Managing our operational waste represents a critical opportunity to keep material out of landfills. Reducing waste also helps PepsiCo to mitigate reputational risk and minimize costs, including fee payments to facilities that accept waste.
To the World:
Waste represents an inefficient use of resources. The World Bank estimates global waste will increase by 70% by 2050 without urgent action. Population growth, urbanization, and other factors are driving unprecedented volumes of waste, overwhelming society's waste management infrastructure and causing environmental degradation.
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. The program is now present in most of our PepsiCo operated facilities, and we are working to improve E2E capabilities in all markets to the performance levels in our best performing markets.
In addition, we strive to achieve virtually zero waste to landfill in our direct operations, including offices and other non-manufacturing facilities, defined as 98% landfill diversion rate or greater. But our ambition goes further: 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 Materials 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.
Our E2E waste program covers waste across four key areas of waste development within our operations:
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 beverage and convenient foods 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, including fertilizer production and biogas feedstock. We are continuously improving our equipment and manufacturing processes as well as planning methods to ensure an optimal use of raw materials.
We pride ourselves on manufacturing efficiency, but we nevertheless work towards continually reducing 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.
As our products move from manufacturing to distribution and ultimately to our customers, waste may be generated at several points along the chain such as when products are damaged or expire.
Strategies to reduce warehouse waste include the addition of analytical tools that monitor and detect deviations from the ideal path and flag when products are nearing their expiration date and have not been shipped. The warehouse team can then ensure the product at risk is shipped fast and can also work with sales teams that can use promotions strategies to move the product more quickly.
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.
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.
Beyond our E2E waste program, 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.
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 2022, we generated just over 2.4 million metric tons of waste in our manufacturing and warehouse operations, of which we diverted from landfill approximately 2.4 million metric tons, or over 98% of total waste.
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. The program is now present in a great majority of PepsiCo markets across all sectors and includes tools such as:
- 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 insight 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.
We are constantly working with our global waste leads to develop standardized processes and tools to mitigate the major and most common waste factors that span across our markets.
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 out 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.
In 2022 we diverted over 98% of our operational waste from landfill.
Recycling infrastructure is not always in place in areas where PepsiCo manufactures its products. Where this is the case, we are working with local partners to develop the necessary infrastructure.
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.
We will remain focused in the coming years on achieving 99% waste 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 a culture of zero-waste;
- Enhancing waste reporting tools; and
- Innovating to reduce with predictive analytics.