Approach

PepsiCo is focused on realizing zero net deforestation in our company-owned and operated activities and global supply chains from direct supplier to source. Our most significant influence on the protection of forests is through our sourcing of paper- and wood-based products and raw agricultural materials, particularly palm oil. Other relevant raw materials that we source include soy, cocoa, and dairy.

We work with our supply chains, peer companies, civil society, and others - directly and through multi-sectoral partnerships - to shape our strategy and approach, help us achieve our goals, and contribute to addressing systemic issues that cause deforestation.

Policy

All of our direct suppliers are required to adhere to the following principles as part of our Stewardship of Forests and Natural Ecosystems Policy and our Global Policy on Sustainable Palm Oil:

• Compliance with applicable legal requirements of each country in which we operate and from which we source;
• No conversion of High Carbon Stock (HCS) forests as defined by The HCS Approach;
• No conversion of High Conservation Value (HCV) areas as defined by the HCV Resource Network;
• No new conversion of any peatlands and the use of Best Management Practices for existing operations on peatlands as described in the Roundtable on Sustainable Palm Oil (RSPO) Manual on Best Management Practices for Management and Rehabilitation of Natural Vegetation Associated with Oil Palm Cultivation on Peat; and
• Compliance with our Land Use Policy.

We provide further details of our progress toward transparency in relevant supply chains and toward zero net deforestation in our CDP Forests submission, for which we received an A- score in 2020.

Traceability in supply chains linked to deforestation

As we strive for zero net deforestation, it is important that we understand the source of the key commodities we buy. This visibility gives us assurance that the production of our raw materials was undertaken in a sustainable way. Traceability in certain supply chains can be challenging, however, as the suppliers we procure from may source the commodities from multiple other suppliers and producers.

Progress

Crops and Ingredients

Palm Oil

Details of our palm oil sourcing can be found on our Palm oil page. This includes annually updated information on total volumes, countries of origin, and our direct supplier and mill lists.

In 2020, our global purchase of palm oil was approximately 451,100 metric tons (MT). Of this total, palm kernel oil comprised approximately 3,700 MT. PepsiCo uses refined palm oil, and more than 99 percent of our total palm oil volume in 2020 was RSPO physically-certified. We were able to support small farms by purchasing approximately 6,100 additional MT of Independent Smallholder Credits to account for the remaining balance (less than 1 percent of our total palm oil volume in 2020).

Our top three countries of origin for RSPO mass balance certified material are Indonesia, Malaysia and Colombia. We are actively working to build capacity for additional RSPO volumes in Mexico to support our demand in that market; more information on those efforts may be found here.

The full list of origin countries in 2020 includes the following:

Brazil, Cambodia, Colombia, Côte d'Ivoire, Costa Rica, Dominican Republic, Ecuador, Guatemala, Honduras, India, Indonesia, Liberia, Malaysia, Mexico, Nicaragua, Panama, Papua New Guinea, Peru, and Thailand

Paper/Fiber

PepsiCo seeks to purchase only responsibly sourced wood fiber products and will not knowingly accept from its supply chain paper-based packaging that may contain wood fiber harvested illegally or sourced from protected forest areas. Wood fiber products are used in a wide range of PepsiCo's primary, secondary, and tertiary packing. PepsiCo's main fiber need is corrugated cardboard for secondary packaging.

Our annual volume, based on 2020 data, is approximately 1.25 million metric tons, with 90 percent of our total volume being certified to one of the following standards in 2020: CERFLOR, CSA, FSC, PEFC, or SFI. Approximately 20% of our volume came from high risk geographies. From 2015 to 2020, PepsiCo increased its amount of certified fiber sourced from 5 to 94 percent in Russia, 19 to 32 percent in China, 0 to 58 percent in Thailand, and 10 to 100 percent in Brazil.

In 2020, roughly 54% of our paper volume was from recycled sources, and we estimate that about 4% of our supply came from non-certified virgin fiber.

Our countries of origin in 2020 included the following:

Australia, Argentina, Austria, Belgium, Brazil, Canada, Chile, China, Colombia, Czech Republic, Dominican Republic, Ecuador, Egypt, Estonia, Finland, France, Germany, Greece, Guatemala, India, Kingdom of Saudi Arabia, Japan, Latvia, Lithuania, Mexico, Netherlands, New Zealand, Norway, Pakistan, Peru, Poland, Puerto Rico, Romania, Russia, Serbia, South Africa, South Korea, Spain, Sweden, Switzerland, Thailand, Turkey, United Kingdom, United States, and Vietnam

Our Global Fiber Supplier List, as of 2022, can be found here.

