PepsiCo’s Responsibilities: CEO Daily

September 24, 2019, 11:00 AM UTC

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 PepsiCo. 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 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


Google Victory

Google has won a hugely significant ruling from the EU's top court: it doesn't have to delist links around the world just because someone in Europe wants to exercise their local "right to be forgotten." The company had argued that global delisting would have set a terrible precedent, allowing the likes to China to determine what everyone around the world could or could not see. Fortune

Johnson Broke Law

Boris Johnson's suspension of the U.K. Parliament was unlawful, the country's highest court has ruled. That means he misled the Queen when asking her to rubber-stamp Parliament's prorogation. The Supreme Court's decision this morning was unanimous and the position of Johnson—currently in New York for the U.N. gathering—is now seriously in doubt. Parliament will immediately re-convene. Fortune

Trump and Ukraine

President Trump told his staff to withhold military aid to the Ukraine, shortly before the call to Ukraine's president in which he reportedly demanded investigations into Joe Biden and his son Hunter. The funds were released weeks later. Washington Post

Chinese Companies

China's government is placing its officials in 100 private companies, including Alibaba. The companies, not all of which have been named, all work in the Hangzhou tech hub. “We understand this initiative... aims to foster a better business environment in support of Hangzhou-based enterprises," Alibaba said. "The government representative will function as a bridge to the private sector and will not interfere with the company’s operations." CNBC


Tax Ruling

The EU's highest court didn't just rule on Google today. A slew of decisions included the striking-down of the European Commission's 2015 tax ruling against Starbucks and the Netherlands, on the basis that antitrust chief Margrethe Vestager did not demonstrate how Starbucks' Dutch tax treatment gave it an illegal advantage. Crucially, though, the court did not fault Commission tactics that it also used in the much larger (and currently litigated) Apple-Ireland case. Financial Times

Facebook Tactics

Snap has reportedly been telling the Federal Trade Commission about all the ways it felt Facebook was trying to suppress its rise—methods that it compiled in a dossier named "Project Voldemort." The FTC is also talking to other companies about Facebook's alleged anticompetitive tactics. Wall Street Journal

Uber Blow

Uber has suffered a shock setback in London, where transport regulators have granted it a license extension for all of two months. It was trying to get its long-term license back, but it seem the watchdog still has serious concerns about the ride-hailing firm's adherence to regulations. Telegraph

AB InBev

AB InBev's Hong Kong IPO is going ahead with very modest fundraising plans—around $5 billion. The flotation of the brewing giant's Asia-Pacific arm would probably be more attractive to investors if Hong Kong wasn't in such political turmoil right now. Reuters

This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.

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