May 4, 2022

Release: PepsiCo’s political activities face investor scrutiny

  • PepsiCo receives a failing grade for global political disclosure, despite public commitment to disclose all international political contributions
  • Resolution presented at its annual meeting gets impressive 18% first time vote
  • Investors with $140 billion in shared assets make public call for PepsiCo to open its books globally
  • New book exposes abuse across soda giant’s Brazilian sugar supply chain, begs greater political transparency

PURCHASE, NEW YORK — PepsiCo needs to step-up disclosure of its political activities. That was the message from investors at today’s annual meeting. A resolution requiring the soda giant to fully disclose its global political spending received an 18% vote of shareowners, representing $42 billion in holdings and 248,400,000 shares. The vote is substantial for a first-of-its-kind resolution (see pg. 87) and allows it to be reintroduced in 2023. A similar resolution before Coca-Cola last week received a nearly 13% vote. McDonald’s investors will vote later this month (see p. 113).

PepsiCo’s political activities, and that of Corporate America more broadly, have been under the microscope since the January 2020 insurrection and the subsequent GOP push to abridge voting rights. The role of its dollars in both were cause for a temporary suspension of political spending and a belated denunciation of GOP efforts. But the corporation’s crisis response has so far failed to spur a commitment to full political disclosure. Last summer, it received a failing grade for political transparency.

“PepsiCo is feeding us all a line when it comes to political transparency,” said Paula Johns, executive director of Brazilian NGO ACT Promoção da Saúde. “They say they don’t make political contributions outside the U.S. Well, the experience in Brazil and countries across the Global South tells a very different story. And I ask PepsiCo executives: why do Brazilians deserve any less visibility into your political activities than those in the Global North?”

Johns presented virtually on the resolution during the meeting. As proof of the need for PepsiCo to open its books, she pointed to the role of the corporations’ trade groups in obstructing and watering down national health policies in Brazil. In a country roiled by diet-related disease, regulators have caved to industry pressure, failing to effectively implement a soda tax that had the potential to deliver major results for public health. You will not find disclosures of PepsiCo’s spending on the trade groups involved readily accessible on its website.

Johns also spoke to a new book documenting rampant abuses in PepsiCo’s Brazilian supply chain. The alleged abuses include illegal land grabs, as well as intimidation, forced removal, and toxic exposure of indigenous communities. The lack of federal action to stop these abuses may well stem from political pressures by the corporation and its suppliers. But we wouldn’t know given the corporation’s lack of disclosure.

She was also quick to point out that Brazil is simply an exemplar of the need for PepsiCo to round out its patchwork political disclosure. It is but one of 200 countries and territories in which the soda and junk food giant does business.

“PepsiCo’s political activities have very tangible, extremely heartbreaking impacts on global public health, human rights, and the environment,” said Ashka Naik, research director of Corporate Accountability. “What remains in the shadows by way of global corporate political action is causing great harm, and must stop. I’d challenge PepsiCo to prove otherwise by fully leveling with investors and the public on this front.”

What’s further, concealment of political activities is also a significant liability to investors. As Vanguard, the largest issuer of mutual funds in the world, has put it, “poor governance of corporate political activity, coupled with misalignment to a company’s stated strategy or a lack of transparency about the activity, can manifest in financial, legal, and reputational risks that can affect long-term value.” And a recent investor statement from the Interfaith Center on Corporate Responsibility (ICCR), a coalition of investors representing more than $4 trillion in assets, noted that “corporate political spending has a destabilizing effect on the broader economic and cultural environment, inhibiting the long-term sustainability of business…” Indeed members of the ICCR and close to 20 investors, representing nearly $140 billion in assets, are now lending their support for an open letter to food and beverage industry executives to step up their global disclosures.

“Disclosure across all markets should be a fundamental part of a corporation’s license to operate,” said Brianna Harrington, shareholder advocacy coordinator for Harrington Investments, the sponsors of the resolution. “Because transparency laws are weak—often thanks to lobbies funded by corporations like PepsiCo—does that mean investors should be blind to the risks posed?”

The global transparency resolution is pioneering in that it demands an accounting of not just direct political spending and activities (lobbying, campaign contributions, et al), but of all the tactics corporations leverage to peddle influence from bankrolling junk science to charitable giving that afford an undeserved halo of healthfulness to corporations fighting lifesaving policies. Its demand that transparency extend to their membership and spending on trade groups, as well as to every country in which the corporation does business, is similarly trailblazing.

PepsiCo, for its part, has claimed:

  • We do not make political contributions to candidates outside the U.S.” If this is in fact true, it’s puzzling that something so easy to disclose would be grounds for opposing greater transparency.
  • We comply with all national transparency rules” around trade group contributions. Clever. It’s through intermediaries like Brazil’s Association for Soft Drinks and Non-Alcoholic Beverages (ABIR) that PepsiCo exerts much of its political influence. Only disclosing contributions when local law explicitly requires creates a tremendous blindspot for investors.
  • Our scientific engagement…adheres to robust principles on transparency…” One has to wonder why then PepsiCo continues to be a member (even after Coca-Cola and Nestlé’s departure) and play an active role in entities like the International Life Sciences Institute, which has invited a range of negative headlines for propagating junk science across the globe.
  • We do not make charitable contributions for purposes of political influence.” This claims insults the intelligence of investors and public, both. More from University of Chicago on the topic here.

The resolutions and broader investor actions facing food and beverage transnationals is part of a broader trend to compel Big Business to level with investors around corporate political spending.

“Making the invisible visible is the first step toward advancing a call demanding corporations stop interfering in our policies and politics once and for all,” said Naik.

Contact Nick Guroff at 617-784-4753 or [email protected] for media inquiries.


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