Pepsi’s Politicized Charitable Giving Again Under Fire

Indra Nooyi photoThe American Family Association (AFA) is criticizing PepsiCo’s financial support of activist groups promoting gay marriage. PepsiCo and the PepsiCo Foundation are major funders of the Human Rights Campaign, and a group called Parents, Families and Friends of Lesbians and Gays.

AFA president Don Wildmon is asking PepsiCo to become “neutral” on the issue of gay marriage by ending support for the groups. Wildmon’s complaints echo those of NLPC, made in 2006 and 2007, of a liberal political bias in the company’s giving. At that time, NLPC objected to PepsiCo’s financial support for groups founded by Jesse Jackson and Al Sharpton.

In 2006 and 2007, NLPC sponsored shareholder proposals that would have required PepsiCo to disclose its charitable giving, and most importantly, provide a business rationale for each gift. NLPC’s interest in PepsiCo’s charitable giving is based on shareholder rights.

NLPC believes that shareholder interests are best served when companies pursue their core mission and avoid controversial causes and associations that can alienate customers, shareholders, and employees, and subject the company to bad publicity and boycotts.

A boycott of Pepsi products is exactly what Wildmon is calling for. Almost 300,000 people have signed an online pledge to boycott Pepsi. He is asking consumers to:

1)    Sign the on-line Boycott Pepsi Pledge.

2)    Call PepsiCo at 914-253-2000 or 1-800-433-2652.

3)    Call the offices of other PepsiCo brands: Frito-Lay (800-352-4477), Quaker Oats (800-367-6287), Tropicana (800-237-7799) and Gatorade (800-884-2867).

4)    Call their local Pepsi bottler.

This year, a resolution requiring charitable contribution disclosure has been filed by Estella Salvatierra of Parents and Friends of Ex-Gays and Gays (PFOX). (PepsiCo shareholders may click here to vote for the resolution.) The PepsiCo annual meeting will take place in Dallas on May 6.

PepsiCo’s management is opposing the resolution, as it did in 2006 and 2007. At that time, the company was criticized by independent observers. Thomas Kostigen wrote in his “Ethics Monitor” column for Dow Jones MarketWatch, “…Pepsi should address shareholder concerns, not hide from them; disclosure is never a bad thing for a company to embrace.” Bruce Meyerson, a business writer for the Associated Press, wrote that NLPC’s proposal was “worthy of consideration since increased disclosure is rarely a negative for investors.”

In my remarks at the PepsiCo annual meeting in 2006, I declared:

Corporate assets belong to shareholders. Many shareholders would certainly object to their money going to a controversial and divisive figure like Jesse Jackson. Shareholders deserve to know where their money is going and for what purpose, especially if it is directly contrary to their interests as shareholders.

Al Sharpton has served for several years as a member of PepsiCo’s African-American advisory board, a compensated position. He joined several years ago and, at the time, it was a real breakthrough for Sharpton in his effort to legitimatize himself.

Is PepsiCo demonstrating a commitment to diversity, or is it reinforcing the worst stereotypes about leadership in the African-American community by associating with a couple of hustlers like Al Sharpton and Jesse Jackson, who by and large, do not receive financial support from African-Americans.

I raised these issues again in 2007 when I remarked to the annual meeting:

Let’s consider what PepsiCo is subsidizing through Jesse Jackson’s organizations. Last April, the Duke rape case grabbed headlines, and soon after Jackson was on the scene. He dismissed suggestions that the accused lacrosse players were entitled to a presumption of innocence, and announced that the Rainbow/PUSH coalition would provide a college scholarship to the accuser.

When pressed, Jackson said, “There’s more evidence that violence occurred to her than (that) she’s the lead of a hoax.”

Well, we know now that the whole thing was a hoax. But in the wake of the Imus controversy, we have to listen to lectures on racism from Jackson, and that other hoaxer, Al Sharpton, who serves on a compensated PepsiCo advisory committee.

Subsequent to the 2007 meeting, PepsiCo apparently dropped Sharpton from its African-American advisory board but continued support for his group, National Action Network (NAN). Most recently, PepsiCo was a sponsor of the NAN annual convention that took place April 1-4 in New York City.

PepsiCo giving to nonprofits that engage in advocacy is overwhelmingly liberal. According to the company’s website, PepsiCo made corporate donations in 2008 to the Citizenship Education Fund (founded by Jesse Jackson), NAACP Legal Defense and Education Fund, National Urban League, Lawyers Committee for Civil Rights Under Law and the United National Association of the United States of America.

PepsiCo’s divisions made contributions to the League of United Latin American Citizens (LULAC), the Congressional Black Caucus, National Action Network (Sharpton’s group), and the National Council of La Raza.

PepsiCo’s CEO is Indra Nooyi (pictured above). While serving as President and CFO in 2005, before she became CEO, Nooyi touched off a firestorm when she seemed to make anti-American comments during a commencement speech at Columbia Business School. She made an analogy of her hand to the world. Africa was the pinkie. Europe was the index. Latin America was the ring, and Asia was the thumb. She reserved her middle finger for the United States. She said:

What is most crucial to my analogy of the five fingers as the five major continents, is that each of us in the U.S. – the long, middle finger – must be careful that when we extend our arm in either a business or political sense, we take pains to assure we are giving a hand, not the finger. Sometimes this is very difficult. Because the U.S. – the middle finger – sticks out so much, we can send the wrong message unintentionally.

Unfortunately, I think this is how the rest of the world looks at the U.S. right now. Not as part of the hand – giving strength and purpose to the rest of the fingers – but instead, scratching our nose and sending a far different signal.

When Nooyi’s half-hearted apology only intensified the protests, the company issued a stronger one.

Pepsi brands include Sierra Mist, Tropicana, Mountain Dew, Amp Energy drinks, SoBe, Aquafina, Mug Root Beer, No Fear, Gatorade, Lay’s potato chips, Ruffles, Doritos, Fritos, Cheetos, Rold Gold, Cracker Jack, Quaker Oatmeal, Cap’n Crunch, Life cereal, Aunt Jemima mixes and syrups and Rice-A-Roni.

photo credit: AP/Wide World