PepsiCo Corporate Social Responsibility - Coursework Example

Corporate Social Responsibility Corporate Social Responsibility: Benchmarks and Models Corporate social responsibility is one of the most important aspects of corporate governance. It is a “commitment to improve community well-being through discretionary business practices and contributions of corporate resources” (Kotler & Lee, p. 3). Corporate social responsibility (CSR) makes corporations be less about profits and be more about making worthwhile contributions to humanity. There are various models and benchmarks that managers can consider when determining their position on CSR. Archie Carrol’s three-dimensional framework of corporate social responsibility revolves around four categories, which are: economic, legal, ethical, and discretionary responsibilities (pp. 497-505). This model emphasizes that first and foremost, the responsibility of the corporation is to produce and distribute goods for trade and profit. Such economic undertaking must be done through legally sanctioned means. Ethical practices must also be applied in the running of the business. The discretionary responsibilities of corporations are those that require corporations to perform beyond their economic, legal and ethical responsibilities. This aspect involves corporate philanthropy and other activities for social betterment (as cited by Besser, pp. 17-18). Another model of CSR that mangers can adapt in determining their position on corporate social responsibility is Sethi’s social responsibility framework. This framework sets forth that there are three aspects by which a corporations’ obligations to corporate social responsibility may be fulfilled, and these aspects are: social obligations, social responsibility, and social responsiveness (Sethi, pp. 53-59). Besser, (p. 19) summarizes Sethi’s model by discussing that a corporation’s social obligations are those actions that seek to fulfil a corporation’s economic and legal responsibilities; he goes on to explain that the fulfilment of social responsibilities implies that a corporation should comply with the norms and values of society; he finally concludes that social responsiveness refers to a corporation’s effort to promote change in society. Wartick and Cochran’s CSR framework is partly based on Carroll’s model, replacing social issues topics with social issues management which basically refer to specific ways by which corporations can understand their responsibilities and how to manage these responsibilities well (Besser, p. 19). Donna Wood also bases her model on Carroll’s framework and emphasizes that CSR has three principles, and they are: legitimacy, public responsibility, and managerial discretion. According to Wood (as quoted by Besser, p. 21), legitimacy is granted by society to the corporation, and in turn, the corporation is expected to use this legitimacy for the common good of the people; their public responsiveness makes them responsible for the consequences of their actions; and the managerial discretion bestowed on them makes their managers “moral actors in a society who are expected to be ethical and engaged citizens working for the common good”. CSR Stakeholders in PepsiCo There are various stakeholders that should be consulted in matters of CSR. These stakeholders are the persons or group of persons that the corporation is expected to consider in the process of accomplishing CSR. Perrini, et.al., (p. 33), summarizes the main categories of corporate stakeholders, and these are: human resources, shareholders/members, customers, suppliers, financial partners, state and local authorities, community, and the environment. In the case of PepsiCo, all of the above enumerated stakeholders are vital to its fulfilment of CSR. These stakeholders have an interest in the corporation and they are affected by whatever decisions that corporation makes in line with CSR. The viewpoints of stakeholders are sometimes considered more realistic as far as CSR is concerned because it “accounts for the expanded role of business and its enormous influence on the lives of people” (Goethals, et.al., p. 282). In assessing the CSR performance of PepsiCo, the abovementioned stakeholders need to be taken into account. PepsiCo’s management of its employees, human resources, and suppliers is a vital determinant of CSR. How the stakeholders, members, and financial partners are legally and ethically dealt with also determines how socially responsible PepsiCo is. How religiously it performs with the requirements of state and local authorities will also determine PepsiCo’s commitment to CSR. Finally, the environment and the community are important stakeholders in the PepsiCo’s fulfilment of its corporate social responsibilities. Assessment of PepsiCo’s Sustainability Report The Sethi social responsibility framework is divided into three categories: social obligations, social responsibility, and social responsiveness. PepsiCo’s latest sustainability report (June 2007-May 2008) discusses a variety of areas where it claims to have fulfilled its CSR responsibilities. In assessing their report using Sethi’s model, PepsiCo elaborates how their social obligations (economic and legal responsibilities) were fulfilled through the healthy rewards that they have brought to their investors, shareholders, and to the communities in which they operate (PepsiCo Sustainability Report “Our Commitment”). They annually hold their code of conduct training for all their employees in order to ensure that their employees and their company comply with the legal requirements of corporate governance. This code of conduct training covers the following aspects: ethical business dealing, bribery, business gifts and entertainment, discriminations, harassment, confidentiality of information, insider