Responsible Sourcing means looking at what we purchase beyond the traditional aspects of cost, quality and consistent supply.
From the farms where our raw materials are grown to the suppliers that help us create a superior product, managing our supply chain is critical to the success of our business
At PepsiCo, we use our relationships within our global supply chains to ensure that those we work with operate ethically and responsibly.
Potato farmer in India harvesting crops.
Our businesses depend on a safe, high-quality and affordable supplies and raw materials to meet the demands of our production lines as well as the expectations of our consumers, customers and other stakeholders.
Managing a global supply chain comprising thousands of suppliers requires setting clear expectations and standards.
PepsiCo is committed to maintaining a high standard of business ethics in its dealings with employees, governments, customers and consumers. It is also our mission to make sure that suppliers providing PepsiCo with goods and
services do the same, by sharing one set of values that guide our daily
decisions and actions.
PepsiCo's Supplier Code of Conduct (SCoC) reinforces our expectation that our suppliers "do business the right way," protects our brand reputation and supports the goal of long-term sustainable supply by addressing known business, environmental and social risks and building supplier capability.
Supplier Code of Conduct
The SCoC communicates our global expectations in the areas of labor practices, associate health and safety, environmental management and business integrity. It is based on the International Labor Organization, the United Nations Global Compact and other internationally recognized standards.
The SCoC includes 13 standards that address basic compliance with applicable law, respect for human rights and prohibitions on all forms of forced or compulsory labor to ensure that no child labor is used, and cooperation with reasonable assessment processes requested by PepsiCo.
PepsiCo’s SCoC strategy includes four levels of engagement:
Achieved through the Global Procurement Contract Management Policy, which requires suppliers to adhere to PepsiCo’s SCoC.
Requires that suppliers understand the SCoC and includes supplier training programs.
Conducted using the Supplier Ethical Data Exchange (SEDEX) assessment tool to determine third-party social audits by suppliers.
Developed on the basis of audit findings of noncompliances.
The SC0C has been translated into 25 languages and appears in procurement contracts globally. In 2013, we launched a SCoC training program for nearly 100 strategic suppliers through live face-to-face training meetings. That training is now publicly available to our suppliers in six languages through an e-learning module on pepsico.com.
Supplier Code of Conduct
Select language to initiate training
PepsiCo procurement manager (right) at a raspberry farm in Prosser, Washington.
CSR Risk Evaluation and Management
While we use our SCoC to articulate our priorities, we use our supplier Sustainable Sourcing Program (SSP) to communicate and educate our suppliers, evaluate compliance and facilitate continuous improvements within our supply chain. We partner with our industry peers, suppliers and third-party service providers such as SEDEX and social audit providers to drive transparency and social accountability across our supply chain.
Along with assuring responsible sourcing, PepsiCo is committed to supporting diverse suppliers.
In 2013, we spent approximately $1.3 billion with suppliers that were minority- or women-owned enterprises (MWBEs) in the United States. We spent nearly $855 million in direct business with MWBEs through our Tier 1 program (involving direct suppliers) and continued to build on our strong Tier 2 program (which reaches out to indirect suppliers).
Through our Tier 2 program, we engage our prime (non-diverse) suppliers by requesting that they incorporate diverse suppliers in their business with PepsiCo. This Tier 2 effort resulted in nearly $468 million spent in business with MWBEs in 2013.
Supplier Diversity Registration Portal
Potato farm in Amasya, Turkey.
We educate and work with our strategic suppliers on specific initiatives across the supply chain. Doing so enables us to grow and extend our resource conservation programs and set quantifiable goals for energy, greenhouse gas, water, agriculture and forestry resource conservation within the extended supply chain.
One example of how PepsiCo is engaging its supply chain is through the deployment of our ReCon, a capability-building program we have deployed to key suppliers in North America and our Supplier Outreach program with strategic suppliers and franchise operations in the United States, Mexico, Latin America, South America and Western Europe. These programs provide our suppliers with tools to reduce their usage of energy and water and reduce waste, thus reducing costs and helping to mitigate climate-related risks.
