Across the globe, farmers continue to bear the brunt of climate-related risks associated with agriculture and acutely experience the impacts of biodiversity loss, freshwater scarcity and soil degradation on crop yield and resiliency. Many of these farmers' families have worked tirelessly to maintain their businesses for multiple generations, and these impacts pose a threat to their livelihoods.

We continue to prioritize working collectively with our farmers to advance the adoption of regenerative agriculture practices — a set of techniques designed to improve and restore ecosystems across impact areas to make soil healthier, capture carbon, improve watershed health, protect and enhance biodiversity and strengthen farmer livelihoods by optimizing their long-term yields and farm income. By supporting farmers in this way, PepsiCo aims to help secure its supply, and importantly, help farmers counter climate change today and prepare for agricultural challenges of the future.  

Depending on local conditions, regenerative techniques may help farmers to grow more food on the same amount of land with fewer inputs like water, fertilizer and pesticides. We are partnering to help protect farmers against the challenges of climate change, water depletion and soil erosion, while also helping farmers achieve greater profitability. 

1. Refer to PepsiCo’s Regenerative Agriculture Practice Bank for a comprehensive listing of practices linked to the five impact areas.

Approach to regenerative agriculture

The core goal of regenerative agriculture is to improve the resilience of the agricultural system as the world and the climate changes. Regenerative farming is not a new concept by any means, and regenerative farming practices are being implemented by farmers all over the world, from large-scale commercial farming systems to smallholder farms. However, farming is hyper-local, with each farm having unique needs and challenges. Much like the ecosystems they are intended to revitalize, successful regenerative practices are highly interdependent, requiring a localized yet holistic approach that takes the entire farming system into consideration and balances newer regenerative practices with current farming practices that have been adapted for the local context. So, our approach to Positive Agriculture is outcome-oriented rather than prescriptive. We support a wide range of regenerative practices including planting cover crops to protect the soil, reducing tillage to maintain soil health and fertility, and encouraging livestock and other diversity onto farms. These practices, and others, help maintain and add nutrients, improve fertility, maintain soil carbon, control pests and weeds through sustainable management, improve biodiversity, maintain water quality and protect watersheds. 

In collaboration with industry peers and cross-sector partners, PepsiCo launched a Regenerative Agriculture Practice Bank in May 2022 as a resource to help our farmers and suppliers understand the types of regenerative practices and potential resulting outcomes that could be applicable based on unique geographic and crop specificities, as well as local laws and regulations that may apply.

We take a system-wide approach to accelerating regenerative agriculture, marked by collaboration between farmers and other stakeholders in a given region — often across multiple crops, sectors and land uses — who commit to advancing shared sustainability goals. In 2022, we continued to use this approach as we launched and scaled existing initiatives across our key agricultural commodities in the Midwest U.S., Mexico and Southeast Asia with strategic partners such as the Soil and Water Outcomes Fund and Proforest.

In addition, we launched a Positive Agriculture Supplier Playbook, a public resource that guides key ingredient suppliers and buyers through the steps of implementing and measuring the impact of regenerative farming in their value chain.

With our agriculture partners, we help farmers deliver farm-level impacts such as greenhouse gas (GHG) emissions reductions. We estimate our efforts will reduce and remove at least 10 million tons of GHG emissions by the end of the decade. In 2022, we provided support to more than 3,300 farmers and helped them make measurable improvements on their carbon footprints, biodiversity, soil health and watershed health on over 900,000 acres¹. This led to the removal of more than 330,000 metric tons of carbon through soil carbon sequestration.

PepsiCo also seeks continuous improvement in agricultural practices that minimize the use of pesticides and other agrochemicals. We engage with external stakeholder groups and industry peers to share and develop best practices in responsible pesticide use and established an internal Global Pesticide Council of cross-functional senior leaders to advise on our policies and programs. 

For regenerative agriculture to take root, farmers need economic, social and cultural, and agronomic support. To improve our ability to provide this support, we invest in innovative programs and nurture close partnerships with our farmers, intermediary suppliers and NGOs along our value chain.

