Governance as a Driver of performance
We believe strong sustainability governance is the foundation for delivering on our Performance with Purpose (PwP) vision to provide top-tier financial performance over the long-term by integrating sustainability into our business strategy. At PepsiCo, sustainability topics are integrated into, and not separate from, our business.
The Role of the Board of Directors
As stewards of PepsiCo, our Board plays an essential role in determining PepsiCo’s strategic priorities. The full Board considers sustainability issues an integral part of its business oversight, as sustainability topics are integrated into, and not separate from, our business strategy. To align with our PwP 2025 agenda, in early 2017, our Board created a Public Policy and Sustainability Committee. The Committee assists the rest of the Board in providing more focused oversight over the Company’s policies, programs and related risks that concern key public policy and sustainability matters. The Committee is comprised entirely of independent directors and reflects a mix of public policy, risk, international and science-related skills, qualifications and experience that are valuable to the Committee’s oversight over key public policy and sustainability matters.
The Role of PepsiCo's Senior Leadership
In 2016, PepsiCo reviewed our sustainability governance structure to identify opportunities to strengthen the integration of PwP into our business agenda and processes. Beginning in 2017, the PepsiCo Executive Committee (PEC) assumed direct oversight of the sustainability agenda, strategic decisions and champions performance management. The PEC is made up of the Chairman & CEO, Sector CEOs and top functional leaders, ensuring that sustainability is a key accountability for every member of our senior leadership team. Placing sustainability accountability within the company’s most senior leaders reflects the emphasis we place on achieving our PwP agenda.
Strategy and progress against our PwP goals are discussed during meetings of the full PEC on a quarterly basis, providing opportunities for our senior leadership to align on major strategic issues relating to sustainability. In between these quarterly meetings, PEC members remain actively engaged in executing against our PwP goals, driving the agenda with their teams.
To help drive progress, we award our executive officers annual incentives for achieving key business and individual objectives against pre-approved targets. The business objectives reflect a combination of Company-wide performance or business-unit performance depending on the executive’s position and scope of responsibility. Individual objectives are based on an executive’s contribution to PepsiCo’s strategic business imperatives, such as:
- Driving sustainable innovation;
- Improving operating efficiencies;
- Increasing customer satisfaction; and
- Managing and developing a diverse and talented workforce.
Dr. Mehmood Khan, PepsiCo’s Chief Scientific Officer and Vice Chairman, oversees the Company’s implementation of PwP 2025 goals. With his background as a physician, with expertise in endocrinology, metabolism and nutrition, Dr. Khan brings deep science-based knowledge and insights to guide the Company’s product portfolio transformation, as well as an intimate understanding of the challenges and opportunities that lie at the intersection of food, the environment and people.
Thematic & Geographic Leadership
The PEC has empowered selected leaders within the company, referred to as Theme Leads, to create and oversee global strategy and execution for each of the PwP goals. These Theme Leads, who were selected for their deep knowledge of the goals they are directing, work with teams comprised of representatives from key functions and all geographic sectors to ensure successful implementation of processes across our businesses.
As part of our restructured sustainability governance, in 2016, PepsiCo formed a Sustainability Office to drive governance and delivery of the company’s sustainability agenda across the value chain. Serving as the key central connection point, the Sustainability Office works closely with theme and functional leads from across the business to ensure continued performance progress against our PwP 2025 agenda. The Sustainability Office also plays a key role in bringing a sustainability lens to long-term corporate strategic planning and key business processes, ensuring that PwP is always embedded into the fabric of what we do as a company.
Another key role of the Sustainability Office is managing the integrity of the data on which we report. Data integrity is absolutely vital to maintaining the trust between PepsiCo and our stakeholders, and aligned with the high internal standards to which we hold ourselves. While our data management process has always been rigorous, our PwP 2025 agenda, with a new set of goals, was the right opportunity to evaluate processes, outline improvements, and implement enhancements to build on the strong foundation already in place.
We have taken a refreshed and centralized approach to sustainability information governance, informed in part by a detailed gap analysis by an expert third party. A dedicated team within the Sustainability Office has developed a robust data governance structure underpinning each of our PwP 2025 goals, ensuring accuracy, consistency, and precision of the data, while driving accountability among our teams. The team continues to work on capability to increase confidence in not only our internal data, but data collected throughout our supply chain, as we develop new tracking tools and methodologies in areas previously not measured. We believe this work, which is in progress, is the critical foundation that will drive confidence in and continue to enable more transparency in our reporting processes.