Pepsi shareholders vote on risk oversight spurred by calls for Aquafina quality reports

Organization behind vote previously compelled Pepsi to label the source of its bottled water

For Immediate Release:
May 2, 2012

NEW BERN, NC – Today, shareholders voted on a resolution that could help compel Pepsi to back up marketing claims regarding the quality of its Aquafina brand bottled water. Unlike public water systems, bottlers are not currently required to publicly report on water quality. 3.78 percent of shareholders voted in favor – a significant tally for a resolution in its first year of introduction – as students across the country staged call-in days to Pepsi’s headquarters demanding greater transparency.

Pepsi is under increasing pressure to produce water quality reports comparable to those produced by public water systems. In response to a report from the Government Accountability Office finding safety and consumer protections for bottled water are often less stringent than those for the tap, Congress subpoened CEO Indra Nooyi to provide more information on the quality of Aquafina. Pepsi has yet to make its response public despite the subpoena and commitments made by the CEO at its last two annual meetings.

In the meantime, bottled water is falling out of favor. Miami is the most recent of a growing number of city and state governments, campuses and institutions to commit to going bottled-water free in support of strong public water systems. Over the last three years, bottled water sales in North America have stagnated. And over the last two years, analysts have reported that many water bottlers have been forced to cut prices in the U.S. in order to maintain volume of sales.

Given these trends, Pepsi is doing itself no favors by making empty promises and failing to act. Aquafina is in fact losing market share quickly after a 7% decline in volume sold in 2010 and a similarly disappointing performance that caused it to lag behind its main behind competitors in 2011.

“The public is tired of deception and lack of transparency,” said Kelle Louaillier, executive director of Corporate Accountability International. “If Pepsi is going to claim purity, let’s see the quality reports to prove it.”

Corporate Accountability International partnered with one of its members, a Pepsi shareholder, to submit the resolution. The organization previously compelled the corporation to print “public water source” on its labels. It sees the resolution as a critical next step in Pepsi’s coming clean on its marketing claims.

The resolution would create a board level committee to address the substantial risks facing the food and beverage corporation. These risks include the lack of a system to regularly communicate water quality information and any breaches that could pose a significant public health risk. According to the resolution, the lack of such disclosure poses a large reputational, financial and legal risk.

For Corporate Accountability International’s statements at the annual meeting click here.

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