Conflict Palm Oil And Pepsico's Ethical Dilemma

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PepsiCo has made considerable efforts and commitments to operate in a socially responsible fashion. However, there execution is fairly limited and frankly quite poor. It is apparent that they only started making efforts to limit deforestation during the acquisition process of palm oil, after they were charged to do so by other organizations. They did not self-initiate the changes, but rather made the changes after being called out for their lack of responsibility. It is reflected in the case, that their social responsibility efforts only began after environmental groups impacted their Dow Jones sustainability indices, and later their stock prices. It has been shown that companies who take a greater effort to be socially responsible in result become more profitable, so much so that it is now a popular trend in large corporations. Ultimately, the end goal is still the same, to gain the most capital and profit, not necessarily to save the planet. There.

PepsiCo’s relationship to meeting the five components of socially responsible is meeting the bare minimum, instead of going above and beyond. This comment is best supported by PepsiCo’s response the Greenpeace, SumOfUs, Rainforest Action Network and other social responsible companies who’ve highlighted PepsiCo’s lack of urgency to meet deadlines and accomplish the mandatory changes. PepsiCo’s models have changed due to a required component of social responsibility being imbedded into the corporate environment, not out of their own proactive efforts. PepsiCo has made it a prioritization for their stakeholders, going as far as to incorporate it into their corporate beliefs. PepsiCo has a very strong and shareholder based approach to sales, because that is their consumer base, and it would be supported to say that they take their innovation efforts very seriously. Additionally, they take the same approach for social responsibility, because that is what their consumers expect, and not what they expect of themselves. How does PepsiCo link rewards and incentives to strategically-important employee behaviors and the company’s targeted sustainability outcomes? SpeakUp is a program that the company created in which employees can contact management and report any grievances or problems.

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The program is accessed either online or phone and employees are strongly encouraged to report any abuse or problems. The company firmly believes that their employees are essential pieces to their future and therefore have a few wellness programs to help employees feel engaged and supported. Employees are also well versed on their sustainability efforts and encouraged to follow them and continue efforts to maintain a strong presence in the community.

PepsiCo’s performance with purpose sustainability initiative subcategorized into talent sustainability, environmental sustainability and human sustainability implemented in 2009 by PepsiCo. Each category focuses on a specific part of their business: talent sustainability focusing on employee development and continually growing the company into a productive and supportive team. Environmental sustainability involves protecting natural resources and the environment through efforts of conservation and innovation into more sustainable ingredients and sources. Finally, human sustainability is the effort to provide clean ingredients for their consumers to meet their desires both flavor and nutritionally. Management has allocated resources to implement their environmental, talent and human sustainability efforts. These efforts have cost the company financially, but also benefitted them through increased sales, better brand recognition and retaining quality employees.

Through their efforts, PepsiCo has restructured their commitments consistently to adapt to new concerns and show their strong commitment to change. These restructuring challenges the company to redevelop their approaches and encourage better sustainable efforts for the future. With the constant changes it can beg to question if there is sufficient attention being put on these efforts, or it can also highlight PepsiCo’s commitment to being in the forefront movement of change. In regards to the leadership at PepsiCo, it is best to look at their CEO Indra Nooyi. Indra has spearheaded performance and purpose programs for the hundreds of PepsiCo products ensuring there are sustainable and attainable for the consumer both with access and financially. Indra has maintained her current position since 2006, after slowly rising up through the ranks, with her constant goal of sustainability being present and in the forefront. PepsiCo’s strengths in their leadership is that their CEO has worked her way up and full understands the company from the inside out, giving her valuable insight and information to continue to steer the company towards the future. In order to facilitate the proper execution of sustainable practices, policies must be instituted. One example of this is PepsiCo’s effort to use recycled materials for the production of their products. Using such materials helps reduce the overall waste returned to the environment and protect the future for the future. PepsiCo has also developed policies to aid in their commitment to reduce water waste and be increasingly more efficient. Additionally, the company is attempting to reduce electricity consumption and the release of greenhouse gases by using annual markets to reduce their goals. These efforts are not just from a production standpoint, but also a procurement of resources, to ensure not just the company but its subsidiaries follow close with their goals of sustainability. The overall net revenue for PepsiCo has decreased signicantly from 2015 to 2016, while their debt has increased as well.

This change can highlight the impact of lack of sustainable efforts from a consumer standpoint, paired with PepsiCo’s efforts to make more impactful changes. Additionally, PepsiCo saw an increase in their operating profits while overall gross profits decrease. This again could embody the social responsibility efforts demanded by consumers along with the desire for healthier beverages. PepsiCo’s triple bottom line consists of their social, environmental and economic components of their business. In order to increase their performance, it would recommended that they take a greater step of being proactive in regards to their social responsibility, being ahead of the curve and changes, rather than wait until there is a pending lawsuit or major political issue. It would be who of PepsiCo to destigmatize their company as being another large mass corporation by making sincere efforts to give back to the community as a whole. Efforts such as fundraising or improving the communities that need it most, or even just being a positive ambassador of change in the community could greatly help.

Environmentally, if PepsiCo could be the leaders in no longer attaining their Palm Oil from communities that have deforestation, and develop more sustainable practices for the future. The company needs to potentially pair up with other companies to help develop and train more sustainable practices to help keep resources low, while also continuing to dominant the market. Each effort that PepsiCo makes that is on their own will play major dividends to their image and opportunities for the future. It’s just a matter of them being the leader of the industry and taking the first step in the right direction.

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