Palm oil

Why it matters

Approach

We use palm oil in our snack food manufacturing due to its wide availability and shelf stability, primarily in Asia, Latin America and other markets where it is grown relatively close to our production facilities. In the United States, we rely on other edible oil crops that are widely grown in North America and use very little palm oil.

We aspire to source crops and ingredients in a way that promotes sustainable agriculture and helps strengthen farming communities. To support these aims for palm oil, our sustainable agriculture team is guided by an overarching strategy and a series of objectives.

Objectives

Positive Agriculture is one of the key pillars of our pep+ (PepsiCo Positive) ambition. This ambition includes our efforts to:

• Spread the adoption of regenerative agriculture, restorative, or protective practices across 10 million acres of land supporting the growth of our key crops and ingredients by 2030;¹
• Sustainably source 90% of our key ingredients and progress volumes (10% or less) that face systemic barriers towards being sustainably sourced in accordance with our guidelines, by 2030;²
• Continue to strive toward deforestation-free sourcing by 2025 and toward deforestation- and conversion-free sourcing by 2030 for high-risk commodities in our company-owned and -operated activities;³ and
• Improve the livelihoods of more than 250,000 people in our agriculture supply chains and supporting communities by 2030.⁴

Our ambitions on palm oil support these goals, and focus on four key objectives: 

• Source sustainable palm oil: Continue to sustainably source 100% of our palm oil through Roundtable on Sustainable Palm Oil (RSPO) in our own supply chain.⁵ This is a goal we set — and achieved — in 2020, and we remain focused on continuing to achieve it going forward.
• Drive sector transformation towards 100% No Deforestation, No Peat, No Exploitation (NDPE), in line with our deforestation- and conversion-free ambitions:
  • In our own supply chain: Direct suppliers are expected to measure, manage and report progress towards NDPE across their own supply base.
  • Across our industry: Collaborate with industry peers, trade associations, government agencies, NGOs and other critical stakeholders to spread adoption of the NDPE implementation principles.
• Support thriving communities and ecosystems: Work, where possible, to help address systemic issues facing communities and ecosystems in priority palm oil sourcing landscapes, including deforestation, land and workers’ rights and economic viability. Globally, we are aiming to: 
  
  • Support implementation of sustainable agriculture practices that enable farmers to increase production on existing oil palm plantations and minimize impacts on the surrounding area through our investments and collaboration with industry coalitions and multistakeholder initiatives.
• Promote transparency and accountability in our supply chain and across the wider sector through collaboration, engagement and reporting:
  
  • Collaborate with stakeholders in developing an industry roadmap for independent verification of NDPE compliance and apply this in our supply chain as soon as practically possible.

We endeavor to turn these long-term ambitions into action through a series of time-bound objectives. We expect these will evolve over time as objectives are met and as our understanding of the issues and how to tackle them develops.

Sustainable sourcing of palm oil

We achieved our objective to source 100% RSPO-certified palm oil in our own supply chain by 2020, and it will continue as part of our broader efforts to sustainably source our key ingredients.² Our approach to sustainable sourcing of palm oil is based on our efforts to:

• Build traceability through our supply chain to the mill and farm level;
• Assess risk to our business, to people and to the planet in order to focus our efforts;
• Help monitor sourcing through credible third-party standards (primarily RSPO);
• Engage suppliers to build the capacity of our direct suppliers and those further down the supply chain;
• Invest in and support on-the-ground projects in an effort to ensure farmers, including smallholders and communities, benefit from our actions; and
• Collaborate with peer companies, suppliers, civil society and others in an effort to address long-term, systemic issues that cannot be tackled alone.

Sector transformation towards NDPE

We aspire to promote progress towards a palm oil sector that supports thriving communities, human rights and the health of vital ecosystems by helping to drive industry-level change toward 100% NDPE.

In our own supply chain, we continue to work toward our Palm Oil Implementation Plan objectives that:

• 100% of direct suppliers have internal systems in place to measure, manage and report NDPE progress across their own supply base and report via the NDPE Implementation Reporting Framework (IRF) by the end of 2021.
• 100% of our palm oil supply is NDPE delivering — or within a time-bound initiative that demonstrates progress to delivering — as measured by the NDPE IRF by the end of 2022.

