Approach

PepsiCo recognizes the critical need to protect and enhance our natural ecosystems. Most recently, under pep+ (PepsiCo Positive), we have set ourselves an end-to-end strategy with sustainability at its core, built to make progress where we believe our ability to influence positive, systemic change is greatest. pep+ includes a series of goals that touch most aspects of our business, aiming to drive Positive Agriculture, a Positive Value Chain and enable Positive Choices. Among these goals are many actions that aim to help us to safeguard nature and in doing so, aim to help to mitigate risk for our business and supply chain while also supporting long-term ecosystem health. These include actions taken in an effort to achieve the following by 2030 (unless otherwise specified):

• Spread the adoption of regenerative agriculture practices across 7 million acres of the land used around the world to grow our crops and ingredients for our products.¹ We approach regenerative agriculture with five impact areas² in mind, including enhancing biodiversity and nature where there are identified risks. 
• Sustainably source 100% of our key ingredients, expanding to include not only our grower-sourced crops (potatoes, whole corn and oats), but also key crops from third parties, such as vegetable oils and grains.³
• Realize deforestation-free sourcing in our company-owned and -operated activities and global supply chains by 2025 and conversion-free sourcing by 2030.⁴
• Conserve or restore at least 140,000 hectares by the end of 2025.
• Reduce absolute greenhouse gas (GHG) emissions across our value chain by more than 40%, including a 75% reduction in emissions from our direct operations (vs. a 2015 baseline). Achieve net-zero emissions by 2040.⁵
• Advocating for and contributing to a measurable improvement in the health of high water-risk watersheds where we directly source our crops. We exceeded our agricultural water-use efficiency of 15% by 2025 (reaching 22% when compared to a 2015 baseline) in high water-risk watersheds two years ahead of schedule.⁶ We regularly review our pep+ goals and consider whether any changes are warranted. As a result of achieving this goal ahead of schedule, we will no longer report on it. But we will continue our work in watershed health through other pep+ goals and remain focused on continuous improvement.
• Achieve our sustainable packaging vision with a series of packaging goals including cutting virgin plastic from non-renewable sources per serving across our global beverages and convenient foods portfolio by 50% by 2030;⁷ delivering 20% of all beverage servings we sell through reusable models by 2030;⁸ and designing 100% of packaging to be recyclable, compostable, biodegradable or reusable by 2025.⁹

In pursuit of these aspirations, we are taking deliberate and significant steps in an effort to address our impact, risks and opportunities that connect our business with nature. For example, our efforts to extend regenerative farming practices are founded on a set of techniques that aim to improve and restore ecosystems with a focus on building soil health and fertility; reducing and sequestering carbon emissions; improving watershed health; protecting and enhancing biodiversity; and improving farmer livelihoods. Through these objectives, we aim to optimize crop yields, to respect human rights, to improve farmer livelihoods and to secure our supply of agricultural ingredients.

Our plans to achieve our pep+ agenda are founded on careful consideration of the nuances of our business and supply chain. For nature, and for other key topics such as climate change and water, this means working with internal and external experts to identify key impacts and risks and to formulate strategies aiming to mitigate them. The focus of these assessments evolve over time in response to the latest science, stakeholder expectations and other developments. Through programs like our Sustainable Farming Program (SFP), we have been working to create a more resilient, sustainable agricultural system in an effort to help safeguard our continued business from disruption due to climate change, water scarcity and other environmental and social risks. PepsiCo continues to monitor and evaluate scientific advances and the needs of the business and its stakeholders; any future adjustments to its assessment approach are anticipated to reflect these.

We have set standards for ourselves and our supply chain that match our ambition for a sustainable agricultural supply chain over the long term. Our 2030 Positive Agriculture ambitions include collaborating with farmers to spread the adoption of regenerative farming practices globally. The effort builds on a decade of progress in our SFP to help farmers adopt practices that build resilience and that we hope will improve and restore ecosystems.

