Cynthia Nastanski, senior vice president, corporate law and deputy corporate secretary at Pepsi Co, highlights the key challenges for a multinational to comply with sustainability reporting and how it could be made easier.
With operations all over the world, including in Europe, Pepsi Co will eventually have to comply with CSRD and the European sustainability reporting standards, which presents a number of challenges for a US headquartered company.
Speaking at the ICGN Stockholm conference yesterday (8 March), Cynthia Nastanski, senior vice president, corporate law and deputy corporate secretary at Pepsi Co, highlighted three of these challenges: supply chain reporting, the timing of the reporting and double materiality.
Pepsi Co is operating in 200 countries and territories. It counts large farming corporations in its supply chain but also small farmers in emerging markets, Nastanski said.
Complying with the proposed standards in areas that the corporation can control, such as Scope 1 and 2, is doable. But when it comes to things like Scope 3 disclosures in the supply chain, it becomes very difficult, she argued.
"It is one thing to ask very detailed information from a public company, but it is another thing to ask a small farmer to gather all this data. And it is a burden to them," Nastanki said. "We will do it and find solutions because we are committed to reporting but it is important for people to understand the challenges at a micro level, what does it mean to an individual supplier."
Another challenge pertains to the timing of the report. Standard setters and regulators are pushing for financial and sustainability reports to be published simultaneously. In the US financial information is reported within 45 days of a company's fiscal year end, but sustainability reporting information "wouldn't be ready that quickly", Nastanski said. "That is going to be a challenge to get it to match up" as the regulation wants it to.
The third challenge is that a lot of companies in the US are "going to have to get used to the concept of double materiality and figure out how to do that the right way".
"There is still a need for more guidance. If you're considering stakeholder impact, what does that really look like? Do you ask the same stakeholders every year? Who are those stakeholders? How do you ensure the accuracy of that year on year," she said.
Nastanski's intervention wasn't all doom and gloom, as she said there are a few things that could be done to make the system more fit for purpose globally.
"For example, there is an open question whether the US securities filling can be counted as an equivalent for purposes of the CSRD, I think that would be very helpful," she said.
Some flexibility in terms of if some information can be posted on companies website and count towards the sustainability reporting would also be helpful, Nastanski said.
"There are some challenges around subsidiary reporting, and it should be considered whether reporting subsidiary level should be at all necessary because that will make it more complicated and more expensive, could it just be global or could there be some flexibility in that?," she added.
Beyond these major areas of consideration, she said there were a couple more technical questions that could be addressed to help companies comply. For example, in the event of an acquisition, "it is a very challenging thing to have a rule where immediately you are responsible for any information on acquired companies – in the US you have a year to check that information".