To measure progress towards NDPE, PepsiCo utilizes the NDPE IRF, a reporting tool designed to help companies systematically understand and track progress in delivering NDPE across their palm oil supply chains. The NDPE IRF recognizes RSPO certification as a strong indicator of delivery but also allows companies to report on volumes that are at different stages of progressing towards delivery, where certification has not yet been achieved.

Supporting smallholder suppliers

Today, millions of smallholders (generally speaking, farmers with small plots that cultivate the land themselves and rely on the outputs for their livelihoods) around the world make a living from oil palm. In Malaysia and Indonesia — two major areas of palm oil production — smallholdings represent approximately 40% of the total area for palm oil production.⁶ Under RSPO certification, smallholders can grow oil palm independently, as part of an independent smallholder group or as part of a smallholder scheme. They can receive Independent Smallholder (ISH) credits as an alternative to physical RSPO certification, reducing the burden on smallholders to compete in the sustainable palm market. While we aim to purchase the majority of our palm through physically-certified mass balance volumes, we will continue to purchase ISH credits to support and encourage the inclusion of smallholders in sustainable supply chains.

Supplier scorecards

Our supplier scorecards provide a means to evaluate our direct suppliers to assess their performance in their own operations and supply chain and encourage supplier progress towards sustainable palm production. Scorecards assess suppliers on traceability and verification; certification; policy and implementation; grievance management; and transparency. The scoring process highlights opportunities for improvement, and PepsiCo supports and helps to identify suppliers poised to help drive industry-leading action, as well as suppliers who require capability-building efforts to improve their foundational programs.

Since 2018, we have conducted these annual assessments of our tier-1 suppliers⁷ and worked with these suppliers to develop and implement tailored time-bound action plans. We have been working to build the capabilities of our direct suppliers, in support of our objective that all score greater than 80% on the 2025 scorecard by the end of 2026.

Traceability protocol

We developed a traceability protocol to help our suppliers improve the quality of data provided to us during our semi-annual traceability data collection process. Under the protocol, our suppliers are expected to provide the name and GPS coordinates of their palm oil mills, as well as the percent of palm oil and palm kernel oil that is traceable to the mill level. We developed a supplier training program for the protocol and operate a traceability help desk with Peterson, a global logistics provider and consultancy, to provide suppliers with ongoing assistance on meeting our data requirements. The protocol is also the basis for independent verification undertaken by suppliers to verify the quality of the management systems used to collect their supply chain data.

Independent verification

PepsiCo recognizes the important role that independent verification can play as we work towards delivering our palm oil NDPE ambition. Independent verification supports credibility by providing assurances that information and claims on compliance and progress towards NDPE are accurate. Independent verification tools, methodologies and approaches continue to evolve with the industry.

Our aim is to support an industry-wide approach to independent NDPE verification with agreed objectives and standards that have broad industry and civil society support. We believe this approach should be underpinned using a credible methodology and third-party verifiers, as well as appropriate transparency.

While PepsiCo strongly supports the RSPO and the certification process, we understand that RSPO certification alone is not currently sufficient to ensure independently-verified compliance with our Global Policy on Sustainable Palm Oil. We aim to work with others to address gaps, which, following the adoption of strengthened standards through the 2018 RSPO Principles and Criteria, primarily relate to the verification process. Our hope is for RSPO certification to provide credible independent verification of NDPE in the future. In parallel, we want to develop approaches to improve sustainability and work to ensure our policies are being met in uncertified production areas or areas progressing toward certification.

We plan to inform this work with our experiences to date (e.g., our approach to the verification of mill data) and to build on successful examples of verifying NDPE delivery. At the same time, we are exploring various tools and approaches to independent verification of NDPE beyond mill- and plantation-level audits. PepsiCo and others are testing new and complementary independent verification approaches and technologies, such as satellite monitoring of deforestation and peatland clearance, social risk assessments and worker monitoring systems.

Thriving communities and ecosystems

We aspire to address systemic issues facing communities and ecosystems in priority landscapes. These issues include deforestation, economic viability and land, worker and community rights. We plan to continue engaging in on-the-ground initiatives with industry, civil society and others that aim to support the transition to responsible production and the wider transformation of the palm oil sector. These include landscape projects that support conservation, restoration, community development, smallholder inclusion, responsible production practices and issues-based programs that tackle specific challenges.

