Management of Ethical and Corporate Governance Factors in PepsiCo

Ganesh Adhikari
ABE membership number: W07304
11 September 2013

Contents
EXECUTIVE SUMMARY............................................................................................ 5 1. INTRODUCTION .................................................................................................... 6 2. COMPETENCIES OF PEPSICO ............................................................................ 8
2.1 PepsiCos strength......................................................................................................................... 8 2.1.1 Distribution channels ............................................................................................................. 8 2.1.2 Strategic alliances .................................................................................................................. 8 2.1.3 Global operations................................................................................................................... 8 2.1.4 Strong Brands ......................................................................................................................... 8 2.1.5 Human resources ................................................................................................................... 9 2.1.6 Technological advancements ................................................................................................. 9 2.2 Analysis of the Environment ......................................................................................................... 9 2.3 linkage of competence to the environment via strategy............................................................ 10

3. ISSUES OF THE ORGANISATION ..................................................................... 12

3.1 Environmental ............................................................................................................................. 12 3.2 Ethical .......................................................................................................................................... 13 3.3 Legal ............................................................................................................................................ 13 3.4 Corporate governance issues ...................................................................................................... 14 3.4.1 Corporate Governance......................................................................................................... 14 3.4.2 Board of directors ................................................................................................................ 14 3.4.3 The Audit Committee ........................................................................................................... 14 3.4.4 The Compensation Committee ............................................................................................ 14 3.4.5 The Nominating and Corporate Governance Committee .................................................... 15

4. CONFLICT ........................................................................................................... 15
4.1 Tension between shareholder value and stakeholder value ...................................................... 15 4.2 PepsiCos strategy to manage these tensions ............................................................................ 15 4.2.1 PepsiCo's Global Sustainable Agriculture Commitments..................................................... 16 4.2.2 Food Health and Safety Policy ............................................................................................. 16 4.2.3 Compliance with law ............................................................................................................ 16 4.2.4 Human resource................................................................................................................... 16 2

4.2.5 Food for good initiative ........................................................................................................ 17 4.2.6 Partnerships with earth Institute and H2O Africa ............................................................... 17

5. CONCLUSIONS ................................................................................................... 17
5.1 Recommendations ...................................................................................................................... 18

REFERENCES...............................................ERROR! BOOKMARK NOT DEFINED. APPENDICES .......................................................................................................... 21

Declaration
I declare that this assignment is my own work and I have appropriately acknowledged the work of others. This assignment is produced in accordance with the ABE regulations and guidelines.

....................................... 11 September 2013

Executive summary

This report provides an analysis of market environment of the PepsiCo. The website of the PepsiCo used to analyse the impact of social, environmental and ethical issues on the organisation. It is found that different stakeholders has different interests in the company, one major challenge for PepsiCo is to manage the tension between shareholders value and CSR activities. Hence the data was useful in analysing the tool PepsiCo has used to balance such conflicting interests. Additionally the information from various other journals, books, magazines and websites were also applied. The purpose of using different source of data was to establish validity and reliability of the research. Report shows that the PepsiCo has the excellent track record of environmental and social initiatives. PepsiCo is developing, reshaping and rebranding according to the needs and wants of the consumer. PepsiCo is constantly facing challenge from public and other stakeholders for its ethical dilemmas. Similarly with the target of being more ethical, transparent and accountable PepsiCo has the corporate governance policy in place. The core competencies of PepsiCo are linked with society through strong

communication channels. PepsiCo also use its key capabilities to eliminate any threat from the environment. PepsiCo has also these strategies to reduce the conflict among the stake holders. It also is leading the market by effectively engaging with the consumers and other partners of the business. However the report also has some limitations because the financial information about the investment in social and environmental initiatives was not available on PepsiCo websites.

