Outcome: Successfully withdrawn. Company has adopted a zero tolerance policy for illegal activities in its supply chain regarding land displacements of any legitimate land tenure holders.
Since 2000, over 885 large-scale land acquisitions covering approximately 79 million acres globally have been recorded. Approximately a third of the deals involve investment in cash crops such as sugar cane, palm oil, and soy. Many of these large-scale land acquisitions involve evicting traditional land holders, through coercion or fraud (“land grabs”).
Land grabbing primarily affects small-scale farming communities in developing countries and has been linked to loss of livelihoods, hunger, and violence. PepsiCo’s sources of sugar include suppliers that have been linked to land grabs, which poses risk to the company and shareholder value; PepsiCo must urgently recognize this problem and take steps to ensure that land rights violations are not part of its supply chain.
By preparing an annual report regarding land rights and applying the results as part of its supply chain management, PepsiCo would strengthen its ability to assess its own and its suppliers’ performance on this important issue and hold its suppliers accountable; enable shareholders to better understand and assess potential reputational and operational risks; and, consistent with the principle that “what gets measured gets managed,” prompt more responsible business practices by suppliers.
There is a clear and growing consumer interest in understanding the impacts made by the supply chains of the brands they purchase. Improved transparency by PepsiCo regarding policies and practices that secure future commodity supplies and reduce social and environmental risks are a part of the process of building a sustainable business model for the company and its shareholders.
As one of the world’s largest food and beverage companies, PepsiCo through its global supply chains is positioned to be a leader in promoting respect and support of land rights, fair resolution of land conflicts, and sharing of investment benefits; PepsiCo also has a unique opportunity to encourage government and the wider food industry to do the same. Indeed, PepsiCo’s membership in Bonsucro serves as an acknowledgement of land rights violations as a sustainability issue resulting from sugar production.
Shareholders request that the Board of Directors cause PepsiCo to publish by November 1, 2014, and on an annual basis thereafter, a report focused on the issue of land rights along the company’s supply chains. Among other important disclosures, the report should (i) disclose from whom and where PepsiCo sources its sugar cane, palm oil, and soy, and whether PepsiCo and its suppliers have adopted a zero tolerance policy on land rights violationsand (ii) provide an objective assessment of how PepsiCo’s supply purchases impact rural communities’ land rights. The report should be prepared at reasonable cost, omitting proprietary information, and using a phased, tiered, or other approach that PepsiCo deems reasonable and practical.
Annual reporting would strengthen PepsiCo’s ability to assess its own and its suppliers’ performance on the issue of land rights, to hold its suppliers accountable, and enhance shareholder value by enabling shareholders to better understand and assess potential reputational and operational risks.