Working to promote thriving communities and ecosystems can help us address our other palm oil objectives. For example, landscape initiatives can be used to develop area-based plans towards certification or verification and support the inclusion of critical actors such as local governments and producers of other commodities.

Transparency and accountability

We aim to demonstrate and promote transparency and accountability in our supply chain and across the sector through collaboration, engagement and reporting. Engaging directly with our stakeholders, including peers, suppliers, communities, investors, civil society, governments, certification bodies and others, is a critical step of our due diligence in continuing to build trust and to receive important feedback on our strategy and programs. We do this through several channels, including our reporting, direct meetings, participation in forums, working groups and collaborations that seek to tackle the systemic issues underpinning many of the sector’s environmental and social challenges.

Our ambitions are set out in our Palm Oil Strategy and include providing transparency to stakeholders through ongoing disclosure, focused on the following priorities:

• Supply Chain disclosure including:
  
  • Annual publication of mills and direct suppliers.
  • Assessment of forest and social risks in our palm oil supply chain.
• Regular reporting on progress against our policies and objectives including through:
  
  • Annual disclosure on PepsiCo website, including progress towards NDPE, as measured by NDPE IRF.
  • Reporting through industry platforms including RSPO and the Consumer Goods Forum (CGF) Forest Positive Coalition.
• Transparency around actions taken to address non compliances and grievances linked to our palm oil supply chain (while protecting the confidentiality of affected parties) including through:
  
  • Disclosing progress on the PepsiCo website of grievances managed through our Agricultural Supply Chain Grievance Mechanism.
  • Playing a leading role in developing industry-wide approaches to deforestation monitoring and responses, including appropriate disclosure on progress.
• Collaboration with stakeholders in developing an industry roadmap for independent verification of NDPE compliance and applying it in our supply chain as soon as practically possible.

Policies

Our strategy is underpinned by a series of policies that are embedded in our business and supply chain. Our Global Policy on Sustainable Palm Oil outlines our vision for sustainable palm oil as part of a broader suite of related global policies regarding human rights, sustainable agriculture and stewardship of forests and natural ecosystems as well as our Supplier Code of Conduct. The policy provides our long-term vision for a sustainable palm oil sector and updates our NDPE ambitions. The policy is supported by an implementation plan that was most recently updated in 2021 and outlines how we aim to translate our policy vision into specific actions and results. We regularly review our policies and objectives.

Assessing risks

We assess risks in our supply chain and the broader palm oil industry to identify geographic areas and issues with the highest likelihood of incidence of noncompliance with PepsiCo’s policies and to help prioritize our efforts to encourage improved practices. In addition to formal risk assessments, we rely on other sources of information to inform our risk evaluation, including:

• Engagement with direct and indirect suppliers;
• Feedback from assessments and audits conducted through our sustainable sourcing and sustainable agriculture programs;
• Participation in collaborative forums;
• Feedback from civil society including through reports and direct engagement;
• PepsiCo employee knowledge and experience;
• Partnership with organizations that have expertise in managing natural resources sustainably; and
• Risks discovered and addressed through our grievance mechanism.

From these sources, we established that the following factors, which are systemic throughout the palm oil industry, are salient to our palm oil supply chain:

• Smallholder production: A significant portion of palm oil is grown by smallholder farmers, who are critical to include in sustainable palm oil supply chains.
• Worker rights: Risks for workers in the global palm supply chain can include rights of temporary workers, working hours and pay, forced labor and child labor.
• Deforestation/peatland conversion: Palm oil-producing regions are among those at risk of deforestation and conversion due to the need for oil palm plantations.
• Land rights: There is growing potential for land rights disputes as new plantations are established.

In 2024, we conducted a risk mapping exercise of our direct suppliers’ sourcing areas in Indonesia, Malaysia and Latin America in an effort to prioritize where we engage our suppliers, partners and peers to address landscape-level forest and ecosystem challenges taking into account deforestation risk, peat presence and land rights, including those of indigenous peoples and local communities. This assessment helps PepsiCo identify where to invest in landscape initiatives that work to holistically address sustainable production and natural ecosystem protection and restoration in our palm oil supply shed. Our eight landscape investments to date help us progress toward our pep+ goal to reach 10 million acres of regenerative, restorative and protective practices.

