Sustainable operations and supply chain management

This report evaluates the sustainable strategies of PepsiCo and Nestle, their triple bottom line impact, and decision analysis. It highlights the importance of sustainability in enhancing organizational performance in the competitive business environment.

Running Head: Sustainability
Sustainable operations and supply chain management

Introduction
PepsiCo, Inc. is an American multinational corporation engaged in production and distribution of
beverages and fast food items. Company was formed in 1965 with the merger with Pepsi-Cola
Company and Frito-Lay Inc. Since then, PepsiCo is expanding its business and market share
across the globe and Tropicana is one of the biggest acquisitions made by company in 1998 and
Quaker Oats in 2001. It has been observed that company’s every brand is contributing to enhance
overall revenues of the organization. Approximately $1 billion revenue is contributed by every
brand of PepsiCo since 2012. Company is operating in various parts of the globe along with
approximately 3 lacs employees in all global locations (PepsiCo, 2018).
Nestle is a Swiss transnational beverage and food manufacturing and distributing company.
Since 2014, company is known as the largest company in terms of revenues across the globe. It
is headquartered in Vevey, Vaud, Switzerland. Company has been ranked on 64th and on 33rd
position by Fortune Global 500 in 2017 and by Forbes Global 2000 list of largest public
enterprises in 2016 apiece. Majorly Nestle deals in baby products, tea & coffee, bottled water,
medical food, confectionary ice cream, snacks, etc. Nestle was formed in 1905 with the merger
of Anglo-Swiss Milk Company and Farine Lactee Henri Nestle (López & Monfort, 2017).
With regards to both these companies, their overall sustainable strategies will be discussed under
this report. Corporate sustainability is an approach which leads to showcase long-term survival
of the organization to its stakeholders with the help of an effective business strategy. The
business strategy implemented within the workplace should consider every aspect in which
business operates such as economic, social, environmental, cultural, and in ethical spheres.
Adaptation of sustainable strategies is an important concept and it should be done with the view
to enhance organizational reliability amongst its target and potential demographics. Apart from
this, sustainable strategies are also effective sources for long term survival in the competitive and
dynamic business environment.

Data Analysis
Sustainable Strategies of PepsiCo
PepsiCo believes in strong sustainability governance which is the foundation for delivering on
our Performance with Purpose (PwP) vision in order to provide long term top-tier financial
performance by assimilating the sustainability into business strategies. Apart from this, PepsiCo
has accepted sustainability as a part of business practices and in this regard, company also value
its shareholders and other stakeholders (PepsiCo, 2018). In order to enhance the effectiveness of
their sustainability strategies, PepsiCo has taken an initiative to make a healthier environment
around the organization and for this; they are working for creating healthier future for people and
for the whole planet. Their Performance with Purpose 2025 agenda is designed to deliver needed
change across the company, industry, value chain and the world (Cohen & Muñoz, 2017).
(Source: CDP Report, 2017).
PepsiCo cultivates sustainability from its employee culture. PepsiCo is using its human resource
department to integrate the concept of sustainability in firm’s culture. In order to integrate the
concept of sustainability in organization, management hires employees, train them and by
providing employee welfare packages to them. PepsiCo hire only educated and talented
employees so that they could be trained with sustainable business practices (Sehrawat, 2017).
With the help of this, a sense of belonging develops which further leads to an employee welfare
package. As a result, company’s employees are always motivated which generate positive results
for the organization like producing high qualitative products. Along with these practices,

PepsiCo is also engaged in ecological manufacturing practices such as diversion of waste from
landfills, organic packaging and reduction in greenhouse gas (GHG) (Appendix 1).
(Source: CDP Water Report, 2017).
(Source: CDP Water Report, 2017).
These figures describes that PepsiCo’s each and every manufacturing site is being monitored as
well as measured whether it is a outsourced firm or it is a part of internal manufacturing unit.
Management of organization tracks on water withdrawals on monthly basis. This is done to
enhance the opportunities of sustainable development for organization along with coping up with
the sustainability metrics platform. PepsiCo’s internal self-assessment program to measure water,
sanitation and hygiene has been implemented so as to enhance the sustainability in the
competitive business environment.
Sustainable strategies of Nestle
Main motive of Nestle is to provide quality food products to the target and potential customers
along with sustainable development. In terms of Nestle, definition of sustainable development is
that it is a process through which world’s access could be increased towards higher quality food

along with contributing towards long term economic and social development by preserving the
natural resources and environment for future generations (Sroufe & Joseph, 2017).
Company made its corporate business principles in 1998 and then updated in 2002. The updated
version of corporate business principles of the organization includes all nine principles of the UN
Secretary-General’s Global Compact, regarding labour standards, the environment and human
rights (Acquaye, Feng, Oppon, Salhi, Ibn-Mohammed, Genovese & Hubacek, 2017). Some of
the basic principles and value of Nestle are:
 Concerned towards long term development instead of short term profits
 Long term relationships with the stakeholders and commitments
 Integrated towards diversified cultures
 Adequate code of conducts and ethical values which helps in proper management of
employees (Svensson, Ferro, Hogevold, Padin & Sosa Varela, 2018).
 Providing adequate and all necessary information to the consumers regarding company’s
products (Appendix 2).
(Source: CDP Report, 2017).

