Analysis of Pepsico’s Efforts in Corporate Social Responsibility

Analysis of PepsiCo’s Efforts in Corporate Social Responsibility

Nimra Abid

Mi Pang

Ayse Keskincelik

Hannah Pham

Dorothy Olszewski

Daniel Broseke

George Mason University

Executive Summary

PepsiCo is working to change stakeholder perceptions as its operations have been heavily criticized with claims of creating serious social and ecological issues. The company has enjoyed stock price increases after employing its Performance with Purpose initiatives; however, it needs to maintain this image and keep improving their efforts to reduce the negative impacts their business brings on stakeholders. If not PepsiCo may divert back to the days of stagnant stock prices and losing market share.

The Performance with Purpose initiative has already proven to be a profitable venture and there is a huge market for healthy foods and beverages. Although many of PepsiCo’s products will never be healthy (that’s why it is called junk food), significantly reducing added sugars, saturated fats and sodium in its products could drastically increase sales. More research and development toward less harmful ingredients should also be a focus of PepsiCo.

The risk PepsiCo faces if they do not change their products is the same criticism it has faced in the past and is still facing. Considering the changes that have already been implemented to their products, the company has made ostensible progress toward “healthy” alternatives. It is possible that laws could be passed banning or requiring adverse labeling for certain ingredients such as trans fats, caramel coloring and aspartame which have been known to increase the risk of cancer.  If PepsiCo is not proactive in reducing social and ecologically issues, it will likely suffer in the long run.

Facts and Issues

PepsiCo is one of the largest food and beverage companies in the world consisting of over twenty-two top brands, with products sold in over 200 countries (PepsiCo). Its total global revenue was approximately $108 billion in 2009 (Valente, 2011).   The company has been trying to establish a role in a sustainable society by steering its food products in healthier directions and reducing its ecological footprint. In order to meet its goals, the firm must identify and address the social and ecological issues that have traditionally been the foundations of their success.

                PepsiCo’s social issue relates to the balance between the health of its food products and its products’ cost. Processed foods are high in sugar, fat and salt to exploit humans’ natural attraction to these items. Low income families are more susceptible to price as they do not have as much disposable income. With the consumer shift toward processed, low cost, convenient foods, people are not getting the nutrients they need and are getting more of what they do not need, leading to an obesity and diabetes epidemic globally. These health issues have caused health care cost to increase and have created a gateway for many other health issues to include cardiovascular disease, respiratory difficulties, gallbladder disease and certain types of cancer (Valente, 2011).