Pepsi is the newest corporation to “go green,” earning media praise while promising to “do well by doing good.” But environmentalism for profit requires the tricky game of lobbying, which makes some PepsiCo investors worried that the corporation is in over its head. PepsiCo makes Pepsi, Gatorade, Aquafina bottled water and other drinks, along with Frito-Lay snack foods. Recently, operating under the motto of “performance with purpose,” Pepsi has joined a green lobbying campaign pushing federal mandatory caps on greenhouse gas emissions. The Free Enterprise Action Fund is a mutual fund (listed as FEAOX) that uses its power as a shareholder to influence corporate policies. While most “activist shareholders” push environmental, racial or labor rules on companies, FEAOX pressures companies to hold close to principles of free enterprise, and focus on their core mission of returning a profit for shareholders. FEAOX portfolio manager Tom Borelli is distressed that Pepsi’s recent words on its actions on global warming will hurt the company and its shareholders while having no significant benefit for the planet.
Last spring, PepsiCo bought “renewable energy certificates” covering all the energy consumed in its manufacturing, distribution and corporate facilities. In effect, Pepsi is indirectly paying someone, anywhere, to generate electricity from windmills or solar panels. But Pepsi is not just changing it’s behavior — it’s trying to use government to change everyone else’s too. Last May, PepsiCo joined the United States Climate Action Partnership, a coalition of environmental pressure groups and corporations united to lobby the federal government to impose regulations that curb greenhouse gas emissions in the form of a “cap-and-trade” scheme. Borelli and other regulation opponents point out that cap-and-trade will impose huge energy costs on U.S. consumers, and that the energy sector profoundly affects the rest of the economy by driving up the price of manufacturing and shipping, all for minimal effect on climate. A handful of corporations, including USCAP members such as General Electric, have positioned themselves to get rich off of these restrictions even while the rest of the economy suffers. PepsiCo may think it can make a profit from these restrictions: The firm can seek CO2 credits for the renewable energy certificates it has bought; also the company outsources its bottling, including some to other countries that have no greenhouse restrictions. At the same time, new CEO Indra Nooyi is hoping the public image of Pepsi as an environmentally friendly company will generate good will and thus business. But Pepsi is learning that the environmental game — both on its PR front and its lobbying front — is full of pitfalls. Pepsi has firmly come down in support of the notion that industrial activity contributes to harmful climate change — the very argument that lies behind the current crusade against bottled water products. Pressure groups have started anti-bottled-water campaigns, and the mayor of San Francisco has prohibited city employees from buying bottled water. The top-selling brand of water in the United States — and thus the chief target — is Pepsi’s Aquafina. The regulatory front is more treacherous. Any cap-and-trade legislation will be complex and nuanced, with the details determining who gets rich and who suffers, meaning he who has the best lobbying team usually wins. Just looking at Pepsi’s cohorts in USCAP, it’s easy to see the soda maker is not the biggest kid on the block. Pepsi spent $1 million on lobbying last year, compared to GE’s $23.6 million, General Motors’ $6.4 million and Alcoa’s $1.6 million. More specifically, PepsiCo has not lobbied on environmental issues in more than three years, according to federal filings. This is enough to make a shareholder worry that Pepsi is in over its head in this high-stakes game of global warming regulation, especially when PepsiCo acknowledged in its annual filings with the Securities and Exchange Commission that high energy prices could have a serious effect on profits. FEAOX has filed a shareholder resolution calling on the company to describe just how their lobbying, PR and voluntary efforts — while putting profit at risk and slowing the economy — will help slow global warming. There’s a lot of money to be made in the global warming lobbying game, but there will also be plenty of losers. Will those losers include PepsiCo’s shareholders? http://www.examiner.com
Labels: Commentary - Timothy Carney: Pepsi dives into dangerous global warming wars |