(Source: CDP Report, 2017).
Comparison of sustainable strategies of PepsiCo and Nestle
Both the companies are part of Food and Drink Federation (FDF). This group has developed a
series for new sustainability commitments. This series of sustainable commitment is a part of
‘Ambition 2025’ document and includes goals related to climate change, packaging, food waste,
water, supply chain, transport (Paloviita, 2017). Along with this, this agenda also includes some
best practices which need to be followed by every company engaged in this industry with the
motive of long term survival in the dynamic and competitive business environment. FDF has
created certain new goals which are as follows:
 Climate Change: Absolute reduction in carbon dioxide emission by 55% till 2025.
 Food Waste: Reduction in the whole food supply chain from farm to fork.
 Packaging: Innovation in packaging technology so that packaging could be recycled
(He, Ghobadian, Ramanathan & Gallear, 2018).
 Water: Supply of water across the food manufacturing industry will be limited and to
reduce the waste of water, appropriate actions will be taken to ensure sustainable water
management and reduce the water waste by 20% till 2020 against the wastage of water in
2007 (Appendix 3).

Triple Bottom Line Impact
Triple Bottom Line is an accounting framework which relates to three aspects such as social
(people), environmental (planet) and economical or financial (profit). People concept can be
described as per three dimensions i.e. organizational needs, community issues and individual
needs. Profit concept describes enhancing sales and revenues so that profitability could be
increased. In this concern, focus should be paid over improvisation of customer service along
with attracting new customers so as to enhance customer base of the organization. While planet
concept can be divided into multitude of subdivisions which are reuse, reduce and recycle.
Various organizations use this framework to evaluate its performance in terms of broader
perceptive in relation with creating greater business value. Traditionally, frameworks of business
were used to evaluate the profit and loss with the help of revenues and expenses statement. Since
last 50 years, social justice advocates and environmentalists are struggling to bring a broader
concept of bottom line into public consciousness with the help of full cost accounting. For
example: if a company’s financial statements are showing monetary profits but the raw materials
and machineries used by the organization is causing thousands of deaths. Generation of waste is
very high in the organization and due to disposition of waste in water, air and land; all natural
resources are getting polluted (Gouchev, Knowles, Sharp, Psaltakis & Lauro, 2017). Though,
organization pays huge taxes to the government which could be utilised for social benefits and
for the development purposes. But the bottom line will be how we call it as a full societal benefit
analysis. The triple bottom line concept also adds two more bottom lines i.e. social and
environmental benefit (Gallego-Álvarez & Ortas, 2017).
Whereas an organization seeking for triple bottom line who is a social enterprise and running
business as non-profit organization and engaged in providing opportunities to the handicapped
people who are labelled as unemployed so that they could earn a living. With these types of
activities, organization is earning a small amount of profit. In this regard, social benefit is a
meaningful employment through which society’s welfare, environmental protection and
corporate social responsibility (Rodger & George, 2017). While evaluating PepsiCo and Nestle
in triple bottom line concept, it could be evaluated that both these companies fulfils all the three
requirements of this framework. Financially, both companies are strong enough, both the
companies are doing well towards society and the last factor which is most essential because if
natural resources will not be saved today, human life cannot be imagined in future (Álvarez,

Bárcena & González, 2017). Concept of triple bottom line concept is committed towards
corporate social responsibility with the help of following:
 Top-level management (CEO, Board of directors)
 Programs
 Policy investment
 Principles (UN Global Compact-Ceres Principles)
Decision Analysis
With regards to the sustainability strategies and their requirements, both the companies i.e.
PepsiCo and Nestle has fulfilled all basic requirements which have helped them to become a part
of Triple Bottom Line framework. This framework helps the companies to analyse their position
in terms of financially, socially as well as on the basis of ecologically. Today, motive of the
business is more than just earning profits. Every company has to fulfil its responsibilities
regarding society. With this view, organization could make a reliable position in the market
along with the attainment of their desired goals and objectives (Bals & Tate, 2017). Apart from
this, corporate success depends upon sustainability strategies practiced by one enterprise that
could be able to extend all aspects of the business which includes employees, customers,
supplier, and all other stakeholders. Following are the key components of a successful strategy:
 Sustainability amongst the workplace should be uplifted considering the environmental
and social issues. Apart from this, organizational objectives must be designed so that it
could be able to fulfil its employees’ objectives as well. This will lead to attain
sustainability goals.
 Feedback should be taken from company’s key stakeholders in relevance with
sustainability challenges and towards sustainability practices adopted by the
organization. This will help the organization to make its strategies as per the external
factors in order to enhance organizational performance (Wei, Alsaadi, Hayat &
Alsaedi, 2017).