In 2022, with new and ongoing strategic partners — some of which were the recipient of the 2022 United States Department of Agriculture’s Climate-Smart Commodities grants — we helped to fund and support independent advisories for farmers, facilitate coaching and peer support, and financially incentivize adoption of on-farm conservation and climate-smart practices, including:

• Soil and Water Outcomes Fund (SWOF). SWOF was awarded funding through the USDA’s Partnerships for Climate-Smart Commodities Initiative, along with approximately $60 million in support from PepsiCo and other industry peers, to launch the Midwest Climate-Smart Commodity Program. The program will help participating farmers transition to climate-smart practices on nearly one million acres by 2030, with the potential to reduce and capture up to more than three million tons of GHG emissions. 
• Illinois Corn Growers Association (ICGA). PepsiCo supports the ICGA’s Precision Conservation Management Innovation Project to help address farmers’ environmental concerns such as water quality, soil health and GHG emissions by offering agronomic and financial support, as well as economic analysis, to enable sound business decisions related to conservation practices. The project is helping spread regenerative practices across approximately 600,000 acres by 2030. 
• Practical Farmers of Iowa (PFI). PepsiCo established a long-term, strategic partnership with PFI to help drive regenerative agriculture practices across approximately 1.5 million acres of U.S. farmland by 2030. As part of this work, PepsiCo is making an upfront investment in people and operating systems, aiming to increase farmer resilience, establish sustainable sourcing and achieve GHG emissions reductions across multiple commodities.
• Archer Daniels Midland (ADM). PepsiCo established a multi-year shared value partnership with ADM that aims to reduce carbon intensity by expanding regenerative practices on up to two million acres across our shared supply chains. The project will support farmers across the Midwest U.S. in building resilience to climate change and has the potential to eliminate over 1.4 million metric tons of GHG emissions.
  

1. PepsiCo 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. Note that all five are included as potential impact areas to be quantified, including livelihoods improvement. 

Goals & progress

In 2022, we increased our regenerative farming footprint from more than 345,000 to more than 900,000 acres¹ globally through a number of actions — including, for example, establishing groundbreaking partnerships, adopting new technologies and working collaboratively with trusted farmer-facing organizations.  

We improved our agricultural water-use efficiency by 14% (compared to a 2015 baseline) when last measured in 2020² in high water-risk watersheds by supporting farmers through partnerships, relevant training and programs such as our demonstration farms. In 2022, we sustainably sourced³ approximately 55% of our key ingredients and positively impacted the livelihoods of more than 11,000 people in our agricultural supply chain and communities by supporting economic prosperity, agency and a sense of security for farmers, farm workers and their households.

Regenerative agriculture goal

1. PepsiCo 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. Note that all five are included as potential impact areas to be quantified, including livelihoods improvement. Metric counts the cumulative number of regenerative acres since 2021.

2. Data for 2021 and 2022 not available, as we measure this at least once every three years.

3. For 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. Percentage of volume sustainably sourced and verified by third parties, including volume of Roundtable on Sustainable Palm Oil (RSPO) — certified palm oil and volume of Bonsucro-certified (or equivalent) cane sugar.

4. Regenerative acres reported for 2021 include U.S. and Canada only.

5. Regenerative acres reported for 2022 include U.S., Mexico, Canada and 17 European countries only.

Commitment to local grassroots work

Complementing the large-scale partnerships with well-established organizations, we understand the importance of funding innovation and supporting start-up organizations with the potential to scale.

In October 2022, we announced the continuation of the Positive Agriculture Outcomes (PAO) Fund, our global agricultural accelerator. The PAO Fund initially launched in 2021 with the intention of accelerating progress toward our 2030 pep+ Positive Agriculture goals and activating the regenerative agriculture strategy across the business. Currently, the PAO Fund acts as a funding mechanism, offering co-investment to drive diverse and sector-led innovative projects around the world. By providing both financial and technical support to transformative initiatives, the PAO Fund incentivizes and ensures committed action is taken across the whole business, innovation is spurred, and capabilities and capacity are built. 

As of December 2022, we had disbursed $1.8 million and invested in over 20 individual projects across a range of sectors and supply chains, supporting initiatives that test new solutions, help farmers "future-proof" our supply chains and build sustainable landscapes. Projects have been funded across 16 countries, touching every sourcing region and including 13 ingredients. 

To illustrate the impact of the PAO Fund’s investments on farmer livelihoods, PepsiCo developed a video series, “Growing Our Future,” showcasing four funded projects.

We also continued to grow our network of demonstration farms around the world by leveraging the expertise and local influence of farmers. Our demonstration farm program highlights locally-relevant best practices in regenerative agriculture areas such as nutrients, water-use efficiency and precision farming. The network provides local farmers the opportunity to observe and learn from their peers, helping to scale proven practices and innovative agriculture technologies that further regenerative results.

