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Pepsi seeks to keep resolution off ballot

By Steve Toloken

PURCHASE, N.Y. (Jan. 15, 2001 - 1:30 p.m. EST) -- PepsiCo Inc. is fighting several investment funds that want the company to use 25 percent recycled content in PET bottles and work to boost container recycling to 80 percent.

Pepsi sent a letter to the Securities and Exchange Commission in late December asking that the investors´ resolution be tossed out and not submitted to a vote at Pepsi´s annual meeting. The group invests in companies and then promotes policies it considers socially responsible.
The Purchase-based soft drink bottler said the resolution contains misleading statements, including that a majority of Pepsi´s bottles are not recycled and that recycled PET is less costly than virgin. The latest estimates put container recycling at 55.6 percent, and the cost of recycled content depends on both supply and the manufacturing process, Pepsi said.

Ken Scott, research analyst for one of the shareholders, Walden Asset Management in Boston, said the 55.6 percent figure is based on inflated numbers that include imported aluminum scrap. When that is factored out, the rate is 49.6 percent, he said.

Scott also said the company presents no evidence to back up its claims on cost.

Pepsi also said shareholder statements that other consumer products, like Gatorade and Veryfine, use at least 25 percent recycled content is "speculative" because none of those companies have publicly stated a commitment to 25 percent.

Scott said Procter & Gamble Co. and Miller Brewing Co. have committed publicly to 25 percent, and that Coke uses 25 percent recycled content in other countries and in a fraction of its PET bottles in the United States.

A Pepsi spokesman had no comment.
The Securities and Exchange Commission will determine if Pepsi can prevent the resolution from getting to a shareholder vote, Scott said.
Scott said Pepsi´s approach "stands in contrast to Coca-Cola´s more shareholder-friendly discussion" about letting shareholders vote. The investors have meetings with both Coke and Pepsi in the near future to discuss recycling policies, he said.


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