 Open reporting on sustainability strategies, goals and accomplishments (Della Porta,
Jackson, Alessandrino, Rossi, Bacigalupo, van Lint & Santini, 2017).

Conclusion
From the aforesaid evaluation of both the company’s sustainability strategies, it has been found
that these practices plays significant role in enhancing organizational performance in the
competitive and dynamic business environment. With this objective, PepsiCo have started
sustainable development campaign since 2006. With regards to the sustainable strategies, both
companies’ ethical and corporate social responsibilities have been discussed in this report. Along
with this, triple bottom line concept has been applied within the workplace with the objective of
enhancing organizational reliability amongst its target audience. Nestle is committed towards
using fresh water resources to produce good quality food products in order to provide customers
value for money as well as to build an effective image amongst them. However, PepsiCo is
concerned towards creating a healthier future for planet and people around. PepsiCo develops its
strategies so that they could grow along with its stakeholders. They value for their stakeholders
but Nestle believes in uplifting organizational performance which will ultimately help
stakeholders to get higher returns.

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Appendices
Appendix 1: Sustainable strategies of PepsiCo
PepsiCo has also adopted the strategy for effective management of resources so that their
operations could generate positive outcomes and it comes under good management practices
(GMPs). Primary motive of good management practices is to save natural resources like water,
air, land, and energy. Sustainable stakeholder management is another sustainable strategy
adopted by the organization. This management approach is useful in reviewing feasible option to
add value for shareholders of the company, investors, general business management and
suppliers. Sustainable governance strategy is also adopted by organization which helps to
evaluate true financial picture of the organization along with determining its position in the
marketplace (Silalertruksa, Gheewala, Pongpat, Kaenchan, Permpool, Lecksiwilai & Mungkung,
2017).
In order to make their products more feasible and adequate for consumers as well as for the other
spheres, organization has focused on several areas which need to be fulfilled in the Performance
with Purpose agenda 2025. These focused areas are reducing waste, manufacturing recyclable
packaging, sustainable sourcing, water, climate, human rights, prosperity, and diversity. For a
food sector enterprise, it is must to adopt healthy practices without seeking for higher returns
because till the time, everyone will not commit to make a healthy environment, it will be a myth
always. As per a report 33% of overall produced food for consumption purpose is wasted or lost
which is a big reason to worry because still there are various countries who are below poverty
line and eats only once in a day (Kim, 2017).

Figure1: key performance details of PepsiCo.
(Source: PepsiCo sustainability report, 2016).
Appendix 2: Sustainable strategies of Nestle
Nestlé Corporate Business Principles include: international recommendations and national
legislation; children as consumers; consumers; human rights; human resources; infant health and
nutrition and the workplace; business partners; child labour; relationships with suppliers;
competition; conflicts of interest; external relations; water policy; agricultural raw materials;
protection of the environment; and compliance (Tischner, Stø, Kjærnes & Tukker, 2017).
Apart from this, key aspect of Nestlé’s approach is to set up production bases in developing
world rather than extracting raw materials from there. With regards to this, 48% of company’s
employees and 45% of their factories are situated in developing countries only. However,
company is not able to earn sufficient from these sites but according to their fundamental

principle, investment should be made in the country which leads to positive results for the
company as well as for the country. This shows that Nestle is a true partner of sustainable
development. Their fundamental purpose is to provide qualitative food products along with
fulfilling their needs and by providing them value for money (Eleftheriadou, Pyrgiotakis &
Demokritou, 2017).
Appendix 3: Comparison of Sustainable strategies
Nestle is committed towards using fresh water resources to produce good quality food products
in order to provide customers value for money as well as to build an effective image amongst
them. However, PepsiCo is concerned towards creating a healthier future for planet and people
around. PepsiCo develops its strategies so that they could grow along with its stakeholders. They
value for their stakeholders but Nestle believes in uplifting organizational performance which
will ultimately help stakeholders to get higher returns (Rodrigues, Demokritou, Dokoozlian,
Hendren, Karn, Mauter & Welle, 2017).
PepsiCo’s management has also adopted certain strategies which are concerned for reducing the
usage of water which is used for per unit beverage production, women empowerment and for
climate protection. From these strategies, it could be said that PepsiCo is a “sustainable
company” due to its engagement in organizational practices which are concerned to an
ecologically conscious company. Nestle company is concerned towards its employees,
customers, suppliers, society and all other shareholders in order to create a long term sustainable
value. Company’s Corporate Business Principles describes that company focuses on sustainable
development instead of short terms profits. Along with this, company is concerned towards
earning healthy profit along with attaining the desired objectives of the organization which are
linked with the sustainable development.