Check out this recent article in Forbes.com on a real effort to make a dent in water stewardship and sustainable agriculture by a global brand leader.
In a wide-ranging interview with Sanjeev Chadha, President, PepsiCo Middle East & Africa, we discussed the evolving relationship between business and society, water management and sustainability at PepsiCo, shortages and scarcity particularly in the Middle East and Africa, the interconnectivity of water with a number of other critical issues, and key leadership lessons learned from a business perspective in tackling some of the world’s most pressing problems.
Sanjeev Chadha is the President, PepsiCo Middle East & Africa. PepsiCo is a global food and beverage leader with net revenues of more than $65 billion and a product portfolio that includes 22 brands that generate more than $1 billion each in annual retail sales. PepsiCo’s main businesses – Quaker, Tropicana, Gatorade, Frito-Lay and Pepsi-Cola – make hundreds of enjoyable foods and beverages that are loved throughout the world.
Prior to his current assignment, Sanjeev led PepsiCo South Asia (India & neighboring countries) as Chairman & CEO, during a period in which PepsiCo rose to become a leading model of PepsiCo’s philosophy of ‘Performance with Purpose’, and the largest Food & Beverage business in India. In 2009, their business achieved a proud milestone: “Positive Water Balance”, by replenishing more water than they consumed, a global first in beverages.
Rahim Kanani: When you think about the evolving role of business in society, what’s been the most significant change, and how does this change impact the way in which PepsiCo operates?
Sanjeev Chadha: Two big, positive changes are shaping this agenda. The first is the discovery of the true power of partnerships. Governments, non-profit organizations, institutions and industry alike are discovering they cannot go it alone against large social and environmental challenges that face our world. They are forging new partnerships, with each partner playing a unique, symbiotic role – and delivering powerful results. The second change is that sustainability is becoming an integral part of the business strategy for an increasing number of companies because, quite frankly, it’s good for business. Conserving resources, for example, produces cost savings today while also helping to make sure the communities in which we operate are strong and successful markets well into the future. At PepsiCo, this is part of our overall Performance with Purpose strategy, which includes our promise to provide a wide range of foods and beverages for local tastes; to find innovative ways to minimize our impact on the environment by conserving energy and water and reducing packaging volume; to provide a great workplace for associates; and to respect, support and invest in the local communities where the company operates.
Harnessing the expertise of diverse partners has helped PepsiCo take a more global, integrated approach in all of our operations. Our water stewardship initiatives, for example, started in our direct operations and now include conservation of water across all aspects of our supply chain. We also work in community watersheds – particularly in water stressed areas; help provide safe water to communities with the most need; and advocate for new approaches that can help find lasting solutions to the issues faced around the world.
All of our global water initiatives have a common, critical element: they are all powered by great partnerships. We work with Columbia University’s Earth Institute, Water.org, the Safe Water Network, The Nature Conservancy, the Inter-American Development Bank, and many others who we rely on for expertise, local knowledge, and deep insights. It’s collaboration that drives success and results. Industry has an important role to play, but so, too, do NGOs, governments, and others. If we all align behind common objectives and play our part, we’ll make the biggest impact.
Rahim Kanani: What kind of goals has PepsiCo set for itself in terms of water management and sustainability, and how are you measuring up so far?
Sanjeev Chadha: Water stewardship and sustainable agricultural practices are critical to PepsiCo’s operational efficiency, long-term growth and sustained profitability. This has led PepsiCo to set aggressive goals, including improving our water-use efficiency by 20 percent per unit of production by 2015 (against a 2006 baseline). PepsiCo recently announced that we reached this water goal a full four years ahead of schedule. We conserved nearly 16 billion liters of water through the application of water-saving equipment and technologies, creative recycling and re-use, and by deploying a water management system throughout our manufacturing facilities.
In addition to reducing our environmental footprint, we also reduced water and energy costs. In fact, PepsiCo reduced water and energy related costs by more than $45 million in 2011 compared to 2006, a clear indication of how environmental and financial performance is inextricably linked. PepsiCo being awarded the prestigious Stockholm Industry Water Award this year further validates our water conservation efforts and highlights our innovation in making the most of every drop used.