Our Board of Directors and its Sustainability, Diversity and Public Policy (SDPP) Committee view sustainability issues such as nature to be an integral part of their business strategy oversight and are actively involved in defining our ambitions and monitoring the progress in advancing the pep+ agenda. Throughout the year, the Board and the SDPP Committee regularly receive updates from and discuss with senior management the Company’s policies, programs and related risks that concern key sustainability matters, as well as progress made towards our sustainability-related goals, including those related to regenerative agriculture, sustainable sourcing, GHG emissions reduction, water-use efficiency and sustainable packaging. See Sustainability governance for more detail.

¹PepsiCo considers an acre as delivering regenerative impact when the adoption of regenerative agriculture practices results in quantified improvements across at least two of the environmental outcome areas, with a strong preference for removing or reducing GHG emissions to be one impact area. Refer to PepsiCo's Regenerative Agriculture Practice Bank for a comprehensive listing of practices directly or indirectly linked to the five impact areas. Regenerative acres reported represent the annual count in each year presented based on actions undertaken since 2021

²Refer to PepsiCo’s Regenerative Agriculture Practice Bank for a comprehensive listing of practices directly or indirectly linked to the five impact areas

³For grower-sourced crops, sustainable sourcing refers to meeting the independently verified environmental, social and economic principles of PepsiCo’s Sustainable Farming Program (SFP). For supplier sourced crops, sustainable sourcing is achieved through a third-party standard that has been benchmarked as equivalent to the SFP or, in limited regions, a continuous improvement program addressing the main environmental and social risks with growing the relevant crop. PepsiCo considers its sustainably sourced volumes to be those that are certified by third parties, such as Roundtable on Sustainable Palm Oil (RSPO) - certified palm oil and Bonsucro-certified (or equivalent) cane sugar, either through physically certified volumes or the purchase of credits. Certain legal and systemic barriers will challenge us as we strive toward our goal of sustainably sourcing 100% of our key ingredients. For example, certain jurisdictions prohibit farmers from holding legal rights to the land they farm (a component of our sustainable sourcing definition). Our sustainable sourcing goal applies to areas where PepsiCo has purchasing control and excludes joint ventures, franchises, co-manufacturers and co-packers and other third parties over which we do not hold purchasing control. Key ingredients are listed in the Agriculture ESG Topics A-Z page

⁴Getting to deforestation-free supply chains requires tackling systemic issues in specific geographies and commodities. This requires working in-depth with a wide range of stakeholders to identify and tackle those issues, which can take time. Key challenges include our ability to trace supply to individual farms, lack of availability of public sector initiatives to incentivize conservation of forests and other natural ecosystems, impediments to identifying areas at high-risk of deforestation and conversion to prioritize action, root causes of deforestation and conversion such as poverty, lack of credibly-certified commodities in certain markets and lack of universally accepted definitions and protocols resulting in varying certifications

⁵Measured versus a 2015 baseline

⁶Measured versus a 2015 baseline. This metric tracks the improvement of the water-use efficiency of PepsiCo’s direct agricultural supply chain. To focus efforts on implementing sustainable practices, we currently collect and publish agricultural water-use efficiency data at least once every three years. World Resource Institute’s Aqueduct water stress assessment tool is used to reconfirm high water-risk areas every three years. Results reflect assessments performed in 2023, 2020 and 2018

⁷Measured versus a 2020 baseline

⁸Our total beverage servings account for all beverage sales volume. Reuse models may include, but are not limited to, SodaStream, fountain beverages delivered in reusable containers, returnable glass and plastic bottles, and concentrates and powders sold to consumers

⁹PepsiCo considers packaging to be recyclable, compostable, biodegradable or reusable (RCBR) if certain end-of-life waste management criteria is achieved. See Calculation methodology on ESG Topics A-Z for an explanation of how we calculate the percentage of our packaging that is RCBR