Resolution askConduct due diligence, audit or risk/impact assessment
Type of voteShareholder proposal
Company sectorConsumer Staples
Company HQ countryUnited States
Resolved clauseDuplicative . Shareholders request the Board of Directors commission an independent, third-party report, at reasonable cost and omitting proprietary or legally privileged information, assessing the effectiveness of the Companys implementation of its Human Rights Policy (HRP) for operations in conflict-affected and high-risk areas (CAHRA)
Whereas clausePepsiCo, Inc. (Pepsi) commits to using the United Nations Guiding Principles on Business and Human Rights (UNGPs) to prevent and mitigate human rights risks.2 The UNGPs call on companies to conduct heightened human rights due diligence (HRDD) in CAHRA due to widespread human rights abuses and violations of national and international law.3 The International Finance Corporation reports that companies in CAHRA ?face business risks that are much greater than those in other emerging markets,? including destruction of assets, deaths and injuries, and supply-chain disruptions.4 The Thinking Ahead Institute found that 84 percent of the world?s 26 largest investors named ?geopolitical confrontation? as a top three systemic risk.5 The European Union?s (EU) recently passed mandatory HRDD6 legislation and international accounting standards bodies (e.g., SASB, IFRS), call on companies to report material human rights risks.7 In one specific example, after the illegal invasion of Ukraine, Pepsi announced it was limiting exposure to Russia, but would continue providing ?daily essentials? to local populations.8 However, Pepsi has expanded its market presence, including dairy and potato chips sales increasing by 13 and 11 percent, respectively, in 2024, selling soft drink products under alternative brands, operating 19 factories, opening a new factory, and registering a trademark.9 10 11 Pepsi?s annual report indicates Russian operations account for 4% of net revenue ($4.5 billion), and allegedly paid over $122 million in taxes to the Russian government.12 Pepsi?s products have also been found in Russian soldiers? food rations.13 Accordingly, the Ukrainian National Agency on Corruption Prevention designated Pepsi an ?international sponsor of war?.14 Instead of disclosing information on these risks to shareholders, Pepsi removed its website statement on the Russian invasion and reduced annual report disclosures between 2024 and 2025.15 16 17 Pepsi allegedly banned references to Ukraine and its armed forces in advertising and has not responded to stakeholder inquiries regarding the issue.18 Pepsi?s value chain partners in other CAHRA have also been associated with a number of human rights and conflict-related risks. This has included sugar suppliers in India linked to debt bondage and forced hysterectomies among female workers, tomato product suppliers in China connected to Uyghur forced labor, and palm oil suppliers in Brazil and Peru linked to escalating conflict and violence and land fraud against indigenous communities.19 20 21
Supporting statementShareholders seek information, at board and management discretion, through a report that: ? Analyzes the effectiveness of the HRP?s assessment, mitigation, and reporting on human rights risks in CAHRA, including Russia and Ukraine. ? Assesses if additional policies, practices, and governance measures are needed to mitigate risks.