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PepsiCo 49/100

(NYSE:PEP) 7 of 38 (2018)

PepsiCo Inc. (PepsiCo), a beverage, snack, and food company headquartered in the United States, ranks seventh out of 38 companies, disclosing more information on its forced labor policies and practices than its peers across all themes. Compared to 2016, the company improved its score by three points by disclosing a revised version of its supplier code of conduct, which prohibits worker-paid recruitment fees and requires suppliers to cascade standards. The company also discloses undertaking a human rights risk assessment that includes its supply chains and developing a grievance mechanism for its commodity supply chains. Further, the company commits to providing supplier training on its revised code, and additional guidance on forced labor-related risks, particularly recruitment fees and freedom of movement. Additional steps the company could take to address forced labor risks in its supply chains include strengthening its disclosure and practices on the themes of purchasing practices, recruitment, and worker voice.

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49 /100

2018 Ranking: 7 of 38

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45

PepsiCo was evaluated both in 2016, when it ranked fourth out of 20 companies, and in 2018, when it ranked seventh out of 38 companies. PepsiCo has improved by four points since 2016 to score 49/100. The company improved its score by disclosing a revised version of its supplier code of conduct, which prohibits worker-paid recruitment fees and requires suppliers to cascade standards. The company also discloses undertaking a human rights risk assessment that includes its supply chains and developing a grievance mechanism for its commodity supply chains.

2016 BENCHMARK

49

The average score for the sector was 30/100, matching the average score in the 2016 benchmark. Compared to 2016, the number of companies assessed in 2018 increased from 20 to 38. Since 2016 the methodology has been strengthened, making it harder for companies to achieve the same score. The 19 companies benchmarked in both 2016 and 2018 saw their average score increase from 30/100 to 33/100, which is positive given the changes to the methodology.

METHODOLOGY

2016

45

PepsiCo was evaluated both in 2016, when it ranked fourth out of 20 companies, and in 2018, when it ranked seventh out of 38 companies. PepsiCo has improved by four points since 2016 to score 49/100. The company improved its score by disclosing a revised version of its supplier code of conduct, which prohibits worker-paid recruitment fees and requires suppliers to cascade standards. The company also discloses undertaking a human rights risk assessment that includes its supply chains and developing a grievance mechanism for its commodity supply chains.

2016BENCHMARK

2018

49

The average score for the sector was 30/100, matching the average score in the 2016 benchmark. Compared to 2016, the number of companies assessed in 2018 increased from 20 to 38. Since 2016 the methodology has been strengthened, making it harder for companies to achieve the same score. The 19 companies benchmarked in both 2016 and 2018 saw their average score increase from 30/100 to 33/100, which is positive given the changes to the methodology.

METHODOLOGY

THEME AND INDICATOR SCORE

The benchmark methodology has seven themes, selected to capture the key areas where companies need to take action to eradicate forced labor from their supply chains. There are a total of 23 indicators across the seven themes. For each theme, a company can score a total of 100 points.

Commitment and Governance

This theme evaluates a company's commitment to addressing forced labor, whether it discloses supply chain standards, and to what extent it has management processes and board oversight, training programs, and engagement with stakeholders on forced labor in place.

OVERALL 88
INDICATORS
Commitment
100
Supply Chain Standards
90
Management and Accountability
100
Training
100
Stakeholder Engagement
50

Traceability and Risk Assessment

This theme measures the extent to which a company demonstrates an understanding of its suppliers and their workforce by disclosing relevant information (such as supplier names or sourcing countries) and assesses and discloses forced labor risks across its supply chains.

OVERALL 56
Traceability
37.5
Risk Assessment
75

Purchasing Practices

This theme assesses to what extent a company adopts responsible purchasing practices (such as providing price premiums and procurement incentives) and integrates supply chain standards into supplier selection and supplier contracts, and whether it cascades them down the supply chain.

OVERALL 45
Purchasing Practices
30
Supplier Selection
0
Integration into Supplier Contracts
50
Cascading Standards through the Supply Chain
100

Recruitment

This theme measures a company's approach to reducing the risk of exploitation of supply chain workers by recruitment agencies, eliminating workers' payment of fees during recruitment processes throughout its supply chains, and protecting the rights of migrant workers.

OVERALL 23
Recruitment Approach
15
Recruitment Fees
50
Monitoring and Ethical Recruitment
0
Migrant Worker Rights
25

Worker Voice

This theme measures the extent to which a company engages with workers in its supply chains, enables freedom of association, and ensures access to effective and trusted grievance mechanisms.

OVERALL 23
INDICATORS
Communication of Policies
50
Worker Voice
0
Freedom of Association
0
Grievance Mechanism
40

Monitoring

This theme evaluates a company's process for auditing suppliers (including whether audits include non-scheduled visits, review relevant documents such as wage slips or contracts, interview workers, and audit lower-tier suppliers) and providing disclosure on the outcomes of supplier audits.

OVERALL 50
Auditing Process
50
Audit Disclosure
50

Remedy

This theme measures the extent to which a company has corrective action plan processes for non-compliant suppliers and ensures remedy is provided to workers in its supply chains who are victims of forced labor. Publicly available allegations of forced labor in a company's supply chains that occurred in the past three years, and how a company has responded to and addressed those allegations, are also assessed as part of this theme.

OVERALL 56
Corrective Action Plans
62.5
Remedy Programs and Response to Allegations
50

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