September 24, 2019 Good morning.
The Business Roundtable's historic decision last month to dethrone shareholder primacy and elevate social goals continues to grab attention. (If you missed my story on this, please read it here.) When I was in Shenzhen last week, Huawei board member and SVP Catherine Chen quizzed me about it over lunch. Her main question was the same I've heard from most others I've talked with: Do they really mean it?
I believe they do, for mix of positive reasons—a new generation of CEOs includes many who are committed to the idea, a growing army of employees are demanding it, and even some customers are beginning to value it—as well as a negative reason: the political environment continues to look very threatening to business these days. Anyone been to an Elizabeth Warren rally lately?
One company that was clearly early in getting religion was PepsiCio. CEO Indra Nooyi pushed the company into healthy foods, sometimes fighting her shareholders in the process. And now, new CEO Ramon Laguarta seems determined to make his mark on the problem of plastic waste, among others. PepsiCo's annual sustainability report is out this morning, but I got an early look at Laguarta's letter accompanying it. Its opening paragraph:
"Since becoming CEO last fall, I've spent a lot of time thinking about the responsibilities that come with leading an iconic global company. There's the responsibility to serve our customers and consumers; to support our large and diverse workforce; and to deliver returns for the shareholders who have entrusted us with their investment. And at a time of such enormous challenges—from climate change and resource scarcity, to inequality and malnutrition—I also believe that business leadership in the 21st century must include a responsibility to our planet, our communities, and future generations.”
That's a big job. Laguarta goes on to say that the modern food system is "no longer fit for purpose." He commits PepsiCo to help build…
"…a more sustainable food system. One that can meet human needs and continue to drive economic growth and social development, without exceeding the planet's natural boundaries."
A big part of that commitment is to help create a world where "plastic packaging need never become waste." The company isn't abandoning plastic; but it is committing to reduce the use of "virgin" plastic—i.e. not recycled—by 35% by 2025. And Laguarta says there is more to come.
"Let me be clear: these efforts are only the beginning. I recognize that we still have a lot of work to do. But I want all our stakeholders to know that advancing sustainability and being a more purposeful company will play an essential role in PepsiCo's future”
Critics, of course, will say this doesn't go far enough. Why not get rid of all plastics? Why keep selling heavily sugared drinks and fat-fried snacks at all? But surely, it's an important step forward when the CEO of PepsiCo sees creating a sustainable world as a critical part of his job.
You can read the full report on the pepsi.co web site. More news below. And be sure to read our Most Powerful International list for 2019, which went live a short while ago, along with Beth Kowitt’s fascinating profile of Starbucks COO Roz Brewer. Also out this morning: Phil Wahba’s examination of soon-to-be-independent Old Navy.
Alan Murray
alan.murray@fortune.com
@alansmurray
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