Sustainable Development in the Time of Crises: Why the Triple Bottom Line helps secure Economic Survival

The senior director of global sustainable development at PepsiCo, Daniel Bena, tells Deutsche Mittelstands Nachrichten in an exclusive interview those who invest in sustainable development today will be the economic winners of tomorrow.

Daniel Bena has served as PepsiCo’s first senior director for sustainable development wit a focus on strategic partnerships since 2006. He is author of „Sustain-Ability: How a corporate conscience helps business sustain the ability to win”

Deutsche-Mittelstands-Nachrichten:  As the senior director of global sustainable development at PepsiCo, what do you tell the manager of an SME (Small and Medium Enterprise) regarding sustainable development when he asks Whats in it for me?

Daniel Bena: The short answer is the very survival of his or her company.  By embracing sustainable development in a genuine way–not just green washing or public relations–but truly „operationalizing“ it into the day-to-day activities of the business, you help assure that your business will thrive long term.

Is sustainable development simply a symbol for good will and philanthropic engagement or does it also serve the bottom line?

Daniel Bena: I think sustainable development, early on, was frequently associated with philanthropy.  More and more, however, this is changing–and changing quite dramatically to be about the core business.  At PepsiCo, we live by the phrase: “Do well by doing good.“  And we truly believe this.  We are a publicly-traded company with obligations to our shareholders and to our stakeholders, and we take these obligations seriously. If we didn’t believe that our sustainable development strategy, which we call „Performance with Purpose,“ would result in bottom line benefit (in addition to many other benefits), we would not be pursuing it with such strong commitment.

When talking about sustainable development, the industries that come to mind are those that are resources intensive, ranging from agriculture to food and beverage production to mining and key technologies.  Are there any types of industry or business that can do without sustainable development?

Daniel Bena: Absolutely not.  Every business or industry will benefit from having a comprehensive and well-though sustainable development strategy.  The challenge is developing a strategy that is right for your specific situation and context.  In this case, one size really doesn’t fit all, and you must customize your approach to address the specific challenges, risks, and opportunities for your area.

In spite of months of efforts, neither the Euro crises nor the economic crises in the US have been resolved yet.  Instead, the global economy is expected to decline next year. Faced with continued uncertainties in the markets and the possibility of a global recession, why should SMEs emphasize on sustainable development as an integral part of their organizational strategies?

Daniel Bena: A few years ago, at the height of the economic crisis in the US, a CEO at the Clinton Global Initiative was asked a very similar question. The response was that in times of economic hardship, this is precisely when companies must increase their attention to sustainable development, not decrease it!

In a very simple example, consider this:  When the economy is in trouble, businesses need to be extra diligent about saving money.  A good sustainable development strategy should include a component for resource conservation.  By using less water, fuel, and electricity, you can save millions of dollars each year through productivity savings

On the „development side“: If businesses are in trouble economically, it is safe to say that communities are also in the same or worse trouble. So this is a great opportunity for a company to strengthen its social license to operate within the eyes of the communities where they do business.

Why is integrating a Triple Bottom Line-approach to a companys business strategy important for its long-term success and how do you personally define that triple bottom line?

Daniel Bena: Great question, since there are so many interpretations of „Triple Bottom Line.“  We recognize the classic definition, which includes elements of society, environment, and economy…sometimes called people, planet, and profit.  However, we developed a banner under which our own triple bottom line approach may be applied to PepsiCo.  We believe that our long-term profitable growth is inextricably linked to our ability to deliver our sustainability objectives.  It’s called Performance with Purpose, and means delivering sustainable growth by investing in a healthier future for people and our planet.

The research institute GlobeScan has found  that some 70 percent of consumers hold companies solely responsible for not harming the environment, treating employees fairly, and ensuring responsible supply chains.  However, it appears that most CEOs are not aware of these expectations. What is your recommendation regarding educating managements with regard to consumer expectations and sustainable development?


Daniel Bena: I might disagree with your premise that most CEOs are not aware of these expectations.  In fact, I am optimistic that just the opposite is true and that CEOs are recognizing the core importance of sustainable development to their business.

 

Last year, at the United Nations Global Compact’s Leaders Summit at the UN, Accenture reported on a study they conducted with nearly 1,000 global CEOs.  In that report, one of the top risks to their business that CEOs face was identified as the inadequate training of the future leaders of their companies in sustainable development!

 

Therefore, I do agree that education and awareness building remain essential.  One way is exactly what we are doing: the sharing of information about it.  Another way is to encourage companies to engage in collaborative initiatives, like the World Business Council for Sustainable Development, UN Global Compact, and so many more.

Can sustainable development provide businesses based in developed countries with a competitive edge or USP when looking at the higher rate of economic growth in emerging and developing economies?     

Daniel Bena: The principles of sustainable development certainly apply across the board, to developed and developing economies alike.  However, in many ways, some of the greatest need–and greatest opportunities–exist in the developing world.  This is not to say that there aren’t opportunities in the developed world as well, but these might not be the proverbial „low-hanging fruit.“

The need for–and benefits of–conserving natural resources also applies across the board.  In developing countries, the benefit might be securing your supply chain or making your business more resilient to the impacts of climate change.  In the developed markets, it might mean saving money by productivity improvements.

