PepsiCo's Green Bonds – among the first in the food and beverage industry – are one of the many tools we're using to advance critical steps in our sustainability journey.
To the World:
Green Bonds are a means of raising funds for sustainability projects from external investors. They enable companies to accelerate sustainability initiatives while helping investors to align sustainability and financial priorities.
PepsiCo’s pep+ (PepsiCo Positive) agenda is built on a series of ambitious sustainability goals. Progress against these takes innovation, partnership and investment. Pioneering funding mechanisms such as Green Bonds help us to channel investment into the critical areas required to build a more sustainable and resilient food system.
In October 2019, PepsiCo issued its first Green Bond, a 30-year, $1 billion senior notes offering, the net proceeds of which were used to build a more sustainable food system. The net proceeds from this offering were allocated to investments in Eligible Green Projects, supporting our efforts in sustainable plastics and packaging, decarbonization of our operations and supply chain and water sustainability to advance the UN's Sustainable Development Goals (SDGs). As of December 31, 2021, net proceeds from the first Green Bond were fully allocated.
In July 2022, PepsiCo issued its second Green Bond ("2022 Green Bond"), a 10-year, $1.25 billion senior notes offering, based on an updated Green Bond Framework that reflects our pep+ strategy. This new framework outlines the categories where net proceeds can be allocated towards Eligible Green Projects1, each one aligning with the UN SDGs, which provide an important inspiration for the company’s priorities:
- Circular economy and virgin plastic waste reduction (UN SDG 9 – Industry, innovation and infrastructure; and SDG 12 – Responsible consumption and production)
- Decarbonization and climate resilience within our operations and value chain (UN SDG 7 – Affordable and clean energy; and SDG 11 – Sustainable cities and communities)
- Pursuing net positive water impact (UN SDG 6 – Clean water and sanitation; SDG 12 – Responsible consumption and production; and SDG 15 – Life on land)
- Regenerative agriculture (UN SDG 2 – Zero hunger; and SDG 8 – Decent work and economic growth)
Our 2022 Green Bond is focusing on investments to deliver key environmental sustainability initiatives under two pillars of our pep+ agenda: Positive Agriculture and Positive Value Chain. This will help us to deliver on our aim to operate within planetary boundaries and inspire positive change for the planet and people.
We have integrated our sustainability capital expenditure and Green Bond allocation processes. PepsiCo’s Sustainability team assesses and determines Eligible Green Projects. Following final approval, PepsiCo’s Sustainability team then recommends allocation of proceeds among Eligible Green Projects to PepsiCo’s finance department and provides them with relevant project descriptions.
Until the net proceeds of our 2022 Green Bond are fully allocated, we plan to publish an annual update of the allocation of the net proceeds, including, subject to any confidentiality considerations, descriptions of select projects funded, and, where possible, their anticipated environmental impacts. These allocation reports will be accompanied by an assertion by PepsiCo management stating that amounts equivalent to the net proceeds of the Green Bond offering (or, pending full allocation, a portion thereof) were allocated to Eligible Green Projects. Our management assertion is independently assured.
In October 2023, we published our first annual Green Bond Report on our 2022 Green Bond, describing our use of proceeds. As of December 31, 2022, PepsiCo had allocated $399 million in proceeds from the issuance of our second Green Bond to Eligible Green Projects. This represents approximately 32% of the net proceeds and includes investments in all four eligible categories of circular economy and virgin plastic waste reduction, decarbonization and climate resilience within our operations and value chain, pursuing net positive water impact and regenerative agriculture. Over 160 individual investments have ranged from approximately $50,000 to just over $12 million2 and span five continents. While projects focused on a wide breadth of solutions, they all shared the common goal of supporting PepsiCo’s vision for a sustainable food system and our pep+ ambitions.
Through the investments made with proceeds from the 2022 Green Bond, PepsiCo has made important progress towards our Positive Agriculture and Positive Value Chain climate, water and packaging ambitions. In the first year since issuing this bond, we have used the proceeds to allocate:
- $105 million for decarbonization, expected to reduce approximately 330,000 metric tons of greenhouse gas (GHG) emissions;
- $242 million to improve packaging circularity, estimated to have helped avoid nearly 150,000 metric tons of GHG emissions compared with using virgin plastic;
- $48 million to pursue a net positive water impact, expected to replenish nearly 5 billion liters in high water-risk watersheds and avoid the use of nearly 1 billion liters of water in our operations;
- $4 million to support regenerative agricultural practices, covering more than half a million acres.3
We will continue reporting annually on the allocation of spend from our 2022 Green Bond.
2Investments include expenditures on capital projects and other sustainability-related operating expense excluding non-cash items like depreciation and amortization. Investments exclude rPET spend.
3As of December 31, 2022, net proceeds had been allocated to projects undertaken between 2020 and 2022. This graph shows the years the funds were spent.