Derek Yach, senior vice president for global health and agriculture policy at PepsiCo, was one of the plenary speakers at the recent Grantmakers In Health (GIH) Annual Meeting, held in Baltimore. A strategist, Yach previously has held positions at the Rockefeller Foundation, Yale University, and the World Health Organization (WHO). His remarks provided “food for thought” (excuse the pun). Yach, who holds a medical degree and a master’s degree in public health, serves on several advisory boards, including the Clinton Global Initiative.

Speaking on March 9 at the Grantmakers In Health meeting, Yach began by mentioning the contributions of two foundations, the Carnegie Corporation of New York and the Rockefeller Foundation (where he was director of global health) to Baltimore, site of the GIH meeting.

Yach described the work of the PepsiCo Foundation, at the worldwide food and beverage company at which he works. Most recently, this funder has supported community-based interventions to prevent chronic diseases and reduce obesity within the United States, as well as in China, India, and Mexico.

Acknowledging the critics of PepsiCo and other similar companies who “question whether these philanthropic investments by [such] a company are an effort to divert attention away from health and nutrition issues and from efforts under way to address chronic disease prevention” by governments, foundations represented at the GIH conference, and the United Nations, he had a ready response to them.

In Yach’s view, such critics “underestimate the public benefit” that stems from the PepsiCo Foundation’s support for community-based research and action aimed at improving child health and preventing chronic diseases. It is hard for companies marketing to consumers “to shift consumer behavior built up over decades,” he commented. And the critics may not be aware of how “companies are increasingly embedding societal needs into the cost and practice of business.”

According to such thinkers as Michael Porter and Mark Kramer, Yach explained, this is called “creating shared value.” What does that phrase mean? Societal needs are “deeply embedded, funded, and executed within the daily operations of [a] company [and are] linked to the way executives are compensated and the way companies report on their progress,” he noted.

At PepsiCo (at the company and its foundation), its president and chief executive officer, Indra Nooyi, calls this Performance with Purpose. (Her bio defines it as doing “what’s right for the business by doing what’s right for people and the planet.”) “Specific goals explicitly address the needs of public health,” such as aims to reduce salt, sugar, and saturated fats in products, and, at the same time, increase the proportion of healthier products sold, such as ones based on grains, fruits and vegetables, legumes, and in some localities, dairy, Yach said. Company policies “restrict the marketing of products that do not meet certain nutrition criteria to kids,” and soon, the company will eliminate the direct sale of full-calorie beverages at schools worldwide, Yach announced.

Yach commented that there are trade-offs “at almost every step.” For example, marketing more dairy products could mean production of more methane gas and that would “threaten our greenhouse gas goals.” And manufacturing products in smaller portions possibly will increase trash that ends up in landfills.

Ironically, the company also faces critics from the investment community, who question the “push into healthier foods.” This may stem from Campbell Soup’s unsuccessful effort to lower salt content, “only to find that consumer demand [for such products] is not quite there yet,” he commented.

Yach recommended three ways that foundations and the public sector could join with PepsiCo to reach common goals.

The first is to have “more incentives and fewer mandates,” he said. He urged foundations to support policy, analytic, and advocacy work that highlights “the power of incentives to align public and corporate actions toward common goals.” He cited the example of the Public Health Law and Policy organization, which has received funding from the American Legacy, California Wellness, Robert Wood Johnson, and Kresge Foundations. (The California Endowment, California HealthCare Foundation, state government agencies, and others have also funded it.) The group’s fact sheet “Putting Business to Work for Health: Incentive Policies for the Private Sector” came out in February.

The second recommendation is to form “smarter partnerships with measurable public health goals.” Going it alone is not effective, Yach said, and partnerships make achieving goals easier. Mentioning the Healthy Weight Commitment Foundation (a group including food companies, restaurants, and others) as an example, he urged foundations that fund obesity prevention to consider participating in this effort to reduce child obesity. The Robert Wood Johnson Foundation is funding an independent assessment, conducted by academics (led by Barry Popkin of the University of North Carolina), of food companies’ pledge to reduce the number of calories sold in the United States by 1.5 trillion by 2015. Yach also mentioned the Clinton Global Initiative, which works on such efforts as human papilloma virus (HPV) vaccines and training in chronic disease research. See the health page of the initiative, which was started by President Bill Clinton, here.

In addition, Yach stated that partnerships with government agencies can be very powerful. The PepsiCo Mexico business is working on an initiative with the InterAmerican Development Bank, in Mexico, to support poor farmers in growing the high-oleic sunflowers Pepsi needs as it moves away from using palm oil in products. The PepsiCo Foundation is assisting the World Food Program (part of the United Nations), in Ethiopia, in developing Ready to Use Supplementary Food, based on local chickpeas, for Ethiopia’s emergency feeding programs.

Yach’s third recommendation was to use “common advocacy for shared positions.” For example, the point that “prevention works and is economically sensible” can sometimes be drowned out by other viewpoints. Advocacy campaigns run by academics and nongovernmental organizations (NGOs), and funded by foundations and others, have a better chance of having a “sustained public health impact” than those led by corporations or governments, he said.

Even as businesses are focusing on sustainability principles (which Yach explained to me are principles that “lead to specific actions to ensure that the needs of future generations are not compromised by actions taken today” in a paraphrase of the words of a former head of the WHO, Gro Harlem Brundtland, there is a continued need for philanthropy to do the following.

(1) Collaborate with corporations to invest in new ideas and knowledge leading to a redesign of health systems and health professional training.

(2) Fund institutions that support human capacity development, such as universities—Yach forecast that in the future free-standing medical or public health schools likely will be replaced by multidisciplinary “centers for health” working in concert with corporate innovators.

(3) Meet emergency needs (such as those seen in Hurricane Katrina, the tsunamis in Indonesia and Japan, and a recent outbreak of typhoid fever in Harare, Zimbabwe), but cap the amount spent on emergencies, to allow for work on long-term improvements.

In the Q and A following his speech, Yach graciously fielded some confrontational questions. For example, one meeting attendee from the Kansas Health Foundation mentioned the challenge of companies’ marketing to teens, which has been effective and is contributing to obesity. The problem is not just sodas in schools. Yach responded that beverage companies and retailers need to be attentive to this problem, noting Pepsi’s efforts to actively support a shift to lower-calorie drinks, such as Tazo teas, Aquafina water, and Pepsi Next, for all, especially teens. In his view, drinking something with artificial sweetener is better than drinking a full-calorie beverage.

An attendee from the Association of American Medical Colleges asked about PepsiCo’s fast-food marketing in India where he has noticed people starting to eat Frito-Lay products instead of traditional snacks. Besides the fact that some of these products are viewed as unhealthy, such products cost more than the traditional Indian snacks of roasted peanuts or garbanzo beans. Yach’s response? The amounts of calories, salt, and saturated fat are worse in the unregulated traditional Indian “street food,” and such snacks are often cooked in a backyard cooker with very high levels of salt and with red enamel paint containing contaminants. Yach said that in emerging markets, such as India, PepsiCo is experimenting with an iron-fortified cookie, which could be sold as a healthier snack food.

Related reading:

See my October GrantWatch Blog post, “Can It Be True? Do Food and Beverage Companies That Sell Healthier Products Do Better Financially?”