Why PepsiCo is a ‘poster child’ for ESG reporting

‘PepsiCo is a poster child for what people are trying to do’ in terms of ESG reporting, says one of the Corporate Secretary judges. It’s a rapidly evolving field of endeavor for governance teams and their colleagues and one in which our winner has shown dedication to disclosing useful information in an accessible way across several avenues.

PepsiCo in June 2020 published its sustainability report in a new format: all-digital and embedded for the first time on the firm's website. The idea is to allow for what the team calls ‘interactive storytelling, more robust and transparent reporting and the ability to cross-link information [across] the site.’

The report includes a letter from chair and CEO Ramon Laguarta outlining the company’s sustainability strategy, and a Q&A with the company’s chief sustainability officer – a position created in October 2019 – indicating the high-profile nature of the ESG disclosures. The report also includes a sustainability highlights video and features targeting the six key areas of agriculture, water, packaging, product, climate and people.

A company’s ESG reporting is best developed by taking into account the interests and needs of its audience, and PepsiCo seeks input not only from shareholders but also from customers, consumers, employees, suppliers, governments and civil society groups including NGOs in developing and implementing its sustainability agenda. Reflecting this, each of the report's six focus areas includes an external stakeholder's perspective.

The use of data is another key aspect of ESG reporting, and one that raises complex questions about which metrics to use and how detailed to be. PepsiCo’s 2019 sustainability report summarizes the company’s progress against its sustainability goals and target metrics. It also features a more detailed look at year-on-year progress against those goals, including data from 2016-2019, and aligns PepsiCo’s goals with the United Nations’ Sustainable Development Goals.

In addition, a new feature allows readers to customize and download specific portions of the information to build their own report. An eight-page downloadable PDF further provides a summary of the report.

The sustainability report is far from the only element of PepsiCo’s ESG reporting efforts. The company also has an online, interactive sustainability directory – Environmental, Social & Governance Topics A-Z – that has been updated to include detailed information on the company’s governance, management, programs, progress and next steps on sustainability issues.

The updated version of the directory also features a new format and design to align it with the sustainability report and a new layout intended to make it more easily navigable using links to focus-area topic pages and quick alphabetical links.

The company’s 2019 annual report repeatedly discusses key sustainability topics. For example, it has a new highlights page on the progress the company has made toward its sustainability goals in six priority areas and tells readers how to access more information on this progress.

In his letter to shareholders, Laguarta further describes PepsiCo initiatives intended to help build a more sustainable food system, a topic that is further referred to in the management’s discussion and analysis and research and development sections of the annual report.

Similarly, the company’s proxy statement this year uses the integration of sustainability into its business strategy as a key theme.

PepsiCo has also released its first report outlining the company’s commitment, approach and progress in promoting respect for human rights. ‘Over the past decade, PepsiCo has taken targeted action to identify, prevent and address potential human rights impacts across our value chain,’ the company says in its submission.

You can read more about the Corporate Governance Awards in the Corporate Secretary Yearbook