Sustainable Development at PepsiCo
Authors: Debapratim Purkayastha, Adapa Srinivasa Rao
Institution: IBS Hyderabad, India
Competition year: 2012
Track: Corporate Sustainability
Key words: Sustainable development, Corporate social responsibility, Balancing excellent operating performance with sustainable business practices, Theory of externalities, Stakeholder theory, Performance with Purpose strategy, Human sustainability, Environmental sustainability, Talent sustainability, Triple bottom line, Social criticism, Environmental criticism, Food and beverage sector, PepsiCo
Courses: Strategic Management, Business Ethics
Target audience: MBA
Download an inspection copy.
This case is about the sustainable development initiatives of one of the world’s leading food and beverage companies, PepsiCo. Faced with various criticisms on the social and environmental fronts, PepsiCo adopted the ‘Performance with Purpose’ strategy in 2009 under the leadership of its CEO Indra Nooyi (Nooyi). This strategy was based upon the philosophy that the company’s financial performance should go hand in hand with its responsibilities toward society and the environment.
The new sustainable development program contained 47 commitments that PepsiCo made toward society and these were divided into four broad areas: Performance, Human Sustainability, Environmental Sustainability, and Talent Sustainability. The first component was to its shareholders, committing itself to good returns. The other three were to other stakeholders. PepsiCo took various steps to fulfil its commitments toward its stakeholders. It increased the content of healthy ingredients in its products like fruits, vegetables, nuts, grains, and low-fat dairy in its global product portfolio. To counter the allegations that its operations were leading to water shortages in the areas in which it was operating, it achieved a positive water balance in India and tried to achieve the same in other places in which it operated. It introduced several new nutritious products which were also cheaper and hence affordable to the underprivileged sections of society. To reduce the environmental impact of its operations it reduced the use of electricity and fuel in its operations. To understand the different markets in which it operated, it increased the diversity of its workforce around the world.
However, since mid-2011, Nooyi had come under fire from key stakeholders such as shareholders and bottlers who contended that her focus on ‘Performance with Purpose’ had come at the cost of positioning of the company’s products and had hurt sales. They felt that its archrival, the Coca Cola Company had gained the upper hand during Nooyi’s tenure.
Case Purchase Information
An inspection copy of this case is available here. Please contact Debapratim Purkayastha for permission rights.