UUSC Shakes up the PepsiCo Annual Shareholders’ Meeting

I just got back from attending the PepsiCo Annual Shareholder’s Meeting in Plano, Texas, where the UUSC/NorthStar Human Right to Water Resolution got a fantastic vote – 7 percent! I know that might not sound like much, but in the shareholder advocacy world, it’s a big victory. For a shareholder resolution to appear on the agenda next year, it needs 4 percent support. Most first-time resolutions, such as this one, don’t reach that threshold.

At the meeting, which was highly choreographed, Claire DeWitte, of NorthStar Asset Management, and I were led to our reserved seats, not too close, but not too far away from where PepsiCo President Indra Nooyi would give her annual report. After a feel-good review of “great Pepsi commercials of the past,” Nooyi gave a glowing report of the company’s performance. She also predicted that the economic slow-down would be good for a company like PepsiCo, owner of Frito-Lay, because in hard times, people can still afford its "comfort foods.”

After her presentation, the shareholder resolutions were presented. Claire and I did a joint presentation of our resolution. PepsiCo was actually very generous with time, and we spoke for about seven minutes. We explained that by adopting a human-right-to-water policy, PepsiCo could take a step forward in showing that they respect their customers and the communities in which they operate. We also argued that the company could prevent massive depletion of water resources before it happens and that adopting our policy could reduce PepsiCo’s liability as it operates in many countries around the world that either have or are integrating a human-right-to-water policy into their national legal framework.

Nooyi responded to our presentation, that “as an Indian woman, the issue of water was very close to her heart.” She then went on to tout PepsiCo as a leader in the industry, while avoiding the issue of why Pepsi would not adopt our proposed human-right-to-water policy. She also failed to address the fact that bottling companies have created water-scarcity problems in the areas in which they operate. In India, it is has been documented that water tables dropped 26 feet in the last seven years in some areas due to beverage-company operations.

PepsiCo states it is investing in water-scarce regions of India by digging public wells and boreholes. But in many cases, it was their operations that exacerbated the water-scarcity problem in the first place.

Because Pepsi is such a huge water consumer – around 90 billion liters of water per year internationally – they have a legal and moral responsibility to monitor and correct the negative impacts they have on the availability and safety of water resources.

I pushed Nooyi with follow-up questions, but she didn’t get to be the president of PepsiCo without being able to deflect hard questions. I did have a chance to speak with her afterward, where I let her know that if the company is interested, UUSC and NorthStar are willing to work with them on developing a human-right-to-water policy, but that if not, we will be seeing them at the next annual meeting!

You can hear the complete PepsiCo Annual Meeting via webcast at http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=78265&eventID=1812154. Our presentation can be heard at the 43:00 minute mark.

You can also read UUSC's statement by clicking here.