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Dear Ethix – Issue 54

School Project

I used your article about CAR for my school project. Jesus has given me a heart to help the poor kids in Africa. I also raised some money to help them.

Sarah Catterall, Age 7
Redmond, Wash.

Good Work

You continue to do a wonderful job with Ethix! The Sherron Watkins interview was very thoughtful, and I will discuss this in my blog. The J&J piece is very good too, though it does not really add anything new to what is already known – your Technology Watch piece, on the other hand, does do so.

Prabhu Guptara
Wolfsberg, Switzerland

The current issue of Ethix arrived on my desk today. Looks great! Good stuff. Glad to see SPU’s name on the journal.

Ward Gasque
Vancouver, British Columbia, Canada

Pepsi and CSR

I just read the interview with Steven Reinemund [PepsiCo chairman, Ethix 52]. First, the magazine is great! In this era of sound bits and scanning web pages, I looked at the sheer amount of text at first and was daunted. But the whole magazine is fascinating. I’ll be subscribing shortly.

I felt Reinemund’s responses to your first questions were quite good. The examples for social responsibility were good, but they do reflect a trend we note here at HighPoint Solutions. Quite often social responsibility is defined (somewhat understandably) by the particular interest of leadership within a corporation, rather than a broadly holistic response to stakeholders in general. It often gets manifested in the areas that others have defined as being important such as the environment or diversity or labor rights, etc. Those are all good and very important, and I especially like the personal passion that Reinemund evidences for diversity. And to be fair, he may be focusing on diversity, water, and recycling as just examples of a broader range of CSR initiatives. I don’t know Pepsi well enough to know how broadly they define CSR. It is really encouraging to read that Pepsi is taking the win-win approach here regarding clean water.

But it felt as if there was a change in tone as you moved from CSR in general (very excited, proactive, and encouraging) through socially responsible products (still positive) to the issue of products in schools (which started to feel more defensive). I’m sure Reinemund has to deal with flak on the latter every day. I did think it positive that their brand managers are striving to develop new products or refine existing ones to gain the Smart Spot label. It implies that the future of the company may be more oriented toward healthier products.

The reality is that today, their biggest revenue source comes from a flagship product line that simply isn’t healthy. I found it interesting that a few years ago a panel of dietary experts came together to compare all the fad diets at the time (low fat vs. low carb, etc.). The ONLY thing they all agreed on was that sugar, particularly refined sugar, was bad for you. Period. No exceptions. And Diet Pepsi, while lacking the sugar, isn’t really a huge step toward better nutrition unless we’ve reached the point in society where “good” is defined as being the lack of “bad”!

This is the heart of CSR to me: Do you go fully altruistic and give up making anything that doesn’t add to the common good, or do you do the best you can with where you are today and strive to move forward. It really sounds as if Reinemund wants to do the latter. How much Pepsi will be able to keep moving forward remains to be seen.

What I find most interesting about this is that for years, Ben and Jerry’s ice cream has been lifted up as a poster child for CSR. Yet their product is inherently bad for you. The question to me is ultimately who defines what “socially responsible” actually means. Is it consumers? Shareholders? Media? Government? All of it gets mixed in, and that’s probably a good but very messy thing.

Most CSR efforts are at best, “enlightened self interest.” As we say here at HighPoint Solutions about corporations and CSR, “If your values do not have a value in the marketplace, you won’t be around to espouse them for long.” We’re pragmatic enough to realize that even for corporations who strive to measure multiple bottom lines, one of them still has to be profit. So what I like about what you’re doing with The Center for Integrity in Business is to promote the discussion of how you balance CSR and profitability, what does that mean now, what will that mean in 20 years, and how can we encourage businesses not so much to be perfect in their CSR efforts, but to be honest in their own motivations and perceptions of what they are trying to accomplish.

To me, that honesty in your motivations is really at the core of integrity. When you understand that on the individual level and how that works there, it is easier to start seeing how it can be applied on the corporate level as well.

Steve Brock
CEO, HighPoint Solutions
Tacoma, Wash.

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