In 2022, our partnerships yielded value for farmers, the environment and the business (percent increases observed in a control plot vs. a demonstration plot):

• On demonstration farms in India, farmers saw average yield improvements of 3% and reduced GHG emissions by more than 20%.
• In Thailand, we helped farmers implement pest and nutrient management systems and install drip irrigation. At the end of 2022, farmers saw an 18% yield increase and up to 36% reduction in water use in irrigation.
• In Mexico, we demonstrated ways to save water through various irrigation techniques and improvements in existing irrigation systems. Farmers saw reduced water use in irrigation more than 35% on average (vs. conventional systems), while increasing potato yields by more than two tons per hectare.

At the end of 2022, PepsiCo worked with 89 regenerative demonstration farms to demonstrate new technologies and regenerative practices.

Supporting nature positive outcomes

Regenerative food systems rely on thriving natural ecosystems in the landscapes where agricultural production occurs. A thriving natural ecosystem can help to regulate weather patterns, such as rainfall, and mitigate the impact of less predictable weather, allowing for ongoing access to a sustainable supply of water and soil, supporting pollinators and controlling pests, supporting sustainable livelihoods and communities, and impacting global climate. 

A focus on nature positive outcomes is linked to our broader pep+ ambitions. PepsiCo recognizes both the role that resilient natural ecosystems play in supporting food systems and the risks that agriculture presents for natural ecosystems, including deforestation and ecosystem conversion, natural resource extraction and pollution. Across our supply chains, we have identified opportunities to mitigate those risks and to support the conservation and restoration of nature. Examples of our recent efforts include:  

• Promoting and measuring the impact of biodiversity on farms; in 2022, over 700,000 of our more than 900,000 regenerative agriculture acres saw measurable positive impact in biodiversity.
• Engaging with suppliers and the industry (particularly for palm oil) to aim for zero deforestation, no peat loss or conversion in our supply chains.
• Serving as a Founding Partner of the Rimba Collective, an innovative sustainable finance mechanism to support forest conservation and restoration in palm oil sourcing regions.
• Working with retailers, manufacturers and suppliers to support the transformation of our sourcing regions toward zero deforestation and supporting conservation, restoration and sustainable livelihoods with the Consumer Goods Forum’s Forest Positive Coalition and the Palm Oil Collaboration Group.
• Supporting landscape initiatives around the world, including those in Mexico and Indonesia, that work to holistically address sustainable production and natural ecosystem protection and restoration.  

While we have been working on our nature positive approach for many years, the interplay between nature and our business is complex. We recognize that, like all businesses, we aspire to develop a more detailed understanding of our nature-related impacts, risks and opportunities. Work is underway to further build these capabilities, including investing in on-the-ground impact programs, new tools and technology, and fostering partnerships with our supply chain, industry peers and conservation experts.

Approach to irrigation efficiency

Water is critical to our business and to the farmers we source from, as they rely on clean, safe and sustainable water supplies to irrigate their crops. This shared interest in water conservation is what drives PepsiCo’s approach to water-use efficiency — defined as the volume of irrigation water required to grow one ton of raw crop material — and achieving our healthy watershed goal improvement target of 15% by 2025¹.

We continually seek more sustainable ways to use this precious resource to ensure we are efficiently accessing the water we need to make our products while preserving water access for the communities in which we operate. At the end of 2022, we sourced approximately 45% of our grower-sourced key ingredients from areas of high water-risk. 

As we work to improve the water-use efficiency in areas where we directly source our crops, we identify the specific needs of at-risk locations and create action plans that support farmers with the relevant training, equipment and resources they need to meet water goals. Our demonstration farms give farmers the opportunity to learn local water-use efficiency and water quality improvement best practices in a hands-on, peer-to-peer setting.

PepsiCo also supports farmers in transitioning to more water-efficient irrigation equipment such as drip irrigation. In March 2022, PepsiCo announced a partnership with N-Drip to help farmers in our supply chain adopt their game-changing high efficiency irrigation technology across 25,000 acres by 2025. N-Drip’s gravity-powered technology combines the water-saving benefits of high-pressure drip irrigation with lower energy, operating and maintenance demands. 

By helping farmers transition from the commonly used flood or trench irrigation — known to lose up to 70% of water to runoff or evaporation — our N-Drip partnership aims to improve farmer livelihoods through water savings of up to 50% while, through a more efficient fertilizer application via the water, potentially reducing carbon and methane emissions by approximately 80% (per season, compared to flood or trench irrigation). N-Drip technology has been used by farmers in India, South Africa, Vietnam, Greece and the U.S., many of whom have reported higher crop yields, less need for use of fertilizers and a significant reduction in water use compared to flood or trench irrigation. 

Irrigation efficiency goal in areas of high water-risk

1. 15% improvement goal measured versus a 2015 baseline.

