THIS DOCUMENT IS THE RESULT OF A HYPOTHETICAL ROLE-PLAY FOR ACADEMIC PURPOSES. IT IS A COLLABORATIVE PROJECT OF A COMMUNICATIONS CLASS IN THE MARLBORO GRADUATE SCHOOL MBA PROGRAM AND IS IN NO WAY AUTHORED BY THE ORGANIZATIONS REPRESENTED BELOW.
FOR IMMEDIATE RELEASE
Testing the Waters: Stakeholders Convene to Shape the Context for PepsiCo’s Sustainable Water Use in India
PepsiCo is first company of its size to move towards integrating sustainability context – a key principle of the Global Reporting Initiative – into its sustainability efforts.
Andy Erickson – Ceres | email@example.com
Claire Wheeler – PepsiCo | firstname.lastname@example.org
Julie Fahnestock – Two Tomorrows | email@example.com
Cody Durant – Calvert Investments | firstname.lastname@example.org
Sophie Abrams – India Resource Center | email@example.com
Brattleboro, VT July 21, 2012
5,826 million liters of water. The amount of water PepsiCo uses in 39 manufacturing facilities in India every year. In a world where less than 1% of our water is both accessible and drinkable, one-fifth of the world’s population lacks access to clean drinking water. In a water scarce region like India, a recent stakeholder engagement focused on PepsiCo is just one example of how companies can advance triple bottom lines by making local resource limits and uses central to sustainability efforts. Following the multi-stakeholder effort, Pepsico is piloting a locally-rooted sustainability project for its Indian operations that relies on watershed thresholds and on-the-ground collaboration with community members and local NGOs. As a stakeholder that spurred this conversation, Calvert Investments has also announced the piloting of a new fund that will encourage companies to follow PepsiCo’s lead.
The Ceres Coalition regularly brings together stakeholders to foster positive dialogue that furthers sustainability. On June 9, 2012, Ceres hosted and facilitated a stakeholder engagement event in order to discuss the consumption and management of water used by PepsiCo’s manufacturing facilities in India. The following stakeholder organizations each had one member present for this engagement: Ceres, PepsiCo, Calvert Investments, The India Resource Center (IRC) and Two Tomorrows. The conversation cultivated a truly collaborative effort in which all parties worked together to integrate sustainability context – a key principle for companies in defining disclosure content articulated by the Global Reporting Initiative – into PepsiCo’s sustainability efforts.
Sustainability context was the major focus of the stakeholder engagement. For PepsiCo, sustainability context means the company is measuring its sustainability against actual specified limits and thresholds of, in this case, water. The biggest achievement of the engagement was that all stakeholders collectively created a definition of sustainability in the context of Water Use in PepsiCo India’s Operations: As a local, renewable yet limited natural resource, community access to water must not be compromised by PepsiCo manufacturing operations. PepsiCo’s water use in India will reach a sustainable level by:
- Contextualizing the clean water limits and thresholds of individual communities where PepsiCo is operating, so as not to exceed these limits and so as not to deprive the community their basic right to water nor the company and future water supply ample enough to ensure profitability.
- Prioritizing the needs of the people and community in order to maintain a flourishing relationship with the municipality as well as meeting the needs of both the shareholders and stakeholders.
- Employing all reasonable means to safely recharge the water supplies for the communities where PepsiCo operates, starting in the least water secure communities.
- Expanding PepsiCo’s internal understanding of its water use and sustainable responsibility to include supply chain production as well as in-plant manufacturing use.
Spurred by a report issued by the India Resources Center last year, stakeholders gathered to address concerns about the metrics PepsiCo employs when reporting on sustainable water use. In a letter to the company, Cody Durant of Calvert and Sophie Abrams of the IRC made a local case for sustainability by saying that “if large corporations like PepsiCo are claiming that they are helping local communities, we need to make sure that these claims are justified.” Stakeholders worked with PepsiCo to incorporate a more specific and local-level context for water use in its sustainability reporting, for example including the impact of resource use throughout the product supply-chain.
Based on the outcomes of this stakeholder engagement, Calvert Investments recently announced the launch of a pilot mutual fund project called the Context-Based Strategies, which is similar to Calvert’s other socially responsible investment options such as the Signature, SAGE, and Solution Strategies. This pilot fund will target and promote context-based reporting inspired by the type of reporting and analysis PepsiCo has agreed to pilot regarding its water use in India. Calvert’s letter asserts that context-based reporting is a way for companies to analyze the resources available in and for the communities in which they operate, a level of management that is not only crucial for meeting sustainability goals but also for ensuring survival of the companies and communities themselves.
According to investment specialist Cody Durant: “Calvert believes that this type of reporting is crucial and would encourage companies to follow suit with PepsiCo because of the changing world we live in. At this point, Calvert is unaware of any other strategies being used which would hold companies to such high standards as with the context-based approach.”
With already strong global corporate relationships with both PepsiCo and Calvert Investments through the Ceres Company and Investor Networks, Ceres acts as a mediator, convener and communication facilitator at such stakeholder engagements. Andy Erickson of Ceres reflects that “when the engagement commenced, each stakeholder really understood each other’s concerns, perspectives, needs and the overall importance of transparent communication…..all parties seemed committed to creating positive change through future collaboration and partnerships.” Ceres will continue to support future engagements between the participating stakeholders around this matter.