Total word count: 3752

1. Introduction
Founded in 1965, PepsiCo is one of the largest food and Beverage Company in the world with net revenues more than $65 billion in 2012/13. The company operate in more than 200 countries around the globe with range of brands which include Pepsi, lays, walkers, Quakers and Tropicana. PepsiCo employs 297,000 people and has range of operational activities like production, supply and sales all over the world. Kelloggs, Kraft foods and Coca-Cola are the major global competitors of PepsiCo. The companys vision is to put into action through programs and a focus on environmental stewardship, activities to benefit society, and a commitment to build shareholders value by making PepsiCo a truly sustainable company (PepsiCo, 2013). PepsiCo have always believed in finding innovative ways to reduce the use of energy, water and packaging, and providing better place to work for everyone involved in its business. Additionally, PepsiCo is known for respect, support and invest in the local communities where they operate, by hiring local people, creating products designed for local tastes, and partnering with local farmers, governments and community groups. PepsiCo is the century old brand with diverse product portfolio and strong distribution channel around the world. However its over dependency on US market and retail chains has limited its growing opportunities in recent years. There is opportunity for PepsiCo to expand into the developing markets like China and India. It also has the required capabilities to expand its product portfolio which need to be more dynamic according to the different markets. However PepsiCo faces strong challenge from its competitors to remain competitive. A change in political situation in the different regions and conflict has result the decline in its revenue and profitability. Additionally the growing consumer awareness about the legal, ethical, social and environmental practises has forced company like PepsiCo to be more transparent, accountable and Ethical.

Swot analysis of PepsiCo

over dependence on US market Low productivity Dependence on retail chains

brand image diversification distribution

Strenght

Weakness

Opportunity
International development opportunity Broadning product portfolio

Threat

Market decline Governemnts regulations competition consumer awareness

Increasing public concern about the social and environmental impact of business has created pressure for the larger organisation to operate as a corporate citizen Carroll (1979). The power of consumer is rising and the expectations of the consumer are surging because of the expansion of the information technology. This awareness among consumers about the firms CSR initiatives has high impact on their buying behaviour (Sen and Bhattacharya, 2004). Most important challenge though is that the expectations of the people are different from countries to countries which are affected by the law, culture, economic level and educational level of the public. For example the consumers in US will have demand for healthier product whereas people in Asia or Africa will seek cheaper products. Therefore it is essential for PepsiCo to analyse the various market environment periodically to fulfil the demand of the people to ensure the consistent growth. Many of these factors keep changing time and again to add extra pressure for the company. PepsiCo is a consumer products company operating in highly competitive markets and rely on continued demand for their products. To generate revenues and profits, it must sell products that appeal to the customers and to consumers.

2. Competencies of PepsiCo
PepsiCo has the diverse and large segment of food and beverage industry worldwide. PepsiCo is able to gain extraordinary strength and flexibility through marketing initiatives, financial capabilities and size. PepsiCo has the strong channels to reach to the wider section of customer according to their needs. According to Prahalad and Hamel (2003) core competencies are the set of actions that lead to the development of core products.

2.1 PepsiCos strength

2.1.1 Distribution channels

The worldwide presence of PepsiCo is depending on its distribution channel which has created the valuable competitive advantage for the business. PepsiCo have the system in place for each market to deliver products to the retail outlets with maximum care, visibility and appeal.
2.1.2 Strategic alliances

Worldwide strategic alliance, joint ventures and partnership bring huge amount of strength in the capabilities of PepsiCo. Through the partnerships with many companies in different geographic market PepsiCo has been able to spread its influence and presence in the market.
2.1.3 Global operations

PepsiCo operates in more than 200 countries with more than 297,000 employees. PepsiCo nearly has 700 manufacturing facilities worldwide, 2100 distribution centres and 70,000 routes. It has very strong presence in North America, Europe and the Middle East and now it is investing significantly to create momentum in the critical emerging markets of China and India.
2.1.4 Strong Brands

PepsiCo has grown significantly in recent years with its product portfolio and global brands. The company has 16 different products which generate more than $1 billion in revenue per year. The company has been also successful in merging and acquiring other brands like Lipton and Tropicana in recent times around the world and has had success by linking with the own brands.

2.1.5 Human resources

PepsiCo attracts, retain and develop some of the best people in the industry which creates the valuable advantage to the company. By providing financial and non financial reward to its workforce for their hard work and commitment PepsiCo is able to satisfy their needs.
2.1.6 Technological advancements

PepsiCo has invested huge amount of money into Research and development in recent years which has helped organisation to develop more eco friendly production and distribution facilities.

