Abstract

This case is about consumer food giant PepsiCo’s ethical dilemma related to conflict palm oil. Palm oil is a key ingredient that goes into the company’s snack foods. Over the years, the demand for palm oil had increased sharply as it was one of the cheapest vegetable oils available on the global market with no transfats. The rise in demand was linked to large-scale deforestation across South East Asia. The case explores the impact of Conflict Palm Oil on the environment and how it is tied to deforestation, human rights violations, and climate pollution, adding to global warming emissions and reducing habitat for many already threatened species. PepsiCo has been targeted by a broad number of environmental groups for its continued use of large quantities of Conflict Palm Oil in its snack foods. As the global palm oil industry was fast approaching a tipping point it was high time PepsiCo worked to realize zero deforestation in its operations and supply chain. Given its global scale and influence PepsiCo could play crucial role in eliminating Conflict Palm Oil from the global palm oil supply chain. Going forward, the question before PepsiCo was what the company could do to ensure its supply chain is free from Conflict Palm oil. How could it assure consumers that the snack products did not come at the expense of the environment? With Conflict Palm Oil being such a critical issue right, how could PepsiCo ensure that its commitment go far enough to enact change? This case is meant for MBA students as a part of their Corporate Sustainability/ Business Ethics/ Corporate Social Responsibility curriculum. It can be also used in the Operations Management/ Supply Chain Management curriculum.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the social, economic and environmental trade-offs involved in production of sustainable palm oil.
• Understand the issue of Conflict Palm Oil and its impact on the environment.
• Analyze the steps taken by PepsiCo to address the issue related to the sourcing of sustainable Palm Oil.
• Analyze the nature of criticism against PepsiCo’s palm oil sustainability efforts.
• Understand the challenges faced by PepsiCo going forward in dealing with the issue of palm oil and explore the ways in which it can overcome the challenges.

Keywords

Ethical dilemma, Corporate Sustainability, Sustainable supply chain, Ethical sourcing, Supply chain transparency, Supply chain risk mitigation, Supply chain mapping, Climate change, Deforestation, Human rights as a Management issue, Businesses as human rights advocates, Business-government-society relationship, Stakeholder management, Stakeholder tension, Stakeholder engagement