PepsiCo engages in industry platforms designed to tackle risks collaboratively, including the World Resource Institute’s Global Forest Watch (GFW) Pro platform, to identify risks at the mill and plantation levels. In 2019, PepsiCo joined other palm oil producers and buyers to support and fund the World Resources Institute's development of a publicly available radar-based forest monitoring system known as RADD. Developed for Indonesia and Malaysia, RADD can detect tropical deforestation several weeks earlier than optical-based systems and with greater accuracy.

For more information about PepsiCo’s landscape investments and RADD, see Palm oil collaboration and engagement.

Grievance management and remedy

We recognize that our policies and programs may not prevent all adverse impacts in our operations and supply chain. Our aim is to provide or cooperate in effective remedy where we have caused or contributed to those impacts and to encourage our suppliers to help enable remedy where we learn there are impacts directly linked to our business operations or products. To help facilitate this process, we have established several avenues that allow our employees, and other stakeholders to raise grievances and seek remedy.

We maintain a grievance mechanism for our agricultural supply chain to complement our existing programs and processes to manage environmental and social concerns raised about our supply chain. The mechanism allows third parties to raise concerns that our environmental and social goals and policies may not be upheld within our agricultural supply chain. 

When we receive a grievance, we engage our suppliers who source from the companies at the center of the complaint to:

• Assess the allegations;
• Demonstrate the importance we attach to addressing the concerns raised;
• Understand corrective action steps already taken and planned in the future; and
• Influence those actions and monitor progress in addressing the complaint.

PepsiCo also supports sectoral collaboration through multiple channels, including monthly industry-wide grievance calls led by Earthworm Foundation, to explore collaborative action on particular cases or issues of concern. These actions may include simple coordination of supplier engagement or shared investment on the ground.

Progress

Sustainable sourcing of palm oil

We have a complex global supply chain with approximately 40 direct suppliers at the parent company level that source palm oil from over 1,800 mills. In 2024, our global purchase of palm oil was approximately 400,000 metric tons, of which palm kernel oil comprised approximately 4,000 metric tons.

Progress and Challenges

RSPO certification

Since 2017, our objective has been that 100% of our palm oil volumes are sourced under one of the RSPO supply chain models. In 2024, we sourced nearly 99% RSPO mass balance physically-certified palm oil, and in recognition of the efforts made by smallholders to achieve RSPO certification, we directly supported smallholders by purchasing ISH credits for approximately 3,000 metric tons, approximately 1% of our total purchase, thereby achieving 100% RSPO certification. We regularly review our sourcing strategy and consider whether changes are warranted based on business needs and external developments.

Supplier capabilities

Each year, we strive to evaluate our direct suppliers to assess their performance in their own operations and supply chain and encourage supplier progress towards sustainable palm production. The overall performance on the supplier scorecards has increased from 36% in 2017, when PepsiCo launched the scorecard, to more than 73% in the 2024 reporting cycle. In 2024, we engaged direct suppliers representing more than 99% of our 2024 volumes, and they scored an average of 11 points out of 15 total possible. Through the implementation of the scorecard and engagement with our suppliers, we continue to observe improvement across the scorecard criteria in 2024.

Utilizing the information from the scorecards, we engage suppliers and support capability building to help improve practices. In 2024, we continued to engage suppliers through a variety of methods, including one-on-one sessions with subject matter experts and live webinars, with a focus on improving and implementing policies and timebound action plans, traceability, and the NDPE IRF. To further support capacity building, we established a digital library of resources with supporting documents for our suppliers. Additionally, we collaborated with higher performing suppliers (in the top 25%) on industry leading protocols and practices.

Sector transformation towards 100% NDPE

Supplier progress towards NDPE

Working with our direct suppliers, we were able to create a baseline of current performance in our supply chain. For 2024, 91% of our tier-1 suppliers were able to provide us with the full profiles for deforestation and peat for the volumes that they source to us. Suppliers who did not share profiles (or shared incomplete profiles) represent less than 1% of our 2024 volumes purchased.

Utilizing the information from the scorecards, we were able to continue our engagement with suppliers and support capability building to help improve practices. In 2023, we continued to deliver this through a variety of engagement methods, including one-on-one sessions with subject matter experts and live webinars, with a focus on policies and timebound plans and the NDPE IRF. To further support capacity building of our suppliers, PepsiCo established a digital library of resources with supporting documents.