2. Data for this time period not available, as we do not measure this metric every year. Assessments are conducted at least once every three years. Next assessment to be conducted in 2023. Last measured in 2020.

Approach to sustainable sourcing 

We depend on a sustainable supply of agricultural raw materials to meet the demands of our business and expectations of our stakeholders. We aim to instill integrity, fairness and stewardship throughout our agricultural supply chain and hold our suppliers accountable to the same standards. Our agricultural suppliers are expected to adhere to our Supplier Code of Conduct and other relevant sustainable sourcing policies such as our Land Policy and Global Human Rights Policy, as a condition of doing business with us. 

Our Stewardship of Forests and Natural Ecosystems Policy outlines our aspiration for deforestation- and conversion-free business operations and supply chain. We are implementing this policy in our agricultural value chains where we face forest and natural ecosystem conversion risk, for example, in our palm oil supply chains where we implement a No Deforestation, No Peat, and No Exploitation (NDPE) commitment as outlined in our Global Policy on Sustainable Palm Oil.

Our sustainable sourcing approach aims to improve the livelihoods of farmers in our supply chain while ensuring a steady supply of key ingredients¹ for production. Forty-three percent of our key ingredients (by volume) are “grower-sourced” — purchased directly from farmers through a grower group, while the remaining approximately 57% are “supplier-sourced” with multiple tiers between the farmer and PepsiCo. 

Supplier-sourced key ingredients include milk and those derived from crops such as corn, wheat, beet sugar, banana, cocoa, sunflower, soy and canola. We actively collaborate with suppliers, industry groups and NGOs using two approaches to achieve our sustainable sourcing goal: 

• High-risk approach (verified volumes): Requires high-risk commodities (palm, cane and soy) and commodities grown in high-risk markets to be verified/certified to a sustainability standard recognized by PepsiCo.
• Low- and medium-risk approach (continuous improvement): Consists of working with suppliers to adopt a continuous improvement model, requiring them to demonstrate active work and progress toward outcomes that address the key risks for the farmers in the sourcing region by 2030.²

Our SFP is a farm-level engagement with growers to build capability, address relevant risks and encourage continuous improvement through fundamental agricultural practices that span the broad aspects of sustainability including positive social, environmental and economic outcomes for growers. SFP focuses on self-assessment, capacity building and verification of farm-level sustainable agriculture practices and principles as described in the SFP Scheme Rules and SFP Fundamental Principles.

We support our supply chain farmers in their transition to more sustainable approaches, leading to economic benefits, improved food security and climate resilience. For example, Agrovita, a three-year program in partnership with the non-profit Proforest, empowers women and other smallholder farmers in Southeast Mexico to grow their crops in a more sustainable way. PepsiCo purchases crops from participating farmers, who are supported with technical training, financial literacy courses and legal advice related to their right to own land. Agrovita’s aim is to drive regenerative practices on more than 29,000 acres and to support more than 37,000 farmers, at least half of whom are women.

As one of the world’s largest buyers of palm oil in the consumer products industry, we remain committed to contributing to a sustainable palm oil industry. In 2022, our purchase represented less than 1% of the global supply. In November 2022, PepsiCo and Unilever supported the first independent smallholder group in Aceh Province, Indonesia — one of the world’s last remaining tropical rainforest areas that is also highly susceptible to illegal logging and clearance for agriculture — in successfully obtaining RSPO and Indonesia Sustainable Palm Oil certification through The Sustainable Trade Initiative (IDH) Verified Sourcing Area landscape-based program. Throughout 2022, we continued to be an active partner in landscape programs such as those in Mexico and Indonesia that are seeking to demonstrate scaled solutions and impacts on palm oil sustainability.

Sustainable sourcing goal

1. Key ingredients include potatoes, whole corn, oats, grains, vegetable oils, cane sugar, beet sugar, high-fructose corn syrup, orange juice, banana, raw milk, cocoa/chocolate and dairy seasoning.

2. PepsiCo is only applying the continuous improvement methodology for sustainable sourcing in our row crop programs in the Midwest U.S. where, through our regenerative agriculture programs, we are addressing key risks such as soil loss/degradation and nutrient loss.

3. For 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. Percentage of volume sustainably sourced and verified by third parties, including volume of Roundtable on Sustainable Palm Oil (RSPO) - certified palm oil and volume of Bonsucro-certified (or equivalent) cane sugar.

Approach to improving livelihoods

Around the world, farmer livelihoods and the food systems on which they depend are threatened by intractable challenges including topsoil depletion, increasing temperatures, more frequent droughts and decreasing biodiversity. 