Rahim Kanani: With parts of the Middle East and Africa facing severe water shortages, what are some ways in which you are tackling sustainability in those particular regions?
Sanjeev Chadha: In the Middle East and Africa, we are taking the best of what PepsiCo has done around the world and adapting it to the local context. Our experience with some of the world’s most advanced water-saving technology in our manufacturing plants, our innovative work to promote modern farming practices in Mexico, and our NGO partnerships around the world are providing best-practices that will continue to enhance our sustainability efforts in the region.
For example, in 2009, PepsiCo India became a leading model of PepsiCo’s guiding principle, Performance with Purpose, when the business achieved “Positive Water Balance” by replenishing more water than it consumed: a global first for PepsiCo. Today, we are leveraging India’s learning in Jordan, one of the most arid countries in the world. Specifically, we are working on solutions to reuse water in our operations that would otherwise be wasted and we are constructing rain water harvesting ponds by collaborating with the local authorities. We are committed to achieving Positive Water Balance in Jordan by 2015.
Our sustainable agriculture initiatives will be particularly important in Africa and the Middle East, especially as PepsiCo is one of the largest agricultural companies and many of our products depend on agricultural raw materials. PepsiCo globally grows or sources several million tons of fruits and vegetables: 4 million tons of potatoes for our Lays brand; 3 million tons of oranges and other fruits and vegetables for Tropicana, Naked Juice and SoBe brands; and 600,000 tons of oats for Quaker. As we continue to expand in markets and regions, sustainable agriculture will continue to play an important role in our business model. Egypt, which is home to our largest food and beverage plants in the region, will benefit significantly from sustainable agriculture initiatives in the future.
Finally, across the Middle East and Africa, from the UAE to Jordan, we have deployed resource conservation best practice initiatives in all our operations that have contributed to saving 3.9 billion liters of water in our company-owned operations last year, as compared to five years earlier. This is an achievement we are truly proud of; it is another example of how we can significantly drive cost-efficiency in our business by reducing our environmental footprint.
Rahim Kanani: Looking at the issue of water and sanitation more broadly in the developing world, what are some of the trends, challenges or opportunities that you’re noticing?
Sanjeev Chadha: The interconnectivity of water is powerful. Water plays a key role not only with food security, but also energy, sanitation, health and education. That is what makes it one of the most complex subjects to tackle – one where collaboration is of paramount importance. Secondly, water scarcity is debilitating … but fortunately, there are solutions that are achievable and not overly complex. Take, for example, PepsiCo’s i-crop(tm) ‘precision-farming’ technology, a web-based tool that was developed in conjunction with the UK’s Cambridge University that enables PepsiCo’s farmers to monitor, manage and reduce water use. To date, initial trials of i-crop across PepsiCo’s UK potato farms have already seen a 13% increase in crop yield while using 8% less water. Instead of always seeking new innovations, we also need to focus on using existing tools and figure out how to scale them.
There are several pools of excellence, innovative solutions and success stories across the world. The task ahead of us is how to transform these pools of excellence into an ocean of positive change.
Rahim Kanani: At the same time, what are some of the leadership lessons you’ve learned tackling water scarcity from a business perspective?
Sanjeev Chadha: I’d sum it up in three thoughts. First, while the power and momentum of partnerships is palpable, there are still too many silos, too many bureaucratic hurdles, and at times too much suspicion – which prevents governments and organizations from joining hands and making swift progress on food and water security. We must continue forging partnerships to make even greater progress.
Second: as a businessman, the one thing I have been taught all my working life is that it is action that yields results. In the case of water security too, we cannot always wait for the perfect solution, 100 percent funding, or a totally risk-free strategy — these rarely exist. We must take action. More and more businesses are reaching the conclusion that sustainability is a critical driver of long-term business growth and financial success, as well as that public-private collaboration is key in order to make a true, lasting difference.
My last takeaway and message is that the business world is under-tapped. Speaking on behalf of Industry across the world, big and small, my message is that we are keen, we are willing, and we are able. Try us.
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