Two Tomorrows, with the help of Calvert, has researched and analyzed a variety of water management resource tools and recommends that Pepsico institute the following:
Two Tomorrows will hold PepsiCo accountable to the integration of each tool as they measure water usage in their supply chains. Additionally, Pepsico has agreed to establish multi-stakeholder working groups in each Indian village in which they source water and other natural resources, at the suggestion of Two Tomorrows.
Following the engagement, the IRC issued a new report, highlighting PepsiCo’s progress since IRC’s original report was released. This report also pinpoints three areas where PepsiCo still has room for improvement:
- Shift to context-based reporting, which entails expanding current reporting practices by measuring progress in improving water efficiency against the thresholds of available water in local watersheds.
- Enhance accountability, which includes setting clear targets, deadlines, and goals for the future to help shareholders, employees, consumers, and other PepsiCo stakeholders to trust in PepsiCo’s commitment to localized sustainability goals.
- Increase stakeholder engagement with local NGOs to collaboratively support community programs, and to ensure that individuals’ water needs are being met in the communities where PepsiCo operates in India.
“The IRC looks forward to future collaboration with PepsiCo by facilitating their relationships with local partners. This unprecedented strategy will help to ensure that the priority remains sustainable water use in India and helps alleviate water scarcity for the people of India,” said Sophie Abrams of IRC.
By collaborating alongside local partners to establish local water thresholds, PepsiCo will better understand and disclose its sustainability efforts where it matters most – in community. According to Claire Wheeler, PepsiCo is determined to advance its position as an industry leader through dynamic stakeholder engagement and it hopes to incorporate sustainability context into its operations and disclosure practices company-wide.
“This experience has been both eye-opening and gratifying…. Only through a shared and honest understanding of the issue can we begin to implement solutions that satisfy all stakeholders, be they investors, executives, consultants, NGOs, community members or local watersheds,” states Wheeler in her recent Performance Notes blog posts.
- IRC’s report Moving from Deception towards Purpose
- PepsiCo’s Performance Notes Blog
- Calvert’s Letter to Shareholders
Ceres is an advocate for sustainability leadership. Through the efforts of the Ceres Coalition, Company Network and Investor Network, Ceres mobilizes a powerful coalition of investors, companies and public interest groups to accelerate and expand the adoption of sustainable business practices and solutions to build a healthy global economy. Ceres is uniquely positioned at the nexus of the business, investment and advocacy communities. They leverage the power of their partners—leading investors, Fortune 500 companies, thought leaders and policymakers—to positively influence change. To accomplish their mission, Ceres relies on the power and expertise of the companies they engage with, the investors they bring together and the public interest groups work with. www.ceres.org
PepsiCo is a world leader in convenient snacks, foods and beverages with revenues of more than $60 billion and over 285,000 employees. PepsiCo is determined to lead the snack and beverage industry in advancing sustainability, and has focused on sustainable water use in its 39 manufacturing locations in India. PepsiCo has saved billions of litres of water and provided safe, clean water to thousands of community members in water stressed areas through on site water recycling, agricultural innovation, and by supporting efforts through Water.org and the PepsiCo Foundation. PepsiCo is committed to “Performance with Purpose”. Simply put, this means doing business the right way: operating responsibly with integrity and with high ethical standards. PepsiCo welcomes direct and honest conversation with its stakeholders as a vital lever for sustainability. Read more about PepsiCo’s thoughts on this stakeholder engagement at the Performance Notes. For more information visit www.pepsico.com.
Calvert Investment is an investment management company serving institutional investors, workplace retirement plans, financial intermediaries and their clients, Calvert Investments offers more than 40 equity, bond, cash, and asset allocation strategies, of which many feature integrated environmental, social, and governance research. Founded in 1976 and based in Bethesda, Maryland, Calvert Investments manages over $11.5 billion in assets. Calvert Investment Management Inc. serves as the investment advisor and provides sustainability research for the Calvert mutual funds and institutional investment strategies. For more information visit www.calvert.com/sri.html
Two Tomorrows is an international corporate sustainability agency. They deliver deep insight, strategic advice and pragmatic support to major companies, enabling them to create long-term value by doing business sustainably. Whatever the industry, they understand the risks and opportunities (see industries). Their expertise covers sustainability issues as diverse as carbon emissions, water scarcity, biodiversity, community investment and human rights (see key issues). Led by prominent figures in the field of corporate sustainability, their high-caliber team of consultants and partners combines many years of hard-won experience with unrivaled expertise. They serve a global client base from offices in Europe, Asia and North America and through our network of partner firms worldwide. For more information visit www.twotomorrows.com.
India Resource Center works to support movements against corporate globalization in India. We provide timely information on transnational corporations to Indian movements. We also educate and mobilize key constituencies in the US and other countries to take action in support of campaigns in India. India Resource Center is a project of Global Resistance. Global Resistance works to strengthen the movement against corporate globalization by supporting and linking local, grassroots struggles against globalization around the world. Our goal is to ensure that those most impacted by globalization are engaged in and at the forefront of the movement against corporate globalization. For more information, and to see our current campaigns, visit www.indiaresource.org/index.html