Higher performing suppliers (in the top 25%) were approached to partner with us on industry leading protocols and practices.

Sector transformation towards 100% NDPE

Supplier progress towards NDPE

Working with our direct suppliers, we were able to create a baseline of current performance in our supply chain. For 2023, 87% of our Tier 1 suppliers⁵ were able to provide us with the full profiles for deforestation and peat for the volumes that they source to us. Suppliers who did not share profiles (or shared incomplete profiles) represent less than 1% of our 2023 volumes purchased.

These profiles show a range of performance across the many hundreds of mills in our supply base. They provide information for us and our suppliers to identify how and where to provide support and guidance to mills and other stakeholders as they work to improve their performance against the framework.

We continue to work with our direct suppliers in an effort to help ensure they have a system in place to report deforestation and peat profiles. At the end of 2023, 69% of our palm oil suppliers self-reported as NDPE delivering. For those suppliers that were not able to meet this deadline, we are now reviewing options including capacity building, improved reporting support and switching suppliers.

Priorities for the NDPE IRF Active Working Group (Working Group) include how to engage mills that score in the lower sections of the framework and how to include smallholder volumes. The Working Group engaged stakeholders including NGOs to establish a principle of inclusion and support for these mills, rather than exclusion, providing that progress is being made. In 2023, good progress was made on development of the methodology, and there was a corresponding increase in global uptake of the IRF as a reporting tool. In 2023, the Working Group continued to work on the methodology, including improvements to support inclusion of smallholders and to ensure the “delivering” category is aligned to global best practice. The group will also seek to develop an improved approach to measuring social delivery.

The Working Group is also collaborating on shared issues with other workstreams in the Palm Oil Collaboration Group (POCG), including the Production and Protection Beyond Concessions (PPBC), Social Issues Working Group (SIWG) and Independent Verification Working Group (IVWG). See Palm oil partnerships and engagement for more information on the POCG working groups.

Engaging our suppliers on the NDPE IRF

To reflect the framework’s importance and support the objectives set out in our Palm Oil Strategy, PepsiCo has integrated the IRF into our supplier scorecard process (see supplier capabilities for more information on our supplier scorecards). Reporting and performance against the NDPE IRF now make up half of the total supplier score, encouraging ongoing improvement against the IRF and helping to guide how we support suppliers towards delivering their and our NDPE ambitions.

Thriving communities and ecosystems

In 2024, we continued work in 8 key palm-producing landscapes in Indonesia and Mexico. For example, in Indonesia, as a founding member of the Siak Pelalawan Landscape Program (SPLP), PepsiCo is working with other stakeholders in an effort to ensure smallholders in Riau are supported. Since the program launched in 2021, we have contributed to supporting more than 50 villages on best practices and establishing alternative livelihood businesses with an eye towards improving farmer livelihoods. This included training almost 3,000 people on good agricultural practices and supporting more than 900 people in getting access to incentives through improved knowledge on the need for business permits and land titles.

In Mexico, we continued our work with the Holistic Program and Agrovita, where we are working to improve the livelihoods of palm oil producers in southern Mexico via increased oil palm productivity through regenerative farming practices, and farmers receive higher premiums for RSPO-certified palm oil. For more detail on our work to support palm oil farming communities and the ecosystems we all rely on, see Palm oil collaboration and engagement.

Transparency and accountability

Traceability to mills

We continue to strive towards 100% traceability to the mill in our supply chain and to ensure high standards of traceability reporting. At the end of 2024, our suppliers reported approximately 98% of our palm oil volumes were traceable to the mill level. Given the complexity of the supply chain, the availability of data from direct suppliers in some of our markets and shifts in market year-over-year, we anticipate maintaining high levels of traceability but falling slightly short of our ambition to achieve full traceability, a component of our deforestation- and conversion-free ambitions. We will continue to work with our suppliers to close the gap and continue to strive for 100% traceability.

In 2024, we launched a collaboration with Satelligence, a satellite monitoring platform, to help improve our capabilities to monitor deforestation events, detect and respond to early alerts and verify origins as deforestation free in our palm oil (global coverage), sugar (Mexico) and cocoa (Brazil, Mexico) supply chains.