trading, accounting and record keeping, health and safety, human rights, environment, political activities, protection of company assets and whistle blowing. They do not definitively detail how they complied with their legal requirements as a corporation, although they do make mention of the fact that the U.S. Environment Protection Act commended their energy conservation. They do not make mention in their sustainability report of how they have fulfilled with their legal requirements regarding bribery, insider trading, and similar aspects of CSR. But, they do provide details regarding their fulfilment of their economic responsibilities. These economic responsibilities have been fulfilled through $2.2 billion dividends shared to their stockholders; employment provided for about 185,000 individuals in different parts of the globe; income provided for various suppliers and retailers; billions of dollars in income provided for the countries in which they operate through taxes paid, which overall, amount to about $1.7 billion (PepsiCo Sustainability Report “Our Economic Impact”). As regards their social responsibilities (societal values and norms), PepsiCo’s sustainability report details how it fulfils these responsibilities through its diversity programs in education and workforce development. The PepsiCo Foundation has provided for access to education and training to various indigents. The foundation was able to assist Latino high school students in their aim to explore better career opportunities, and they were also able to help train multicultural women towards possible careers in corporate America. Their report also indicates that their community efforts have managed to support various local and national activities through their employees’ volunteer work. Their social responsibilities to the environment were also fulfilled by their reported reduced consumption of water, electricity and fuel. They reported that in their beverage businesses, they were able to reduce their water consumption by 9 percent, electricity by 8 percent and fuel consumption by 7 percent. Their food business was able to reduce water consumption by 6 percent, electricity by 3 percent and fuel by 3 percent. They claim that they are committed towards ensuring that their manufacturing process does not unnecessarily strain the environment, and that they “will continue to actively lead and engage in key private-public partnerships to spur action and solutions to address the urgency of the world’s environmental issues” (PepsiCo Sustainability Report, p. 13). In order to reduce their energy consumption, they have managed to integrate the use of renewable energy, thermal energy, liquid propane gas, and such other alternative fuel sources into their manufacturing plants. They also have adapted the principles of reducing (less material in their packaging), reusing (increasing use of reusable packaging), recycling (use of biodegradable packaging solutions), removing (eliminating environmentally sensitive materials from their packaging, and renewing (increasing use of renewable material resources). Their report does not indicate their efforts towards corporate philanthropy, which would have been in keeping with detailing their contributions to society and in giving back to the community Finally, as regards PepsiCo’s social responsiveness (promoting positive change), their sustainability report details that in order to promote change in the diet and health of the citizens of the world, the corporation has supported programs towards healthy living and active lifestyle. They have supported programs in Latin America, India, and the United States that teach children to add physical activity to their lives. They have also added nutrition labels on their products in order for the customers to be able to assess which products are in line with their healthy goals and lifestyle. They also offer new beverages that offer nutritional benefits. They have managed to reduce existing concerns on their products related to fat, saturated fats, sodium, and other sugars. They have instead, added whole grains, fibre, fruits, vegetables, and key vitamins and minerals to their products. These efforts to reduce the caloric content of their products is an effort towards being more responsive to the health needs of a society which is presently ridden with many health problems like heart disease, diabetes, and obesity. Also, the previously mentioned efforts of the corporation to reduce energy and water consumption may be considered as a solid effort to initiate and promote change. PepsiCo’s CSR efforts are commendable moves towards achieving balance in the corporate world. Works Cited Besser, T. The Conscience of Capitalism: Business Social Responsibility to Communities (2002) pp. 17-21. New York: Greenwood Publishing Corporation Carroll, A.B. A Three-Dimensional Conceptual Model of Corporate Performance Academy of Management Review 4 (4) pp. 497 – 505 Goethals, G. Encyclopedia of Leadership. (2004). p. 282). California: SAGE Publishers Kotler, P. & Lee, N. Corporate Social Responsibility: Doing the Most Good for Your Company and Your Cause. (2005). p. 3. New Jersey: John Wiley and Sons Perrini, F., et.al., Developing Corporate Social Responsibility: A European Perspective. (2006). p. 33. Cheltenham, UK: Edward Elgar Publishing. PepsiCo Sustainability Report (2007). PepsiCo.com. 23 February 2009 http://www.pepsico.com/Downloads/2008_Summary_final.pdf PepsiCo Sustainability Report (2007). Our Economic Impact. 23 February 2009 PepsiCo Sustainability Report (2007) Our Commitment 23 February 2009 PepsiCo Sustainability Report (2007) Our Progress 23 February 2009 Sethi, S. P. (1975) Dimensions of Corporate Social Performance: An Analytic Framework California Management Review 22(1), pp. 53-59 Read More