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Image: PepsiCo 2014 Sustainability Report
Over the years I have written many reviews of Sustainability Reports for different publications, in addition to the comments and observations I make here on my blog. My most recent report review was published in the October edition of Ethical Corporation Magazine and it was all about food and bev giant PepsiCo's 2014 Performance with Purpose Report. As Ethical Corp. is a subscription-based publication, I won't share the entire review here. However, I will share two interesting things, one insight that particularly impressed me in the Performance with Purpose Report, and one after the review was published.
The insight
I'll reproduce a short section from the published review:
"A very positive feature of PepsiCo’s reporting is the linkage between sustainability performance to business growth and profitability. Most companies keep financial and non-financial messaging conveniently separate and it is rare to find an economic expression of sustainability benefits in standalone sustainability reports. PepsiCo’s press release leads with a highlight of financial benefits: “Environmental sustainability programs, including efforts to use less packaging and energy, have saved the company more than $375m since 2010.”
Throughout the report, these references are specific: in 2014, PepsiCo recycled and reused 90% of waste with estimated savings of $3.5m compared with 2009; decreased absolute water use by one billion liters, generating $17m in cost savings; removed over 89m pounds of packaging materials resulting in $48m of cost savings and improved energy efficiency delivering energy cost savings of more than $83m. This is good for the financial community who use sustainability reports, and for PepsiCo stakeholders who are interested in impacts on society, and it also serves as an encouragement to other companies, demonstrating that sustainable practice can also be profitable practice.
In other areas, PepsiCo incudes outcome-type statements that show the impacts of performance which are less easily quantifiable in money terms. For example, in 2014, PepsiCo India supported water-saving programmes that benefited more than 50,000 people."
I think you get the picture. Sustainability helps a business make a positive contribution to society AND do business. While it's great to declare how we are doing on energy savings and other sustainability-type metrics because we value our future on the planet, positive economic value realized from sustainability activities is nothing to be ashamed of. The opportunity to link sustainability impacts in the business to the sustainability impacts of the business is still not considered deeply by most companies. Just because a report is a Sustainability Report doesn't mean it cannot mention money. In fact, it should. Only a handful of companies get this. Marks and Spencer has for years demonstrated the economic contribution of Plan A in a clever way.
BT also makes an explicit link between business and economic benefits of sustainble practice. In BT's Better Future Report for 2015, the company confirms that global portfolio revenue from products and services contributing towards BT's goal to help customers reduce carbon emissions by three times more than the carbon impact of BT's business was GBP 3.4 billion in 2014-5 FY. And there is of course the Kering Environmental Profit and Loss model that turns everything into money to the point where just reading the report may well generate economic impact. UPS also makes an impressive connection between environmental and economic efficiencies in UPS's 2014 Sustainability Report.
The more we accept that it's OK - in fact, it's imperative - that sustainability benefits equal business benefits as well as social and environmental benefits, the more we will see these sort of linkages in Sustainability Reports and also in Annual Reports. I have often said that you should write a Sustainability Report with a financial hat on and you should write an Annual Report with a sustainability hat on. That's assuming you wear a hat when you're writing. PepsiCo, in the 2014 report, has made great progress in making this connection.
What happened next
No less interesting than the linkage of integrated sustainability to business performance is what happened after my review was published in Ethical Corporation. I received an email from Camille Aylmer, Sustainability Communications Director at PepsiCo, who wrote: "......we really appreciate the careful attention you gave to reading through our materials....There was some great feedback in the article that has created a lively discussion internally. I’d love to grab 15 minutes with you by phone to discuss some of these items....."
Now, while my review included praise for PepsiCo's best practice in creating aforementioned linkage, it also included a few criticisms and recommendations. (So you all know me by now, it's rare that I don't have something challenging to say) (even though my intentions are positive!). Yesterday, I chatted with Camille and was impressed by her questions. She wanted to know about my approach in reviewing the report, whether I had looked at prior reports, what stood out for me as I reviewed the report, why I had highlighted certain aspects. I genuinely felt she wanted to learn about what was important to me, and that this might help PepsiCo in developing strategy and reporting going forward.
I am one of mbillions of PepsiCo stakeholders and my teeny weeny voice is hardly the loudest, coherentest, intelligentest or importantest among all the experts that I imagine PepsiCo engages with on sustainability matters. But the fact that Camille took the time to track me down (ok, that's not hard), and have a really positive conversation with me (that's harder) earns her and PepsiCo top marks (and ice cream) from me.
I was happy to respond to Camille and share my thinking. I was delighted to know that someone actually reads my report reviews (apart from the Ethical Corporation editor) and that maybe they do a little good. Kudos to PepsiCo for reporting and for not being too big to take note.
Oh, and while you're here, take a look at PepsiCo's 2014 Report. Give feedback. They listen.
Elaine Cohen is a CSR consultant, Sustainability Reporter, HR Professional an Ice Cream Addict! Author of Understanding G4: the Concise guide to Next Generation Sustainability Reporting AND Sustainability Reporting for SMEs: Competitive Advantage Through Transparency AND CSR for HR: A necessary Partnership for Advancing Responsible Business Practices. You can follow her on Twitter @elainecohen