retrieved from:
http://www.unglobalcompact.org/index.html
Westchester County Business Journal (2012). PepsiCo Gives Back. Westchester County Business
Journal. 9/17/2012, Vol. 48 Issue 38, p44-45
