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Stakeholder Engagement


Stakeholder Engagement Why It Matters

Approach

We define our key stakeholder groups as those who impact - directly or indirectly -  our business success, or who are impacted by our operations. The insights that we receive from customers, consumers, shareholders, employees, suppliers, governments, and civil society including non-governmental organizations (NGOs) is critical to how we develop, implement, and evolve our sustainability agenda. These engagements help us to identify emerging sustainability risks and opportunities, prioritize our efforts, and create long-lasting value for our company and society.

We solicit feedback from stakeholders through a variety of mechanisms, summarized below. Engaging with a diverse array of stakeholders — even those critical of our actions — is important, because it gives us a broader perspective on our approach and programs.

During 2020, multiple PepsiCo team members, including representatives of our management team met with a significant number of diverse stakeholders to discuss our sustainability agenda, which establishes a dynamic framework to advance our business in a way that is responsive to society. We solicited feedback on areas where PepsiCo can strive to have the greatest impact, as well as how to support this agenda through strong corporate governance and management practices. Although stakeholder perspectives varied in emphasis, some consistent themes emerged.

For additional information about our engagement with shareholders and other stakeholders, please see pages 35-36 of our 2020 Proxy Statement.

In addition, the following chart summarizes our key stakeholder groups, their significance to PepsiCo, how we engage with them, and their topics of interest. This chart is not exhaustive, but it provides examples of our process.

Investors

Importance to PepsiCo
We believe that regular, transparent communication with our shareholders and other stakeholders is essential to PepsiCo’s long-term success. As providers of capital, investors support our ability to finance new projects and advance the future of our business.

How we engage
We engage with our shareholders and other stakeholders year-round in a variety of ways:

  • Our investor relations team regularly meets with shareholders, prospective shareholders and investment analysts. As appropriate, these meetings include our Chairman and CEO, Chief Financial Officer or leaders of our divisions.
  • Every year, during the two-month period before the Annual Meeting of Shareholders, we generally contact our 75 largest shareholders, who in 2020 represented approximately 47 percent of our outstanding shares of Common Stock, offering to discuss a broad range of topics.
  • Subsequent to the Annual Meeting of Shareholders, we continue our outreach efforts to develop a better understanding of the feedback received from shareholders and issues important to our shareholders.
  • As reflected in our Corporate Governance Guidelines, our Presiding Director is available for consultation and direct communication, if requested by major shareholders. Our engagement program also involves directors, as well as senior executives and associates from many different parts of the Company, including from PepsiCo’s communications, investor relations, executive compensation, compliance and ethics, legal, public policy and government affairs, and sustainability teams.

Key matters of interest
Investor engagement is generally focused on our portfolio strategy, financial and operating performance, and capital allocation. Members of our management team also regularly engage with shareholders and other stakeholders to discuss our sustainability strategy and initiatives, human capital management, company culture, diversity, corporate governance, and executive compensation practices, and to solicit feedback on these and a variety of other topics of interest.

NGOs

Importance to PepsiCo
NGOs help identify key issues, represent the views of affected stakeholders, and provide guidance on how we should take action to address them. The NGOs we engage express opinions on a wide range of topics, and we consider their expertise and perspective as we craft our approach to key sustainability issues.

How we engage
PepsiCo maintains both direct and collective dialogue with leading local, national, and multi-national non-profit groups. We do so both as part of an ongoing effort to build knowledge and maintain relationships as well as in response to specific events or activities.

In addition, we have had an ongoing dialogue with various other shareholders and stakeholders and regularly meet with diverse stakeholders often in collaboration with leading non-profit groups that bring together investors, non-governmental organizations, and businesses in support of sustainability.

Key matters of interest
NGO interest ranges from topic- or geographically-specific issues, to more broad global and cross-cutting sustainability issues. These include such topics as climate change, water scarcity, packaging, nutrition, public health, diversity, gender pay parity, human rights and environmental matters related to PepsiCo’s supply chain, sustainable agriculture, sustainability reporting, and various other issues.

Consumers

Importance to PepsiCo
Consumer demand drives the sale of our products. We strive to create joyful moments through our products and brand experiences. By aligning our product portfolio with consumer needs and preferences, we can strengthen our competitive positioning and continue to deliver our mission to Create More Smiles with Every Sip and Every Bite.

How we engage
We engage with our consumers through a number of channels that help us to understand their needs and interests, as well as share information about our product portfolio and company. These include market research, advertising and marketing, social media, and company communications, including sustainability reporting and consumer-centric content on our website.

Key matters of interest
In a year where routines were routinely disrupted, we had to satisfy new demands that grew from the pandemic, with more consumers eating at home. While preferences shifted somewhat, interest in key issues such as Product Safety, Nutrition, Labeling, and Packaging continued.

Customers

Importance to PepsiCo
Our customers are the conduit through which we distribute and sell our products to consumers globally. Maintaining strong relationships with customers helps us to bring our products into the hands of consumers, delivering more smiles and strengthening our business.

How we engage
We engage with customers through a number of channels that range from commercial dialogue to collaboration on shared sustainability ambitions. These can be undertaken directly, or through participation in broader partnerships with industry groups, NGOs, or customer-led initiatives.

Key matters of interest
As consumer preferences and habits change, we are focused on pivoting our resources to provide first-class service levels, driving game-changing innovation, and delivering a level of growth unmatched in our industry, creating smiles for our customers.

Addressing global sustainability challenges requires collaboration along the value chain. By addressing key sustainability issues like climate change, water stewardship, nutrition, human rights, and packaging, we can help our customers to meet their own objectives and collectively contribute to a more sustainable food system.