CDP Supply Chain
Our membership in the CDP Supply Chain demonstrates to our suppliers how important we feel predicted climate change is to business decision-making. It also demonstrates our desire to work collaboratively. In 2013, 49 percent of 206 suppliers invited for the CDP Supply Chain survey responded.
Best Practice Sharing – PepsiCo France
To build a more sustainable supply chain and to encourage co-packers, transporters and raw packaging material suppliers to embrace Performance with Purpose, PepsiCo France rewards suppliers’ actions and encourages the sharing of best practices.
For the second year in a row, PepsiCo France hosted its Sustainability Supplier’s Trophy to award the environmental and social initiatives of its suppliers. The three winners demonstrated collaboration and originality by recovering beetroot water to irrigate plants for biomass generation, creating a PET collection network and fostering employee engagement.
PepsiCo continues to leverage third-party expertise to help meet our environmental sustainability goals. For instance, PepsiCo is a member of Bonsucro, a global nonprofit dedicated to reducing the environmental and social impacts of sugar cane production while recognizing the need for economic viability.
PepsiCo is working with Bonsucro and other relevant stakeholders to evaluate certification standards that can help the company meet a goal of 100 percent sustainable cane sugar by 2020.
In 2013, we increased our sourcing of certified sustainable agricultural raw materials from both Rainforest Alliance- and Fairtrade-certified sources.
In Chile, 100 percent of our potato growers and 100 percent of our seed growers are certified to the Rainforest Alliance standard. Our partnership with Unilever on Lipton includes sourcing 100 percent Rainforest Alliance-certified tea. In addition, the bananas and pineapples used in our Naked juices also carry the Rainforest Alliance seal.
A number of our products are also certified to the Fairtrade USA standard. We have a Fairtrade-certified supply chain for our Near East Quinoa Blends, and in 2013 Naked Coconut Water became one of the first Fairtrade-certified coconut waters to be sold in the U.S.
Sustainable Palm Oil
PepsiCo is a member of the Roundtable on Sustainable Palm Oil (RSPO), which was founded to increase the supply of sustainable palm oil products.
In 2010, PepsiCo agreed, through RSPO, to source exclusively 100 percent RSPO-certified sustainable palm oil. While we remain committed to RSPO and its progress and standards, we recognize that in some regions of the world, additional measures may be necessary.
As a result, in 2014, PepsiCo further committed that by 2016, the palm oil that we source through our suppliers will be:
- Sources exclusively through suppliers who are members of RSPO.
Confirmed to have originated from responsible and sustainable sources.
In compliance with our Forestry Stewardship Policy, which includes adherence to the following principles:
Compliance with applicable legal requirements of each country in which we operate and from which we source.
No further development on High Carbon Stock (HCS) Forests or High Conservation Value (HCV) Forests.
No new conversion of Peatlands.
Adherence to the Free, Prior, and Informed Consent (FPIC) Principles as defined and outlined in the PepsiCo Land Policy.
Sustainable Coconut Production (São Mateus, Brazil)
In São Mateus, Brazil, PepsiCo entered into a partnership with one of our coconut suppliers, Regon Group, to send processed effluent from the wastewater treatment plant at our facility to a neighboring farm to be used for irrigation and as fertilizer.
The treated wastewater contains large amounts of nutrients, especially potassium, which is beneficial to coconut farming. To ensure the quality of the treated effluent, PepsiCo and our supplier monitor both the effluent the farm’s soil through a specialized laboratory.
The farm also uses crushed coconut, a waste by-product of the extraction of coconut water, as ground cover on the farms. In addition to providing nutrients, this reduces weeds and prevents excessive water evaporation.
In early 2014, PepsiCo rolled out a new Land Policy with zero tolerance for illegal activities in our supply chain and zero tolerance for land displacements of any legitimate land tenure holders. This policy built on the previously established policies and programs that existed in the areas of supplier conduct, sustainable agriculture and environmental health and safety.
This Land Policy complements the PepsiCo Supplier Code of Conduct, which is part of the contracting process with suppliers and addresses the areas of labor practices, associate health and safety, environmental management and business integrity. Learn more about PepsiCo’s Land Use Policy.