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Testing the Waters: The Sustainability Context of PepsiCo’s Water Positivity
October 4, 2012
What happens when PepsiCo and its stakeholders examine its Water Positive initiative through the lens of the Sustainability Context Principle, as Global Reporting Initiative (GRI) guidelines require? That’s the question a handful of Marlboro Sustainability MBA students answered by role-playing this real-world scenario. I structure my Communication, Persuasion and Negotiation course as an engagement role-play that enacts a stakeholder dialogue to play out its logical outcomes when following the prevailing principles of corporate accountability and transparency.
Given a few options, we collectively chose to play out this PepsiCo case, spurred by a November 2011 report by the India Resource Center (IRC) and Community Resource Center (CRC), called Deception with Purpose: PepsiCo’s Water Claims in India. The report calls PepsiCo out for claiming credits for water savings in its supply chain to counterbalance debits in its factories. Of course, water impacts accrue at the local watershed and aquifer level, precluding this kind of default “credit swapping.” According to the report:
“Pepsico either needs to compare the water used in its factories with the water saved in their factories, or compare the water used in their supply chain (a vastly more appropriate measure) with the water saved in their supply chain, to assess its water balance,” the IRC/CRC report states.
With this as the initiation, IRC (represented by Sophie Abrams) partnered with Calvert Investments (portrayed by Cody Durant), which holds PepsiCo in its SAGE (Sustainability Achieved through Greater Engagement) fund, to send a letter to PepsiCo (played by Claire Wheeler) asking for a meeting. Facilitated by Ceres (played by Andy Erickson) based on the stakeholder engagement section of the Ceres Roadmap for Sustainability and the AA1000 Stakeholder Engagement Standard, the dialogue focused on how PepsiCo reconciles its commitment to the “human right to water” with its obligation to measure its performance “in the context of the limits and demands placed on environmental or social resources at the sectoral, local, regional, or global level,” according to the GRI definition of Sustainability Context.
The dialogue flowed into ongoing engagement (vividly described by Julie Fahnestock in a series of blogposts resulting in a series of outcomes:
- A press release from Ceres as facilitator, encapsulating all of the below developments;
- A common Sustainability Definition for PepsiCo India Operations arrived at collaboratively between PepsiCo and its stakeholders;
- An evaluation of water management tools by PepsiCo consultant Two Tomorrows (played by Julie Fahnestock);
- A series of posts on PepsiCo’s Performance Notes blog by Wheeler, reflecting on the process and announcing the integration of new water tools and community engagement in India;
- A report by IRC (following up on its Deception with Purpose report) called Moving from Deception towards Purpose; and
- A letter to Calvert shareholders announcing the piloting of a new fund taking a context-based sustainability approach called Context-Based Strategies.
While such outcomes are ostensibly possible and even logical based on existing principles such as GRI’s notion of Sustainability Context, it’s striking that the role-play scenario differs so starkly from reality, where PepsiCo (and almost all companies) fall short of measuring and reporting their performance vis-à-vis the real-world limits and thresholds that define sustainability. Perhaps this case study will prompt companies to sit up and take notice, inspiring them to shift their practice toward this more disciplined approach to measuring, managing and reporting sustainability performance.