On the surface, profit is a word that is easily defined: to make money. In reality, however, that definition is incomplete. In a world that is being radically reshaped by sweeping forces of change — from technological innovation and globalization to resource scarcity, climate change and public health challenges — how companies make money is just as important as how much money they make.
Without question, profits are the engine that propels a corporation forward. But the blind pursuit of profit at all costs is untenable. It is essential that we make money the right way. After all, if communities suffer as a result of a company’s actions, those returns are not sustainable.
Today, a company’s profits are inextricably tied to the prosperity of its consumers, customers, employees, communities and society writ large. More than ever before, profitability and sustainability are synonymous.
Corporations should embrace this new way of doing business. Profitable companies of the 21st century will be those that align the needs of their business with the needs of the world around them.
With this in mind, PepsiCo looked out across the food and beverage landscape nearly a decade ago and charted a new course. We recognized a simple truth: there is profit in purpose. Sustainability is not something to support with the profits we make, but rather a path to delivering profitability. Weaving sustainability into the very fabric of our organization is a way to help future-proof our business for the changing world around us.
At PepsiCo, we focus on three pillars of sustainability: Human, Environmental and Talent. We are working to improve the nutritional profile of our products and offer a wider selection of nutritious foods and beverages in response to growing consumer demand. We are striving to reduce our impact on the environment and conserve natural resources, reducing our operating costs in the process. And we are continuously investing to build a diverse and engaging culture inside PepsiCo that allows us to attract the next generation of talent we need to propel our company forward.
These three pillars form the foundation of what we call Performance with Purpose, and they help to drive our financial results. The report that follows describes the significant progress we made in each of these areas in 2014. We are particularly proud to report that PepsiCo achieved four of our environmental goals ahead of schedule.
It is clear that in the years and decades ahead, the private sector will be increasingly impacted by global environmental and social challenges that no single company, industry, government or nongovernmental organization (NGO) can address alone. Collaborative solutions, in which we all play our role, hold the key to meaningful and lasting progress.
The strongest cross-sector partnerships flourish when each member engages in constructive dialogue. This dialogue is, at times, lacking today. For example, the relationship between corporations and some NGOs can be purely adversarial. While NGOs should absolutely push hard for companies to change, they should also acknowledge when companies set thoughtful goals and take serious steps to achieve them. We share many common objectives and must find more opportunities to join hands rather than simply pointing fingers.
For our part, PepsiCo is fully committed to engaging partners who seek progress on our shared challenges. We are proud of the relationships we have built with many highly respected organizations around the world. Moving forward, we intend to expand and strengthen these partnerships. The NGO community brings in-depth experience and local knowledge that is critical to solving big problems, and we will continue seeking new opportunities to work together on topics most significant to our business and on which we can make a meaningful impact.
Simply put, we need cooperation at all levels. As such, the private sector must step forward and offer its unique capabilities to develop new solutions, uncover new opportunities and, ultimately, build the viable, trusted companies of tomorrow.
That is why PepsiCo is more committed to Performance with Purpose than ever before. It is how we will position our business for sustainable long-term growth and contribute to solving broader challenges that impact each and every one of us. In this report, you will see how we are achieving progress through sustainable agricultural practices, innovative methods of water conservation, more nutritious product offerings and more diverse workplaces. These efforts don’t come at the expense of profit. Rather, they are examples of just some of the work underway that we are confident will help fuel our profits for generations to come.
Indra K. Nooyi
Chairman and Chief Executive Officer