Approach

Waste reduction, in all its forms and across our value chain, is a strategic imperative for PepsiCo and a key tenet of our pep+ (PepsiCo Positive) ambition. It not only provides benefit to our business in the form of cost savings and efficiencies gained, but is also inherent to being a good citizen of the communities where we operate.

We manage our supply chain and marketplace waste and associated costs through our End-to-End (E2E) Materials Waste Program. The program, led by Global Operations, manages waste across much of the value chain, from raw materials and manufacturing, to warehouses and sales operations. All PepsiCo-operated markets are actively engaged in the E2E Materials Waste Program and are pursuing improvement targets that account for business model nuances.

In addition, we strive to achieve virtually zero waste to landfill in our direct operations, defined as 98% landfill diversion rate or greater. But our ambition goes farther: PepsiCo is working toward achieving a 99% diversion rate by 2025 in its direct manufacturing and warehouse operations. This goal is a global one, but through the E2E Waste Program, each market builds an E2E waste plan that takes into account local infrastructure and the greatest opportunities for improvement. Though managed at the site level, progress is aggregated globally by PepsiCo’s Sustainability Office, and the total volume of waste generated from our company-owned manufacturing and warehouse operations is independently assured on an annual basis.

Raw material waste

Raw material waste is generated when packaging and/or ingredients become obsolete or when raw ingredients reach their expiration date and are no longer usable in production, as indicated by food safety standards.

As a global convenient food and beverage company, we have an interest in addressing the issue of food waste. Globally, approximately one-third of the food produced for human consumption is wasted each year, and that waste is a significant contributor to greenhouse gas (GHG) emissions.

Our efforts to reduce food waste focus on using agricultural inputs as efficiently as possible in our manufacturing processes and finding innovative solutions for using the organic material that remains. We are continuously improving our equipment and manufacturing processes as well as planning methods to ensure an optimal use of raw materials.

Manufacturing waste

We pride ourselves on the efficiency of our manufacturing facilities, but we still work towards reducing the waste in the process. Manufacturing waste is driven primarily by process disruptions such as start-ups, line changes, and shut-downs, quality issues, breakage and repacking. Plant teams strive to reduce it by efficiently sequencing production lines, reducing changeover waste and improving packaging quality, to reduce breakage and damage.

Warehouse waste

As our products move from manufacturing, to distribution and ultimately to our customers, waste may be generated at several points along the line such as when products are damaged or expire.

Strategies to reduce warehouse waste include working with sales teams to ensure that warehouse orders match orders from customers in order to prevent over-stocking, which can lead to waste due to expiration of products.

When finished goods are not salable, but still safe to consume (i.e., aesthetically damaged or with too short of a shelf life for store turnover rates), they are often donated to local communities or used as samples.

Sales waste

During the course of getting our products to store shelves, waste is generated through breakage, product expiration and changes in product (labeling, flavors) that make the product no longer salable. To reduce sales waste, our E2E Waste Team works closely with sales to understand demand planning and reduce the risk of over-stocking, as well as with route sales representatives to develop solutions to avoid product breakage.

Hazardous waste

PepsiCo tracks and manages hazardous waste created in our company-owned operations. The precise definition of hazardous waste differs regionally, but can include lab materials and maintenance residue such as gearbox oil, lights and batteries. In total, hazardous waste comprises less than 1% of our total waste stream. Our global and regional Environmental, Health, and Safety teams oversee this waste to assure we are fully compliant with local governmental requirements.

Progress

Waste to landfill

In every community where we operate, we are working to minimize the amount of waste that we send to landfill through our direct operations, covering raw materials, manufacturing, and warehousing. PepsiCo has been on this journey for many years and is approaching its goal of achieving a 99% diversion rate by 2025 in its direct manufacturing and warehouse operations. In 2021, we generated approximately 2.4 million metric tons of waste in our manufacturing and warehouse operations, of which we diverted from landfill approximately 2.3 million metric tons, or over 98% of total waste (consistent with nearly 98% in 2020).

End to end waste

To help meet our E2E waste goals, we've developed a series of tools and platforms to help us better analyze, track and manage our waste. In 2021, we spread the adoption of these tools across our operations globally and launched new initiatives to reduce waste, including:

• Automated Waste Diagnostics: A series of dashboards to provide visibility to waste spend, visualize waste trends, and benchmark against successful facilities.
• E2E Waste Playbooks: Documents that provide a step-by-step framework to assess waste performance and unlock savings opportunities across the value chain. The playbooks provide tools to review best in class practices, share market-tailored solutions, and gain insights into waste innovation.
• PepsiCo Champions League: A competitive program allowing different facilities to compete against and learn from each other about waste reduction best practices. More than half of the participating teams hit waste performance milestones (producing waste weighing less than or equal to 1% or 2% of the production volume) in certain weeks during the competition.

Reduce food waste

We strive to reuse materials in productive ways. PepsiCo collaborates with its partners to identify beneficial uses for the processing residue that remains from manufacturing. For example, our Leicester plant in the U.K. rolled our a program to convert leftover potato peelings from making Walkers Crisps into low-carbon fertilizer that will be returned to farms where potatoes for the crisps are grown. Once supplied at scale, this fertilizer is expected to reduce Walkers' potato-based Scope 3 greenhouse gas emissions by an estimated 70% from 2019.

Progress and Challenges

Strategic Partnerships

PepsiCo maintains partnerships with organizations that help us to reduce the waste we send to landfill. These include recycling, composting and waste-to-energy businesses. Building a strong local infrastructure for these activities helps us to meet our commitments while also strengthening local economies and reducing waste beyond our own operations.

What's Next

We will remain focused in the coming years on achieving 99% waste to diversion in direct manufacturing and warehouse operations, particularly in the developing markets, where we are building recycling infrastructure in our operations and embedding a culture of recycling.

Through our E2E Waste program, we will work towards:

• Promoting zero-waste culture;
• Enhancing waste reporting tools; and
• Innovating to reduce with predictive analytics.