Independent verification

We made progress towards developing tools for independent verification through our work within the IVWG, one of the workstreams of the POCG. Alongside Unilever, PepsiCo co-convenes the group, which is focused on determining approaches to independent verification for progress on deforestation, land rights and labor rights. The group has created functional working groups with defined scopes and frameworks for action. These groups are linked to existing initiatives, including the social issues aspect of the IRF, the CGF Palm Oil roadmap and the IRF data verification protocol. In 2023, the group developed a draft framework for independent verification of deforestation, as well as progress on the requirements for verification of labor and land rights claims. In 2024, the Working Group piloted an independent verification tool to understand application in the field, and to provide insights for future implementation.

Grievance management and remedy

We received 17 grievances in 2024, with most related to palm oil production in Southeast Asia and a combination of environmental and social issues such as deforestation, forced labor and land rights. We have and are continuing to engage with our suppliers and other stakeholders to help resolve open grievances through corrective action plans. By the end of 2024, approximately 11% of the mills in our supply chain were linked or potentially linked to deforestation and peat grievances and are undergoing suspension, as outlined by our Agricultural Supply Chain Grievance Mechanism.

Strategic collaboration

In an effort to drive systemic change and support our ambitions, we have increased our engagement and leadership in collective initiatives and actions with peer companies and suppliers. We meet directly with stakeholders on a frequent basis to listen to their concerns, receive feedback about our program and explain our approach to supporting the development of a sustainable palm industry. We also engage regularly with NGOs whose missions range from environmental conservation to protection of human rights. For more information on our engagements and actions, see Palm oil collaboration and engagement.

What’s next?

• Sustainable palm oil sourcing: We plan to continue to focus on supporting RSPO uptake and effectiveness through continued sourcing of 100% RSPO certified palm, with at least 95% being physically-certified mass balance and the balance comprised of ISH credits.
• Sector transformation towards 100% NDPE: We continue to work with suppliers with the objective that 100% of our direct suppliers have internal systems in place to measure, manage and report NDPE progress via verified IRF profiles and action plans. From 2024, new direct suppliers must have IRF profiles and actions in place, and we will assess their progress toward no-exploitation commitments.
• Thriving communities and ecosystems: We continue to expand our investments to include new landscape projects that support conservation, restoration, community development, smallholder inclusion, responsible production practices and issues-based programs that tackle specific challenges.
• Transparency and accountability: We aim to disclose information on actions taken to help address noncompliances and grievances directly linked to PepsiCo’s palm oil supply chain, as managed through our Agricultural Supply Chain Grievance Process, while respecting the confidentiality of affected parties.
• Future plans to support smallholders: we plan to continue to build on the work we are undertaking to support smallholders as we view smallholder inclusion as an important component of our Global Policy on Sustainable Palm Oil and implementation plan. In 2024 and beyond, we plan to:
  
  • Continue to support smallholder programs in Indonesia and Mexico, including adding programs where appropriate.
  • Work together with multiple stakeholders in several landscapes to support the inclusion of non-certified smallholders into responsible supply chains.

¹See PepsiCo’s Regenerative Agriculture Guidelines for additional information, including details on key crops and regeneration, restoration and protection criteria. Results reflect total acreage meeting these criteria within the annual reporting period

²Sustainably sourced refers to in-scope ingredient volumes that meet the established criteria outlined in PepsiCo’s Sustainable Sourcing Guidelines. Sustainable Sourcing practices can help manage risks, but challenges like deforestation or social issues can persist in some regions 

³PepsiCo set this ambition in its Stewardship of Forests and Natural Ecosystems Policy. High-risk commodities include ingredients and materials at high risk of deforestation and conversion as defined in our Calculation Methodology. Systemic challenges continue to be an industry-wide barrier to reaching fully deforestation-free sourcing, but we continue striving toward this ambition and expect to reach more than 90% by the end of 2025 

⁴This goal captures the number of livelihoods reached through an outcome-focused evaluation measuring improvements in economic prosperity and farmer and farm worker security. Metric counts the cumulative people impacted since 2021

⁵In 2024, 99% of palm oil by volume was physically-certified RSPO Mass Balance. The remaining 1% is covered by Independent Smallholder Credits

⁶RSPO.org. (2025). Gaining certification changes everything 

⁷Self reported against the NDPE IRF. For additional guidance on the outlines categories, see the NDPE IRF website