Why it matters
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 have been allocated to investments in Eligible Green Projects, supporting our efforts in three categories, while also advancing several of the UN’s Sustainable Development Goals (SDGs):
- Sustainable plastics and packaging
- Decarbonization of our operations and supply chain
- Water sustainability
In July 2022, PepsiCo issued its second 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, 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 new Green Bond will focus 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 recommends allocation of proceeds, and provides a description of Eligible Green Projects to PepsiCo’s Finance department, who track the allocation of net proceeds to approved projects. Pending allocation, net proceeds are temporarily invested in cash, cash equivalents, short-term investments, or used to repay other borrowings.
Until the net proceeds 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 2022, we published our third and final annual Green Bond Report on our 2019 Green Bond, describing our use of proceeds. As of December 31, 2021, PepsiCo had allocated $974 million in proceeds from the issuance of its first Green Bond to Eligible Green Projects. This represents 100% of the net proceeds and includes investments in all three eligible categories of packaging, decarbonization, and water. Over 250 individual investments have ranged from nearly $60,000 to over $98 million1, and spanned six 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+ ambition.
Through the investments made with Green Bond proceeds, PepsiCo has made significant progress towards our Positive Value Chain climate, water, and packaging ambitions. As of December 31, 2021, our eligible decarbonization expenditure has helped to increase our renewable energy generation capacity and put technology in place to avoid more than 230,000 metric tons of GHG emissions in our direct operations and supply chain annually. We’ve funded projects to support our sustainable packaging ambitions and we have launched 100% rPET packages in 22 global markets. Green Bond net proceeds have helped PepsiCo to avoid more than 480,000 metric tons of GHG emissions since 2017 by incorporating rPET into plastic packaging. Investments in water projects have helped us to avoid the use of more than 5.5 billion liters of water in our company owned plants annually, and replenished an estimated 1.3 billion liters of water into water-stressed watersheds.
With reporting now concluded on our first Green Bond, we will issue our first communication on progress for our 2022 Green Bond in the second half of 2023.