FIN/370 – Finance for Business
PepsiCo Ethics and Compliance
PepsiCo Inc. is a world leader in the beverage and snack food industry. Founded in 1965, the company has grown to become a household name. PepsiCo employs more than 285,000 employees worldwide, and has revenues of more than $60 billion (Our History, 2011). PepsiCo prides itself on social and environmental responsibility, and maintains a commitment to ethical business practices. Role of Ethics and Compliance in PepsiCo’s Financial Environment The management at PepsiCo realizes that reputation hinges on adherence to ethical policies as seen in the public eye. Because of this, PepsiCo has interwoven ethics throughout the company’s policies and procedures, its training practices, and its timely and accurate financial reporting. As evidence of such, in 2010 Ethisphere Magazine ranked PepsiCo one of the world’s most ethical companies. The magazine also placed PepsiCo in the top 25% for compliance performance among beverage industry competitors in the Dow Jones Sustainability World Index (Ethisphere, 2010, Sec. 40). PespiCo’s letter to the Shareholders (2010) states, “our actions—the actions of all our associates—are governed by our Worldwide Code of Conduct…the Code and our core values enable us to operate with integrity—both within the letter and the spirit of the law” (p. 102). The letter further states that PepsiCo is “committed to providing timely, accurate, and understandable information to their investors” (p. 102). PepsiCo displays its ethical commitment by maintaining strong controls over financial reporting, exerting rigorous business oversight, and requiring strong and effective corporate governance from its board of directors. The company is committed to providing investors with financial results that are “complete, transparent, and understandable” (Annual Report, 2010, p. 102). To ensure adherence to these ethical principles, PepsiCo employs an independent registered public accounting firm to audit its financial statements and those of its subsidiaries. The firm also audits PepsiCo’s internal control over financial reporting according to the guidelines set forth in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Audits are conducted in accordance with the Public Company Accounting Oversight Board (Annual Report, 2010). PepsiCo has some of the highest standards for maintaining corporate governance. PepsiCo shareholders elect members of its board of directors annually. Outside advisory firms help watch over the company and give advice to the board of directors. Some of the advisory firms include Institutional Shareholder Services and Governance Metrics International. PepsiCo maintains strict company standards and accountability, and holds all employees responsible for their actions. Ethics Training and Code of Conduct
PepsiCo conducts regular code of conduct training to keep the company in harmony with legal and ethical compliance. The PepsiCo brand is recognized worldwide, and company leaders are very conscious about maintaining a strong ethical company. PepsiCo’s has translated its code of conduct training into 38 languages, and this tool helps the company maintain the highest ethical behavior worldwide. PepsiCo prides itself on reporting earnings to the shareholders through ethically sound financial statements. PepsiCo demonstrates to the business world a commitment to honesty and compliance with industry standards, along with the stiff regulations of the SEC, Security Exchange Commission. PepsiCo reports all financial dealings and strives to report correct statements to its shareholders (Silverblatt, 2010). Business Ethics Leadership alliance
PepsiCo is a member of the Business Ethics Leadership alliance (BELA), an organization committed to raising public awareness of the importance of ethics in business. BELA promotes...