Economic growth in the past 150 years or so has been based on using and exploiting the earths natural resources. Many climate change and ecology experts argue for a paradigm-change to secure our survival as a species.  On the other hand, many business leaders fear the cost will be too high to secure economic growth. Do you have a suggestion on how to achieve both?

Daniel Bena: I never believe in single solutions–especially to crises of the magnitude of those we face.  So, I think we really need to do both.  We need to continue with small, incremental improvements:  Saving some resources is better than saving none at all.  At the same time, though, we need to work on the „bigger picture“– those ideas which will challenge the existing paradigms, spur innovation, and, hopefully, be truly transformative.  This reminds me of one of my favorite quotes from Albert Einstein, „If at first the idea is not absurd, then there is no hope for it!“

As a global food and beverage producer with hundreds of brands in some 200 countries, 60 billion dollars annual turnover and some 300.000 employees, PepsiCo has often been criticized for its exploitation of water and land resources, as well as for damaging the environment, for example through pesticides in products in India, air pollution in the US or water pollution in China.  What is your policy regarding environmental exploitation, climate change and unfair working conditions?

Daniel Bena: We would need a long time to adequately answer those questions, but I refer back to the description I gave of the elements of Performance with Purpose.  Certainly these explicitly cover environmental stewardship, climate, and the treatment of our people.

Aside from this, and more specifically, PepsiCo was one of the first companies of our size to publicize formal guidelines to respect water as a fundamental human right.  I like using this as an illustrative example of our commitment, since the elements of our policy are comprehensive and include safety, sufficiency, acceptability, physical accessibility, and affordability.  We also have very clear policies for occupational health and safety, environmental stewardship, sustainable agriculture, human rights, and much more.

The demand for water around the world will outstrip supply by a staggering 40 percent by 2030. In addition, natural resources are dwindling and the effects of climate change are threatening entire societies. Who caries more responsibility for this development and the required change–policy makers or business leaders?

Daniel Bena: That is a point we feel very strongly about.  It is not a question of who is „more responsible.“  The most important message is that the solutions to these crises are very much a shared responsibility, and not just among business and government, but also among NGOs, academia, and even individuals.  Everyone has an obligation to do their part.

A recent study by GlobeScan and Circle of Blue, released during World Water Week a couple of years ago, clearly demonstrated that people across the world are worried about water availability and quality.  In fact, they are more worried about this than they are worried about climate change.  The survey responses also made it clear that people see the need for a shared solution to the problems.

It there a path toward sustainable development that cash-strapped SMEs can follow without having to hire a head of CSR and creating a CSR department?

Daniel Bena: Yes, and this is exactly why I wrote my first book.  Companies come to us all the time and ask for assistance.  They definitely do not need to add layers to their organization, nor do they need a chief sustainability officer–at least not right away.  The start of a sustainability journey can start very simply.  The easiest thing to do is begin to measure and track your resource use.  The saying „if you treasure it, you will measure it“ has a lot of value!  It is amazing how much water, fuel, electricity, and money can be saved simply by robust measurement of its use.  Also, once you start to measure, it begins to stimulate hundreds…even thousands of ideas of how to improve the efficiency with which these resources are used.

On the societal side, there are always many ways to begin to engage the communities in which companies operate…sponsoring events from local non-profits, holding a „volunteer day“ where your employees can all contribute to a good cause, like helping to construct a shelter, or cleaning up a local park…many ideas that don’t require a lot of money.

What are the three key steps you would recommend an SME undertake in order to embark on a successful journey toward sustainable development?

Daniel Bena: First, get started.  Do something, stop thinking about it or meeting about it and get busy!  It’s all about action and impact.  I heard a quote recently attributed to a sales guru and motivational speaker, Tom Hopkins, who said, „the profit of great ideas comes when you turn them into reality.

Second, metrics are very important.  Get the metrics and the measurement systems right early on in the game, no matter what it is you are measuring.  This helps you track your performance, and adds credibility to your reporting–which, by the way, should be as transparent as possible.

Third, engage your employees.  Some of the greatest sustainability ideas we have seen at PepsiCo are the result of our people.  Many of them were „grass roots“ efforts that started as a single idea from one person in one of our plants who had a passion.  This fosters team work, enriches the job, and often results in significant benefit to the company.

The interview was conducted by Regina Koerner

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PepsiCo is involved in a number of CSR-, civil society and intergovernmental initiatives for sustainable development.  For example, PepsiCo and PepsiCo Foundation have invested almost $34 million in safe water and sanitation initiatives in developing countries since 2005 with partners that include Water.org, the Safe Water Network and the Inter-American Development Bank’s AquaFund.  PepsiCo also supports health and nutrition projects such as a $5 million public-private partnership with the United Nations World Food Program and the United States Agency for International Development (USAID) to increase chickpea production and promote long-term nutritional and economic security for some 10,000 farmers and 40,000 children in Ethiopia.

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