2.2 Analysis of the Environment

PepsiCo is operating in the highly competitive food and beverage industry. PepsiCo constantly seek to remain competitive by closely monitoring the price, quality, quantity, variety and efficient distribution of the products. PepsiCo is facing intense competition in all major markets from the rival companies. Consumer buying patterns changes in short period of time which is a major challenge for the company like PepsiCo. It takes long time to develop, produce and sell the product as well as the huge amount of investment if the consumer choice changes in short period of time company has the risk to lose all the invested into that particular product. Currently the demand for healthier food and drink is rising. People are also concerned about the way food companies source the natural resources. Similarly the public awareness about the business practice has great impact on their buying behaviour. It is widely believed that the CSR activities of the firm have the direct relationship with the sales (Lombardo, 2011). Eco friendly and socially responsible companies are performing better than the one those are controversial. Because the public perception is positive for those who invest some amount of profits into the social and environmental initiatives. Government policies are the subject to change according to the development of the social and economic situation of the country. In some cases law can change when opposition party come into power. Therefore the change in the law and regulation has great impact on the performance of the PepsiCo. Similarly political instability across Middle East and changing government policies in Europe and America has
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significant impact on PepsiCos business. Conflicts and uncertainty in the market create unstable business environment and such situation has big influence on PepsiCos operation. The economic development in the countries like china and India has created more opportunity for the multinational companies like PepsiCo. PepsiCo is already the established market in those countries but have the opportunity to expand. Technological development is another challenge for PepsiCo to remain competitive in the market. Uncertainty over the scientific developments over the future creates the sense of fear about the possible investment in any technology or machineries. Crop like potato, wheat, rice and grains are the major raw materials for PepsiCo. Shortages in the supply of food have great impact on its business. Natural disaster and the global warming has caused the shortages in crop supply which help increase the price of raw material hence has negative impact on PepsiCo profitability. PepsiCo hold assets and incur liabilities, earn revenues and pay expenses in a variety of currencies other than the U.S. dollar. However the consolidated financial statements are presented in U.S. dollars, the financial statements of foreign subsidiaries are translated into U.S. dollars. In 2010, PepsiCos operations outside of the U.S. generated a significant portion of net revenue. Fluctuations in foreign exchange rates may therefore adversely impact business results or financial condition.

2.3 linkage of competence to the environment via strategy

PepsiCo links its competencies through the various strategies to generate growth for the company. To enhance the company image as the ethical company PepsiCos believe in responsible marketing. PepsiCo cancelled its contract with rapper Lil Wayne in 2013 for his use of racial lyrics in his songs. PepsiCo believes in equality therefore it distances itself from the controversial celebrity which shows the marketing strategies are directed towards the ethical responsibility of the company (PepsiCo, 2013). PepsiCo has taken several important steps to ensure responsible advertising practices which are directly linked with its reputation. It has joined the International Food & Beverage Alliance (IFBA), a
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Swiss-based NGO, to adopt a worldwide voluntary commitment to advertise to children under the age of 12 only those products that meet specific nutrition criteria. PepsiCo used its technological expertise to develop and reshape its products according to the changing consumer preference. To do so PepsiCo work on following areas:

Food Safety Innovation (R&D) Manufacturing Quality Responsible sourcing Eco friendly distribution channels

Furthermore PepsiCo has utilised its competencies in enhancing the brand image and the reputation of the company by being a responsible company. Similarly it also uses its human resources to enhance its prestige. In 2012, about more than 33,000 volunteer hours were completed by PepsiCo employees around the world (PepsiCo, 2013). It uses the following social and environmental actions to get closer to the community to maximise its relationships with them and enhance the trust and image of the company. Initiative Green Building Description 10 new construction building with

Environmental design certification Renewable energy projects Energy efficiency process 10 renewable energy projects in 2012 Through lighting upgrades in 2012,

PepsiCo America Beverages is saving 14,426,000 kWh of electricity and 47,700 MMBTU of natural gas each year. Organisation wide behavioural change PepsiCo-wide Environmental 2012 Operations Summit

Sustainability

provided a forum for knowledge transfer, collaboration, education, networking, and sharing of best practices on reducing energy, cutting greenhouse gases and using water more efficiently. Energy saving fleets PepsiCos electric vehicles have travelled
11

nearly

three

million

miles,

reducing

carbon emissions by 5,000 metric tons Third party involvement to verification An independent organization, Bureau Veritas, was used to verify PepsiCos 2012 environmental performance data for emissions, energy consumption waste production and water withdrawals.