Among the most vulnerable to these impacts are smallholder farmers, farm workers, temporary or migrant workers, and women producers in rural agricultural communities. To help address these challenges, PepsiCo aims to use its scale and influence to source crops in ways that help strengthen farming communities and farmer livelihoods. By helping build healthier, more sustainable and inclusive food systems, we are not only supporting farmers directly, but also securing our supply of the ingredients that our business depends upon. 

Our approach focuses on supporting economic prosperity, agency and a sense of security for farmers, farm workers and their households. We rely on strategic partnerships across geographies, sectors, industries and supply chains to leverage technical and financial resources that support farmers in transitioning to more inclusive and regenerative practices.

PepsiCo launched the Livelihoods Implementation Framework for Engagement (LIFE) in September 2022 to establish a roadmap and define metrics to calculate progress with a focus on improvement in three areas: 

• Economic prosperity: Supporting long-term farm profitability and productivity with an emphasis on regenerative agriculture and environmentally sustainable farming practices.
• Farmer and farm worker security: Addressing issues of food security, labor conditions and land rights and enabling access to resources.
• Women’s economic empowerment: Improving women’s access, time, agency and use of resources, and decreasing legal and institutional barriers.

The framework establishes a set of common Livelihood Outcome Indicators aligned with international norms including the United Nations’ (UN) Sustainable Development Goals (SDGs), International Labor Organization (ILO), UN Food and Agriculture Organization (FAO), and UN Guiding Principles on Business and Human Rights. 

At the time of publishing, according to the FAO, women represent 43% of global agricultural workers, yet tend to earn less than their male counterparts and have less access to key resources including training, land ownership, agricultural advisory services, technology and finance. If the equity gap for women were closed, research by the FAO suggests women-run farms would increase their yields significantly. Our work to bolster gender inclusivity in our agricultural supply chains has the potential to deliver social outcomes for women, including livelihood improvements at the household and community level, greater access to resources and capability building opportunities, as well as business benefits, including resilient supply from a diversified supplier base.  

PepsiCo and the PepsiCo Foundation continue to build resilient supply chains by supporting diversity and inclusion in farm management. We are often working with the most vulnerable — those that may not have traditionally had access to markets and supply chains, including women, smallholder farmers, Indigenous Communities and People of Color — through strategic partnerships with the U.S. Agency for International Development (USAID), Inter-American Development Bank (IDB), Cooperative for American Relief Everywhere (CARE), National Future Farmers of America Organization, GIZ and the National Black Growers Council.  

• In 2020, PepsiCo and USAID established the Global Development Alliance (GDA), a shared value partnership focused on building an evidence-based business case for empowering women in agriculture supply chains, demonstrating that gender transformative procurement can drive commercial benefits. Co-invested by PepsiCo and USAID, the Investing in Women to Strengthen Supply Chains Program is a $20 million global partnership to make the business case for women’s economic empowerment. 
• The GDA — which has begun implementation in five countries, including India, Pakistan, Vietnam, Colombia and Peru — collaborates with local PepsiCo agriculture teams to design and deliver programs that work with both existing and new PepsiCo suppliers to build their capacity and knowledge around the inclusion of women. Through pilot partnerships that implement Gender Smart Leadership Lab and Gender Smart Farm programs, both farm management and women workers are exposed to inclusive agronomy advice, receive training on new techniques and are given access to new regenerative agriculture technologies. Participating farms serve as learning hubs that provide data and insights on the economic impact of empowering women on farms and will help scale investments within PepsiCo and other global companies. 
• Building upon the lessons learned from PepsiCo and USAID’s co-funded four-year Integrated Land and Resource Governance (ILRG) program in West Bengal, India (our longest running women’s economic empowerment program), ILRG has helped over 1,100 female potato producers gain agricultural training, 97% of whom have applied agronomy and sustainable farming knowledge and skills. Results from 2022 also showed that 55% of participants reported their family experienced an increase in income from potato farming, and 95% of women reported they improved their confidence as farmers over the season.
• Through the Next Generation Agriculture Fund, a three-year, $2 million partnership with IDB, PepsiCo is researching and taking action to enhance the role of women as strategic partners in our potato supply chain. By testing and demonstrating the impact of gender-smart solutions, the fund is helping to identify gender-related issues and challenges in our supply chains in the Dominican Republic, Ecuador and Guatemala. 

Improving livelihoods goal

1. Metric counts the cumulative people impacted since 2021.

Learn more about PepsiCo’s key agricultural strategic partnerships, how they are contributing to progress toward our 2025 and 2030 pep+ goals and the growing resilience and sustainability of our agricultural supply chain.