Other raw materials

• Soybean oil is procured from Brazil, Argentina and the U.S. through two direct suppliers, Bunge and Cargill, primarily for use in our food businesses in Brazil, Argentina and Canada. PepsiCo procures approximately 30,000 metric tons of soybean oil annually. In 2020, PepsiCo became a member of the Roundtable on Responsible Soy Association (RTRS) and is working with our suppliers to certify the sustainability of the soy that we source to the RTRS standard. This follows a review of 17 different certification models, which determined that RTRS was the most suited to meet our sustainability criteria and business needs. PepsiCo is also implementing a supplier scorecard to assess progress by, and areas to work with, our suppliers in sourcing sustainable soy. As a member of the CGF Forest Positive Coalition of Action (FPC), PepsiCo participates in the Soy Commodity Working Group, which published its first Roadmap in 2021, and co-leads the FPC's Landscapes Working Group, which aims for coalition-wide action against Element 4 of the Commodity Road Maps (Engagement in Regions and Landscapes)
• Cocoa is primarily produced for use in our North America and Latin America food businesses. For 2020, PepsiCo procured approximately 27,000 metric tons of cocoa. The top four suppliers, which represent over 80 percent of our global cocoa procurement, are Barry Callebaut, Cargill, Amco, and Blommer.
• PepsiCo procures milk primarily in support of our Russian dairy business, and it is sources in-country from a broad network consisting of hundreds of dairy farmers. Outside Russia, PepsiCo procures dairy-derived ingredients for seasonings across our food business, with the majority coming from the U.S.

Strategic partnerships

Consumer Goods Forum

PepsiCo is a founding member of the Forest Positive Coalition of Action (Coalition) launched by the Consumer Goods Forum (CGF). The Coalition consists of 20 global consumer goods brands, retailers and manufacturers that will work together and use their collective voice to accelerate systemic efforts to remove deforestation, forest degradation and conversion from the key commodity supply chains of palm oil, soy, and paper, pulp and fiber-based packaging, and drive transformative change across the industry. To accelerate progress, PepsiCo became an original signatory to the Coalition. The previous strategy was rooted in remediating individual company supply chains often through certification. Going forward, the Coalition will focus on systemic change underpinned by two pillars of action – supply chain management and integrated land use approach – developed with significant input from both supply chain companies and other stakeholders.

The Coalition will:

• Accelerate efforts to remove commodity-driven deforestation from our individual supply chains;
• Set higher expectations for traders to act across their entire supply base;
• Drive transformational change in key commodity landscapes; and
• Define measurable outcomes (Key Performance Indicators, KPIs) on which all members agree to track and report individually and collectively.

The Coalition has published road maps for palm oil, pulp and paper and soy and issued its first progress report in March 2021.

NDPE Implementation Reporting Framework

Since 2017, PepsiCo has been a lead convener of the Palm Oil Collaboration Group (POCG) to address key sustainability issues and challenges in the palm oil space with companies throughout the value chain and other stakeholders in a pre-competitive manner. The POCG has four active working groups:

• The NDPE Implementation Reporting Framework (IRF) Active Working Group (IRF AWG), which is responsible for the development, dissemination, and technical advancement of the IRF tool.
• The Social Issues Working Group (SIWG), which aims to foster collaboration to address human rights issues on the ground.
• The Production and Protection Beyond Concessions (PPBC) group, which focuses on analysis of areas outside of concessions that are high risk for deforestation, thereby allowing for prioritization to plan where action is needed.
• The Independent Verification Working Group (IVWG), which is focused on determining approaches to independent verification for progress on deforestation, land rights, and labor rights.

The NDPE IRF recognizes that RSPO certification is the strongest guarantee 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.

During 2020, PepsiCo made progress towards operationalizing profiles for No-Deforestation and No-Peat by working with the POCG and our suppliers to help them implement reporting on mills against the framework. This included providing information and training via webinars and one-on-one discussions. For more information see our Palm Oil Report.

Tropical Forest Alliance (TFA)

The TFA is a multi-stakeholder partnership platform, initiated to support the implementation of private-sector commitments to remove their deforestation from their palm oil, beef, soy, and pulp and paper supply chains. Hosted by the World Economic Forum, PepsiCo is a partner of the TFA and supports its mission, goals and objectives, including through active involvement in programs and initiatives to end commodity-driven tropical deforestation.

Arbor Day Foundation (Reforestation, Afforestation and Engagement)

In 2020 PepsiCo became a Tier One partner of Arbor Day Foundation. The Arbor Day Foundation provides a wide variety of opportunities for partners to engage in tree planting.

1t.org

In 2020, PepsiCo became a Corporate Alliance member of 1t.org which is part of the World Economic Forum’s efforts to accelerate nature-based solutions and was set up to support the UN Decade on Ecosystem Restoration 2021-2030.

What's next?

We will continue to work with our suppliers, peers, civil society, and others directly and through partnerships by:

• Delivering our palm oil strategy as we work towards our goal of zero net deforestation in our palm oil supply chain;
• Increasing the amount of our pulp and paper sourcing covered by credible certification schemes
• Working in multi-sectoral collaborations including the CGF Forest Positive Coalition of Action, Tropical Forest Alliance, and Palm Oil Collaboration Group to tackle the systemic issues that drive deforestation across various commodities and geographies;
• Updating our Forestry Stewardship Policy to reflect lessons learned and emerging best practice on the role of companies such as PepsiCo in contributing to halting deforestation;
• Reviewing the traceability and transparency of relevant supply chains to inform our strategy, approach, and actions.