3. Issues of the Organisation

3.1 Environmental
In 2003 sales of Pepsi products was banned in India after the level of pesticides in the drink was found higher (PepsiCo 2013). Similarly Beijing local government accuses Pepsi one of the most pollution creating factory in china (PepsiCo, 2013). These issues has created negative publicity for the PepsiCo and had adverse effect on their business. It is important for the modern business to take responsibility and take appropriate action to eliminate the impact it has cause to the environment. The concept of CSR is increasingly important for corporations around the world in this competitive environment where the expectations are heightened in the way business is operated (Blowfield and Murray, 2011). Major international companies are the target for the pressure group, regulatory bodies and media for their impact on environment. PepsiCo believe that environmental stewardship and protecting the health and safety of the consumers underpin their core values. PepsiCo monitors company-owned operations and joint ventures where it holds a majority share. It encourages suppliers, service providers, bottlers and other partners to adhere to the policy. PepsiCo has been able to achieve their goal, four years ahead of schedule, to improve global operational water-use efficiency by 20 percent per unit of production by 2015, compared to a 2006 baseline (PepsiCo, 2013). The improvements in efficiency enabled PepsiCo to save nearly 14 billion litres of water in direct operations in 2012, which, in turn, enabled the company to save more than $15 million in water costs.
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3.2 Ethical
According to Bowen (1950) social responsibility is the moral obligation of the business to follow the objectives and values of the society. People across the world have different cultures, values and traditions. One of the biggest challenges for PepsiCo is how to successfully enter into other countries, particularly when laws culture and traditions are different. PepsiCo often faces heavy criticism for products that are viewed as largely unhealthy and whose packaging contributes to a large amount of waste. Similarly PepsiCo has been constantly working to create the working environment where anyone can report the misconduct or inappropriate business behaviour. "We want people to come forward and ask questions, to create a culture where people are willing to raise issues and challenge behaviour," says Pam McGuire, PepsiCo's senior vice president and deputy general counsel of business practices and compliance.

PepsiCo believe in acting ethically and responsibly while sourcing, processing, distributing and selling the products. PepsiCo Global Code of Conduct which is seen as roadmap and compass has been revised on October 1, 2012 to address changing laws that impact our business. According to the (PepsiCo website, 2013) all the employee are supposed To show respect in the work place act with integrity in the marketplace ensure ethics in our business activities perform work responsibly for our shareholders

3.3 Legal
Climate change is the global challenge which is familiar among almost everyone in the world. Therefore there the law regarding energy use and emissions are getting tougher. Similarly the health and safety law are different in many countries. New taxes are imposed on the sugar related drinks in US for the public health initiative
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(Reuters, 2010). Similarly the political conflicts and the change in the government across many regions have great impact on the performance of the PepsiCo. It is often likely that the law and regulation will change after the change in government. Therefore it is a major challenge for the PepsiCo to comply with all the legal compliance.

3.4 Corporate governance issues

Public, consumers, investors and other stakeholders in current market environment have concerns relating to PepsiCo's accounting, internal accounting controls or auditing matters. There is a belief among people that active participation in public policy is essential and appropriate for companies in open societies (PepsiCo, 2013).
3.4.1 Corporate Governance

PepsiCo's Articles of Incorporation provide a legal declaration of its structure and purpose as a corporation as mandated by law. Its report clearly shows the rules and procedures by which it operates as well as the rights and powers of company shareholders, directors, and officers. These principles were adopted to establish a common set of expectations to assist the board and its committees in performing their duties in compliance with applicable requirements. PepsiCo has adopted comprehensive corporate standards and policies to govern our operations and ensure accountability for our actions.
3.4.2 Board of directors

PepsiCos business strategy and affairs are overseen by the board of directors comprised of one executive director and 12 independent directors. Only independent directors are appointed to the three standing board committees which are the following
3.4.3 The Audit Committee

The audit committee is comprised of independent directors with the financial literacy to provide oversight of PepsiCo accounting policies and financial reporting.
3.4.4 The Compensation Committee

The compensation committee is composed entirely of independent directors responsible for overseeing policies on executive compensation.

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3.4.5 The Nominating and Corporate Governance Committee

This committee is responsible for nominating new members to the board and providing policy recommendations regarding corporate governance.

4. Conflict
The business is the combined system of different forces which has different powers and interests in the company. Difference in interests among stakeholders creates the situation of conflict.

4.1 Tension between shareholder value and stakeholder value

There is apparent distinction between shareholders value and stakeholders value. Shareholder value is directed towards the maximisation of profits and returns to the shareholders. Many academics argue that the profit maximisation must not be the only objective of the company. According to Hopkins (2004), The wider aim of company should be to create higher standards of living, while preserving the profitability of the corporation, for peoples both within and outsid e the corporation. However on the other side many people criticise CSR for being just another tool of publicity and marketing. According to Theodore Levitt (1958) social responsibility is the harmful approach to business interest. He further argued that the social and environmental issues are for government and regulatory bodies to solve. Similarly, Friedman(1970) famously said that the social responsibility is a fundamentally subversive doctrine in free society arguing that profit itself was a social g ood and that society was best served when corporation maximize shareholder value. There was conflict with the farmer in India after the report suggests that the PepsiCo factories are creating the kind of pollution that is affecting the soil of the farmer.

