Tim Erblich: Hi, Tony. I’m Tim Erblich as you know. CEO of Ethisphere Institute. I’m here as we just released a 2016 list of the World’s Most Ethical Companies ®. Of course, as you know, PepsiCo is one of a handful of companies that have been honored every single time we’ve done this list. Congratulations of course.
Tony West: Thank you.
Reinforcing an Ethical Culture
Tim Erblich: Why is it important for PepsiCo as a global company to reinforce an ethical culture?
Tim, it’s important for a number of reasons. I think, first and foremost, as you know, corporations increasingly are being looked to by society to help resolve large problems. Big problems. Part of that is not just because companies have resources, because companies operate in societies, operate in communities, not as a matter of right, but because they earn a social license in which to operate on. Earning that social license to operate is something that doesn’t happen automatically. Companies have to actually gain the trust of communities. They have to make sure they are bringing value to the social ecosystem in which they’re operating, and that can only happen if they are operating with a core of sustainable, ethical business practices.
A Company’s Purpose
Tim Erblich: There’re some great data out there that says 79% of prospective employees will choose a company because of their purpose. It’s really about attracting and retaining the best people, right? How do you do that?
It’s been 10 years since our CEO Indra Nooyi first introduced this idea of performance with purpose. It says that a company can’t only be managed for the level of returns quarter-over-quarter. You need to do that, no question about it, but in addition to that you have to manage for the duration of returns over the long term. The way that a company does that is it engages in long term, sustainable business strategies. Strategies that are not only good for the company, but good for the community and the society in which it operates.
The second thing you mentioned I think is also important, which is talent. In order to be able to be competitive in the 21st century, when we’re looking for the best talent that we can find all over the world, we have to be a place where people can not only come to work and have a rewarding professional life, but they will see their own personal values reflected in the work place in which they find themselves.
A Culture of Integrity
Tim Erblich: How do you at PepsiCo create a culture of integrity?
It’s a great question. I think that it really does start with our code of conduct. If you think about a stool, our code of conduct has four legs. The first is integrity in all of our actions. The second is ethical behavior in all our of business dealings, in all of our business relationships. The third is mutual respect. The last is making sure that we’re acting responsibly on behalf of our shareholders. The fiduciary duty, of course, is paramount when it comes to a lot of the work that we do as a company. When you put all of that together, it creates an atmosphere or a culture of values that says, “This is how we want to do business in the world.”
The World’s Complex Problems
Tim Erblich: It’s fascinating for us to see the role corporations are playing in solving really some of the world’s most complex problems.
That brings us really full circle to the beginning of our conversation, because that’s exactly right. Companies are increasingly being looked to to help resolve these very large, social and societal problems. Part of that comes from the bargain that we have, the important bargain that we have, with societies where we get so much, we need to give as well. I think that given the resources but given the infrastructure, given the know-how, given the talent that we can bring to bear, I think it’s an important ecosystem that exists between companies and the societies and communities in which they operate.