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 only 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 on its website that the company 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 view the entire meeting via webcast on www.pepsi.com. Look for the link in the bottom right-hand corner under shareholder information.

PepsiCo shareholders to weigh profits, people, and the environment

More great news for the human rights to water! For the past few months, UUSC's Environmental Justice Program has been working with NorthStar Asset Management, a socially responsible wealth-management firm here in Boston, on a shareholder resolution that requires PepsiCo to adopt a human-right-to-water policy for all of their domestic and international operations.

To give some indication of the company’s overuse and abuse of water resources, PepsiCo uses 2.5 liters of water for every liter of soda that it produces. Given that PepsiCo sells around 36 billion liters of soda in an average year, this means the beverage giant consumes over 63 million gallons of water every day.

In 2003, PepsiCo’s license to operate in Puthussery, in Kerala State, India, was revoked after the local community charged that PepsiCo’s bottling operations were committing “water piracy” by depleting groundwater sources in the area. In 2004, the Supreme Court of India ruled that both PepsiCo and Coca-Cola must label all cans and bottles with a consumer warning after tests showed their products contained unacceptable levels of residual pesticides.

UUSC and NorthStar Asset Management have begun a dialogue with PepsiCo about adopting a human-right-to-water policy. We believe this is an important way for the company to show its commitment to respecting the human rights of people in the communities in which they operate and create a mechanism for monitoring the impact of its operations on access to water.

After PepsiCo refused to adopt such a policy, we decided to submit a resolution to PepsiCo shareholders so they could decide what good business practice is when it comes to water use. PepsiCo challenged this resolution with the Securities and Exchange Commission, but UUSC and Northstar prevailed. We will soon be presenting and speaking in support of this resolution at the PepsiCo annual shareholders meeting in Texas. (If you own stock in PepsiCo, you can vote your proxy in favor of our shareholder resolution.)

This does not mean the resolution will be passed, but it does mean that thousands of PepsiCo shareholders will read about the human right to water when the resolution is proposed. They will begin to understand that investing in companies like PepsiCo that threaten people's access to safe, sufficient, and affordable water for daily needs will become increasingly contentious.

On Wednesday in Texas, we hope to show that respecting human rights is the right thing to do, and that good business practice can improve a company’s bottom line. There are strong arguments for a triple bottom line: profits, people, and the environment. If people feel good about your practices, they will feel good about consuming your products. For a beverage company like PepsiCo that relies on the same water resources as the communities around them, it would behoove them to ensure that they protect their most vital ingredient: water.