4.2 PepsiCos strategy to manage these tensions

PepsiCo achieve this by following the strategy to return and invest in the society where it operates around the world. Additionally by serving society as a good corporate citizen and taking action or aligning itself with leading experts and organizations focused on emerging social and environmental issues, PepsiCo has
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achieved a high level of stakeholder engagement. By minimal use of resources and using advanced technology in its production and supply PepsiCo saves Environment and the money at same time. By investing on following operations around the world PepsiCo is reducing the cost of production which will increase the profitability for the longer period of time.
4.2.1 PepsiCo's Global Sustainable Agriculture Commitments

PepsiCo has used the sustainable agriculture programme in many parts of the world by reducing the cost as well as using minimum resources. Few examples include A new way of growing rice in India saved more than seven billion litres of water PepsiCo has developed tools to increase the efficiency of fungicide used in Russia, the UK and Egypt. In Inner Mongolia, PepsiCo China developed a highly productive method of growing potatoes, wheat and corn in desert conditions.
4.2.2 Food Health and Safety Policy

People in modern market environment are buying more from the firm which is doing well for the society and environment. PepsiCo has created responsible portfolio of its product by keeping the health of consumer in mind. Currently, 54% of product portfolio is defined as healthier, and PepsiCo aims to increase this to 60% by 2015(PepsiCo, 2013).
4.2.3 Compliance with law

Various governments have different GHG emission policies in places however PepsiCo has continuously worked with all regulatory bodies to make efficient use of fuel and other resources. This strategy has helped PepsiCo to save cost as well as preserve the environment. By keeping constant level of GHG emission PepsiCo was able to grow its food and beverage production by 7 to 12 percent from 2008 to 2012(PepsiCo, 2013).
4.2.4 Human resource

Additionally PepsiCo is dedicated to supporting health and wellness of its work force through a variety of initiatives, including education programmes, activity initiatives
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and health checks to test for body fat content, body mass index and blood pressure. PepsiCo employees also help make a meaningful difference in the lives of others and have an enduring impact on the communities where they live and work by seeking ways to minimise global challenges.
4.2.5 Food for good initiative

Through collaborations with community and government partners, the program provides free, nutritious meals and fun physical activities to kids during the summer months, when they are out of school and therefore do not have access to government subsidized meals.
4.2.6 Partnerships with earth Institute and H2O Africa

PepsiCo and the Earth Institute at Columbia University, an institutions dedicated to global sustainable development announced a partnership with H2O Africa, which involves identifying a series of high-impact, community-based activities and practical solutions across water, agriculture and climate. The effort is focused on improving water access, increasing water productivity and recommending innovative methods to deliver "more crops per drop," among other goals. The PepsiCo partnership with H2O Africa also involves on the ground clean water projects in Niger, Mali, Senegal and other countries in Africa.

5. Conclusions
PepsiCo is the typical business success story, with the imagination of single mind and being the largest food and Beverage Company in the world. Yet the challenges are still there form the environment and competitors. PepsiCo is seeking a way towards more balanced stakeholder engagement by identifying their needs and interest to understand and respond. There is the belief among the leaders of PepsiCo that with the effective use of social activities has helped maximise the relationship and engagement with the society. As CSR is related to the brand image, companies with being better in social and environmental initiatives are believed to receive a positive word of mouth in society (Lombardo, 2011). With the increasing emphasis in sustainable development PepsiCos management has linked

environmental, ethical and Corporate Governance issues with the corporate strategy of the company.

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Still there are some issues related to its operation on the production facilities in developing countries. PepsiCo must go beyond law to take extremes actions for the wellbeing of the consumers. Many of the past challenges face by the company were due to the reduced engagement with stakeholders and society. Due to the lack of cultural sensibility PepsiCo shared ethical dilemmas through its marketing campaign in the past. Even though PepsiCo has worked hard to maintain the level healthy ingredients in its products it seems PepsiCo has the long way to go before its snacks can be called healthier. If PepsiCo can learn from its mistakes, there is the possibility for the company to justify a reputation as a socially responsible company.

