How do Coca-Cola Co and PepsiCo fare under Oxfam’s spotlight? - Sustainability Spotlight

PepsiCo and The Coca-Cola Co have made progress on some of the agricultural supply chain issues monitored by Oxfam's Behind the Brands campaign. But, Ben Cooper writes, the NGO bemoans the companies' lack of progress on farm worker pay and conditions and support for smallholders.

Oxfam's Behind the Brands report [http://www.behindthebrands.org/], which ranks the agricultural sourcing policies of the world's ten largest food and drinks corporations, has provided an opportunity to measure how The Coca-Cola Co and PepsiCo measure up in this increasingly prominent and controversial area.

The two company's dominance of the soft drinks market - and their profile across the drinks arena as a whole - mean their influence extends even beyond the already-significant impact of their businesses. Nowhere can this be more clearly seen than in relation to sustainable sourcing.

Coca-Cola has been widely recognised, for example, as setting a positive example and helping to raise standards with regard to land rights, one of the seven criteria on which Oxfam's Behind the Brands scorecard rates companies. The company's progress on land rights, from a score of one out of ten in February 2013 - when the NGO launched the campaign - to 8 in 2016, has been a key factor in the Atlanta-based giant consistently retaining third place among the ten multinationals.

Over the three years, Coca-Cola has increased its aggregate score from 41% (29/70) in February 2013 to 57% in 2016. In its response to the report, Coca-Cola said it is working with Oxfam to "address global challenges collaboratively", as part of its commitment to "more transparent, sustainable and responsible business practices".

PepsiCo, meanwhile, has also increased its score, from 31% in February 2013 to 49% in 2016, although its ranking has slipped from fourth to equal-fifth. PepsiCo said that while it had made progress, it also recognised that there was "always more to do", and it would "continue to listen to and engage with a wide array of stakeholders and organisations, including Oxfam".

Nestlé, not only the world's largest food company but also a significant player in a number of beverage categories, is one of the leaders in Oxfam's view, although it lost the top spot this year to Unilever. Other food companies in Oxfam's "big ten" with beverage interests of note are Danone, Unilever, Mars and Associated British Foods.

Of the seven criteria assessed, Oxfam noted that the strongest progress had been seen in equality for women, land rights and tackling greenhouse gas emissions, with the top ten companies improving their scores by an average of 24%, 37% and 32% respectively. The report concluded, however, that 'Water', 'Workers' and 'Farmers' were among the areas where least progress was seen.

Erinch Sahan, acting head of the private sector team at Oxfam GB, says the lack of progress in supporting smallholder farmers and the treatment, working conditions and pay of farm workers speaks to the core of Oxfam's critique of how big business interacts with agricultural suppliers. While the NGO adopts a deliberate policy of recognising and applauding achievement, a constant theme is the general lack of progress on ensuring that a living wage is received by those working in company's supply chains.

This appears as true for the soft drinks giants specifically as it does for the ten companies overall. Coca-Cola's scores on Farmers and Workers have remained unchanged over the three years, at three and six, respectively, while PepsiCo's score on both of these two criteria has been stuck on three.

Sahan stresses that progress on these aspects is particularly dependent on addressing the share of value that eventually reaches farmers and adjusting the economic model on which modern global supply chains are generally based.

"We are seeing less and less value go to farmers and farm workers and smallholders and communities in the supply chains of a lot of these global companies," Sahan says. A system that is "increasingly squeezing value away from farmers and workers", he continues, is "part of the much bigger growth of inequality, with returns to labour in decline in comparison with return to capital".

While campaigning for improved processes and better policies has been critical to the success of the campaign, Sahan believes realising significant change in living wages is a matter that needs to be brought directly into the buying negotiation. It is therefore not surprising that this remains the most intractable of issues that Behind the Brands aims to address. "We need more value to trickle down to the workers," he concludes.

Oxfam also participates in many multi-stakeholder initiatives aimed at addressing supply chain issues collectively. However, Sahan says a major company taking a lead can make a huge impact and precipitate more rapid change, not least because of the influence it has on peers and on the multi-stakeholder initiatives.

"What we found is when at least one or two of the companies came out with a bold commitment, it provided the disruption to then spur the multi-stakeholder initiatives to do truly ambitious things," he says. "The solutions are going to come from multi-stakeholder processes, but we also need that bold voice that pushes the envelope."

Coca-Cola's work on land rights is the prime example Sahan cites to illustrate how "ambition and commitment" by one or two leading voices "completely shifts the narrative".

If it is about any one thing, Oxfam's Behind the Brands campaign is about accentuating the positive, and shining a light on what is possible with the right will. 

Characterising itself as a "critical friend" to companies, and strenuously giving credit where credit is due, is not about ensuring a comfortable relationship with industry and avoiding awkward conversations with corporate counterparts in conference coffee breaks. Rather, it is borne out of the recognition that a leading move taken by one of these giant companies is so influential.

Giving such a move glowing recognition and exposure helps stretch its impact further, while also possibly encouraging companies to consider similarly bold moves.

To view Oxfam's scores and summaries of Coca-Cola's and PepsiCo's performance in its latest 'Behind the Brands' report, click here

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