Suppliers

Importance to PepsiCo
Our suppliers are a critical link within our value chain, providing the ingredients, materials, and services needed to make our products. With their partnership, we are striving to create a more sustainable food system.

How we engage
We expect our suppliers to adhere to the same standards of integrity to which we hold ourselves. Therefore, all suppliers, vendors, contractors, consultants, agents, and other providers of goods and services who do business with or on behalf of PepsiCo entities worldwide are expected to follow our Supplier Code of Conduct (SCoC) and all other relevant policies as a condition of doing business with us.

Our supply contracts include our SCoC, and we provide training on it through Sustainable Sourcing Program (SSP) engagement and on our website. In purchasing categories with time-bound commitments to sustainable sourcing, such as palm oil, our procurement teams use tools such as supplier scorecards to evaluate and compare performance of individual suppliers against our expectations. In cases where we identify potentially high risk or priority supply chain concerns, we deploy specific programs to improve knowledge, awareness, and outcomes.

Our Speak Up hotline is an important component of our culture, ethics, and integrity, and we encourage our suppliers and business partners to use their own effective grievance mechanisms and make the PepsiCo Speak Up hotline available for their use through our SCoC.

Key matters of interest
Engagement with suppliers centers around a number of topics of mutual interest. Examples of these include human rights, ethical conduct, health and safety, diversity and inclusion, and environmental stewardship.

Governments

Importance to PepsiCo
PepsiCo’s business is affected by public policy at the local, state, national, regional, and global levels. Through public policy engagement, our goal is to promote a business environment that supports PepsiCo's ability to achieve sustainable growth in the years ahead.

How we engage
PepsiCo engages with governments and other public policy officials both directly and through various groups. PepsiCo monitors and abides by the changing laws and regulations governing lobbying activities, including the rules regarding national and sub-national lobbying registration and reporting obligations.

We are also a member of numerous industry and trade groups and partners with various nonprofit organizations and non-governmental organizations. PepsiCo works with these groups because they represent the food and beverage industry and the business community on issues that are critical to PepsiCo’s business and its stakeholders. Importantly, such organizations help develop consensus among varied interests. PepsiCo currently does not belong to any organizations which have as a major focus the creation and promotion of model legislation.

Key matters of interest
We participate in public policy dialogues and share our expertise on key issues that support our business strategy and where we or others have identified that we can contribute ideas to solve policy issues. We aim to make constructive contributions that will lead to policies that help our business, our consumers, and society thrive in a sustainable fashion. In 2020, our key issues included discriminatory taxation, trade, commodities, restrictions in the marketplace, food security, health & nutrition, and environmental regulation.

Employees

Importance to PepsiCo
PepsiCo believes that human capital management, including attracting, developing, and retaining a high quality workforce, is critical to our long-term success. Our goal is to create meaningful opportunities for our employees to work, gain new skills, and build successful careers, while building a diverse and inclusive workplace.

How we engage
In addition to informal engagement with teammates and managers, we have established various mechanisms designed to encourage PepsiCo employees to Voice Opinions Fearlessly. Each of these channels is designed to provide the opportunity to speak up, landing feedback with those who are empowered to address it. They include an annual Organizational Health Survey (OHS), our periodic Employee Confidence Index pulse check, and Life Cycle Surveys, conducted at key moments in employees’ tenure with the company. In 2020, approximately 63 percent of employees worldwide voiced their opinion through the OHS survey.

In 2020, approximately 51 percent of employees worldwide, eligible to be covered under collective bargaining agreements, were represented. PepsiCo maintains positive working relationships with union representatives.

Key matters of interest
Protecting the safety, health, and well-being of our associates around the world is PepsiCo’s top priority. Throughout the COVID-19 pandemic, we have remained focused on the health and safety of our associates, especially our frontline associates who continue to make, move, and sell our products during this critical time. We believe that our culture of diversity and inclusion is a competitive advantage that fuels innovation, enhances our ability to attract and retain talent, and strengthens our reputation. We continually strive to improve the attraction, retention, and advancement of diverse associates to ensure we sustain a high-caliber pipeline of talent that also represents the communities we serve. We are also committed to the continued growth and development of our associates.

Our 2020 internal survey results show that PepsiCo associates feel high levels of pride in working for PepsiCo, are energized by their work and are confident in PepsiCo’s future success. As a result of the feedback we received from employees, we continue to leverage our strength in leadership to set future direction.

Communities

Importance to PepsiCo
We know that our company can only succeed when the society we serve flourishes. Supporting our local communities is an important part of operating as a responsible business.

How we engage
Through strategic partnerships and programs globally, the PepsiCo Foundation seeks to tackle the long-term challenges facing the global food system and do the most good for the most people. We strive for tangible impact in the places where we live and work—collaborating with industry peers, local and international organizations, and our employees to affect large-scale change in the spaces that matter to us and on issues of global importance.

Key matters of interest
Our philanthropic work focuses on supporting the essential elements of a sustainable food system:

  • Targeting short- and long-term solutions to provide food security;
  • Investing to address the safe water access needs of local communities surrounding our operations;
  • Providing marginalized populations with the support they need to manage through these unpredictable times and build capability for a more stable future. In each market, our approach is customized to meet local needs.

In addition, as COVID-19 reduces access to food and other essential goods for communities around the world, PepsiCo and The PepsiCo Foundation have invested more than $71 million globally and worked with over 250 partners to bring food and other vital resources to the most affected communities. As part of this effort, the company is providing funding for protective gear for healthcare workers, testing and screening services, and is in the process of distributing more than 145 million nutritious meals to at-risk populations.