5.1 Recommendations
The future of PepsiCo depends upon its actions to provide the product that has minimum impact on the health of the consumers. To fulfil the health and safety commitments PepsiCo must comply with all the local bodies in various markets to ensure the good sustainable business environment for all the stakeholders. PepsiCo has taken some concrete steps to reduce the level of pollution and use of natural resources. However the future of PepsiCo depends upon its commitment and value for the environment. There is still the need of more investment in the infrastructure to reduce the emission of carbon. Similarly PepsiCo must increase its engagement with society and stakeholders to develop ethical working environment. The effective leadership initiatives on the issues of governance and ethical corporate structure will have great impact on its performance.

Reference Books
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9780199581078.pp. 32-55

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Creswell, J. W. (2009). Research design, Qualitative, Quantitative and mixed method approaches 3rd edition thousand oaks CA: sage

Friedman, M. (1970). The Social Responsibility of Business is to Increase its Profits. New York Times magazine, New York Patton, M.Q., (2002). Qualitative Research and Evaluation Methods. London. Thousands oaks. CA. Sage publication Saunders, Mark; Lewis, Philip & Thornhill, Adrian. (2009). Research Methods for Business Students. Pearson Education Limited. Essex, England

Journals Bhattacharya, C.B and Sen. S. (2004) Doing Better at Doing Good: when, why and how consumers respond to corporate social initiatives. California management review, vol.47 Carroll, A.B. (1979). A three dimensional conceptual model of corporate social performance. Academy of management review, Vol.4, page 497-505 Carroll, A.B. (1999). Corporate social responsibility: evolution of a definitional construct. Sage publication. vol.39, page 268-295 Hopkins, M., 2004. Corporate social responsibility: an issues paper. International labour organisation. Printed by the International Labour Office, Geneva, Switzerland Websites ASOCIO Policy Paper, 2004. CORPORATE SOCIAL RESPONSIBILITY. [online] Available at:

http://www.asocio.org/policy/Corporate%20Social%20Responsibility.pdf [Accessed at 10 May 2013] Csrwire. 2013. CSR profile of PepsiCo. [Online] available at:

http://www.csrwire.com/members/10363-PepsiCo [Accessed at 22 May 2013] EU, 2013. http://ec.europa.euenterpriseandindustry.[online] Definition of CSR. [Online] Available at:

http://ec.europa.eu/enterprise/mobile/topics/policies/sustainable-

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business/corporate-social-responsibility/index_en.htm [Accessed at;12 May 2013] Karnani, A. (2012). The case against corporate social responsibility. Wall street journal.[online] available at:

http://online.wsj.com/article/SB1000142405274870333800457523011266450 4890.html [Accessed at 14 May 2013]

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http://www.ecostat.unical.it/RePEc/WorkingPapers/WP15_2011.pdf [Accessed 9 May 2013] Mehra. A., 2010. Pepsi Refresh' Is Not PepsiCo's True CSR effort. [online]Available at: http://www.forbes.com/sites/csr/2010/10/19/pepsi-refreshis-not-pepsicos-true-csr-effort/ [accessed at: 15 May 2013] Ministry of Justice UK. 2008. Core Competence Framework Guidance booklet. [Online] Available at:

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Appendices
A. The engagement of its leadership into the social and environmental issues has created the opportunity to balance the corporate interests of PepsiCo. To achieve both CSR and profitability PepsiCo has developed the sustainable leadership structure policy. Following figure shows the model where all activities are directed towards the social and environmental goods. Goals and commitments Training and Awareness policy Monitoring and Follow up PepsiCo-owned

Issues of water, Climate Business

and All

21

change, waste elimination, expectation agriculture, education. health

are manufacturing facilities are

and communicated to business required to have an EMS associates and partners that complies with the

through code of conduct, PepsiCo EMS framework employee conduct, while using a locally

environmental policy and relevant approach. marketing policy. In 2005, the PepsiCo

Environmental Management System

(EMS) framework was first developed with the help of an independent third party. Currently, 86 percent of PepsiCo's manufacturing

locations have an EMS in place that aligns with the PepsiCo EMS framework, and 83 locations have ISO 14001

achieved

certification for their EMS.

B. PepsiCo strategy is to link its competencies through 1. Human sustainability 2. Environmental sustainability 3. Talent sustainability All the actions within the company are directed to fulfil these three purposes of its corporate strategy. Similarly with having strong controls over financial reporting PepsiCo is able to provide timely, accurate and understandable information to its investors, customers and other related parties. There is the framework to do so which is internal controlIntegrated framework.

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