Sustainable Local Benefits – Industry Leader Perspectives

Speakers

• John Chaplin, Vice President, OBO Project Organization, ExxonMobil Development Company
• Beth Sauerhaft, Director of Global Environmental Sustainability, PepsiCo.
• Michael Oxman, Director, Advisory Services, BSR (Moderator)

Highlights

• Investing in local benefits means looking at where business needs and local needs intersect, and then fulfilling those needs.

• Investing in sustainable local benefits takes time, and as a consequence, getting results takes time. Patience is crucial from investors and business to see benefits come to fruition.

• All businesses have an inherent interest in the development of local communities and preservation of environmental systems. No business, however, can tackle these challenges alone. Consequently, cross-sector collaboration is imperative to the development of local benefits that are truly sustainable.

Memorable Quotes

“Providing local benefits is more than philanthropy … it is a direct value driver associated with business.” —Michael Oxman, BSR

“There is an eighth Millennium Development Goal [that’s not being discussed]: It’s global partnerships. I would like to challenge you to use this Conference to find ways to work together to make a difference.” —John Chaplin, ExxonMobil Development Company

“PepsiCo has stood behind the human right of access to safe drinking water, and has committed to helping 3 million people access safe drinking water over the next couple of years. We know how to clean water. It’s something that we can do and we do.” —Beth Sauerhaft, PepsiCo

Overview

While investing in local benefits has traditionally been a product of philanthropy, businesses are now moving away from once-off investments in local communities to strategic, intentional commitments that produce sustainable local benefits. Oxman opened the session with a reminder to the audience that investments in local communities is a means of securing license to operate, a productive and skilled workforce, and efficient production.

After years of investment in local communities, ExxonMobil has incorporated community investment into its global strategy. Energy fuels the modern world—it means expanded industry and increased trade and transportation; yet today 1.4 billion people lack access to affordable, reliable energy. Chaplin explained that a portion of the ExxonMobil business is creating sustainable value by connecting these homes with access to affordable, reliable energy. However, beyond connecting homes with energy, ExxonMobil’s national content strategy focuses on the potential economic development opportunities during the entire scope of a project. For example, when first entering a new site, ExxonMobil conducts a full assessment to determine the needs and capabilities of the region and communities.

One of the most critical needs within many ExxonMobil communities is gainful employment. For instance, the company has recently started work on a new site in Iraq, where the average unemployment rate among men is 60 percent. ExxonMobil has estimated that it will initially need to hire 5,000 people on-site to complete the project. The job descriptions, however, are diverse and require varying skill levels. When possible, ExxonMobil is working to ensure local sustainable benefits. They accomplish this by first accurately estimating the number and type of jobs needed, and then communicating these needs externally. It is important for the relationship with local stakeholders that accurate expectations are set for the level of employment that a project will generate. Second, Chaplin stressed the importance of mandating that all low-skilled labor is hired locally. Third, where higher-skilled labor is needed, ExxonMobil provides skills training. Finally, ExxonMobil works to create a sustainable exit strategy. For example, in the Iraq scenario, the company will hire 5,000 employees; however, later in the cycle of the project this number may drop to 500. Ensuring that employees have continued gainful employment is critical. One way of providing sustainable benefits is by investing in local businesses that can absorb employees post-project, and by investing in skills training that provides employees the capacity to seek other work.

Similar to ExxonMobil, PepsiCo considers investment in sustainable local benefits to be imperative to the success of its business. Sauerhaft shifted the conversation away from workforce development to investment in local business through sustainable agriculture. With agricultural raw materials being at the source of most PepsiCo products, sustainable agriculture is at the heart of its business. Recognizing this, PepsiCo has recently launched a pilot program in Mexico to source sunflower oil from small farmers. Sunflower oil has proven to be a healthier oil than alternative ingredients, but is currently being grown only in small amounts in Mexico. To build the sunflower oil industry in Mexico, PepsiCo made an agreement with growers to purchase 100 percent of sunflower crops over seven years. The PepsiCo pilot project is a prime example of how investing in local content benefits the consumer, the business, and the local community:

• The consumer benefits by having access to a healthier product.
• PepsiCo benefits by having a sustainable source of raw materials.
• The small farmers within the community benefit by having a secure buyer and revenue flow. As a consequence of a secured revenue flow, the small farmer is also able to more readily access necessary loans and capital investments.

Such large-scale investments cannot be made alone. In the current sunflower oil pilot program in Mexico, PepsiCo partnered with the International Development Bank (IDB) to develop contracts with local farmers. More than collaborating with external partners, Sauerhaft stressed the importance of partnering locally to develop sustainable benefits. PepsiCo stays in touch with local issues by continually involving local stakeholders in identifying issues and developing solutions to resolve them. One such issue that PepsiCo is focusing on is water: The company has committed to providing safe drinking water to 3 million people over the next couple of years.

Both ExxonMobil and PepsiCo have found that the benefits of investing in targeted local initiatives expand beyond the community to the consumer and business itself.