2020 Sustainability Report: Focus Areas
We are committed to addressing the impacts of climate change by focusing our efforts on reducing emissions across our entire value chain, as well as building resiliency in our operations and our supply chain to withstand the adverse impacts of climate change.
Committed to driving urgent climate action
The rise in global temperatures continues to have a dire impact on our food system. To create a more resilient and carbon-efficient food system, global companies need to step up more than ever before. At PepsiCo, we’ve heeded this call. We acknowledge the important role we play as a food and beverage leader, with our products sold in more than 200 countries and territories. We aim to lead by example and manage our climate-related impacts in a responsible manner, while helping to drive systemic change.
Understanding the urgent need for climate action, we’ve set an ambitious new target to achieve net-zero emissions by 2040, one decade earlier than called for in the Paris Agreement. In addition, we more than doubled our interim climate goal, and are now striving to reduce absolute GHG emissions across our direct operations (Scopes 1 and 2) by 75% and our indirect value chain (Scope 3) by 40% by 2030 (against a 2015 baseline). We expect these new goals to lead to reductions of more than 26 million metric tons of GHG emissions, the equivalent of taking more than 5 million cars off the road for a full year.
Our new target is approved by the Science Based Targets initiative and is the most ambitious designation available through their process. In addition, this target aligns with the Business Ambition for 1.5°C pledge, which we signed in 2020, joining other leading companies committing to set science-based emissions-reduction targets in line with limiting global warming to 1.5°C.
Our climate mitigation strategy:
Climate change adaptation: Resiliency
Our climate adaptation strategy helps us plan for a resilient future and ensure business continuity. By assessing climate-related risks to our business, as well as potential opportunities as a result of climate policy adoptions, we are able to be more nimble in addressing vulnerabilities and leading systemic change.
In 2020, we completed our first climate scenario analysis, taking into consideration all of the climate-related risks and opportunities in our wholly owned assets, third-party manufacturing assets and agricultural supply chain locations. This assessment is aligned with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), the results of which will help us:
More details on our climate risk governance can be found on our ESG Topics A-Z Climate page.
Our key risks and associated resilience activities are as follows:
Higher temperatures affect crop growing cycles
Heat-resistant crop varieties and regenerative agriculture practices
Storm damage from extreme weather events
Enhanced business continuity plans
Coastal flooding/sea level rise
Planning for manufacturing footprint adjustments
Water security through holistic watershed solutions
Decarbonize ahead of tax
More details on our Climate Action Strategy can be found here:
Climate and Sustainability Recognition
Bonsucro Inspire Award, which honors changemakers in sustainable sugar cane.
Rabobank Excellence in Food and Agriculture Leadership Award.
Field to Market Collaboration of the Year for U.S.-based Precision Conservation Management Innovation Project along with the Illinois Corn Growers Association and the Sustainable Food Lab.
Corporate Secretary Best ESG Reporting and Corporate Governance Team of the Year (Large Cap) at the annual Corporate Governance Awards.
CR Magazine’s “100 Best Corporate Citizens.”
To learn more about our climate change risk mitigation and resilience strategy and efforts, see our TCFD Index.
PepsiCo engages in multiple partnerships and coalitions to drive collective action on climate change, including:
For more on our collaborative work to address climate change, visit our ESG Topics A-Z Climate page.
“The race to 2030 is well underway, and PepsiCo is among a vanguard of companies that are leading on climate action and ambition. With dual recognition on CDP’s A List for climate change and CDP’s Supplier Engagement Leaderboard, PepsiCo has demonstrated its commitment to environmental transparency and accountability, not only within its own operations, but across its supply chain as well. Building on this with an ambitious science-based emissions reduction target aligned with 1.5°C of warming, PepsiCo is a model to other companies on environmental stewardship.”
Head of Corporations and Supply Chains
CDP North America
See our climate goals & progress
Transitioning to 100% Renewable Electricity Globally
As the already severe impacts of climate change intensify, the world is looking to industry to invest in renewable energy sources that drive us toward a low-carbon economy.
PepsiCo invests heavily in renewable electricity sources, including wind, solar, anaerobic digestion, as well as in cleaner transport and distribution technologies for our fleet. In 2020, we joined RE100, an initiative led by The Climate Group in partnership with CDP to bring together the world’s most influential companies committed to 100% renewable electricity. In early 2021, on the heels of signing the RE100 pledge, we launched our ambitious new goal to transition to renewable electricity globally by 2040. Specifically, we plan to source 100% renewable electricity across all company-owned and controlled operations globally by 2030, and across our entire franchise and third-party operations by 2040.
To achieve 100% renewable electricity globally, PepsiCo will employ a diversified portfolio of solutions, including Power Purchase Agreements (PPAs) that will support the development of new projects such as solar and wind farms around the world, as well as through purchased energy certificates that will enable the near-term transition to renewable sources in many geographies.
As of 2020, we are well on our way, meeting nearly 60% of our current global needs from renewable sources. Twelve European markets are already using 100% renewable electricity, and we have renewable energy sources such as wind turbines, solar, photovoltaic panels or biomass generators installed on-site at 13 facilities in the region. In 2020, we achieved 100% renewable electricity for our U.S. direct operations – PepsiCo’s largest market. By the end of 2021, 15 countries in our direct operations are expected to be fully sourcing renewable electricity.
Making electricity and fertilizer from potato peels
PepsiCo’s Walkers brand is converting leftover organic waste, including potato peelings, into energy with anaerobic digestors at our crisp (potato chip) manufacturing site in the U.K. The anaerobic process produces a biogas, consisting of methane, carbon dioxide and traces of other gases. This biogas can be used directly as fuel, in a combined heat and power unit to generate renewable electricity. The process byproduct then becomes a fertilizer. This “circular potato” effort improves soil health by using low-carbon and nutrient-rich fertilizer from the potato peelings and is expected to reduce Walkers’ carbon emissions from growing potatoes by 70%, against a 2019 baseline.
Turning waste heat into energy
We’ve embarked on an innovative project in Mexico and Guatemala to capture waste heat from plant chimneys to pre-heat oil and air, heat water and generate steam, cold water or air conditioning. This system reduces the need for fuel and electricity in boilers, heat exchangers and chillers, leading to reductions in energy use per plant by up to 10%. We have installed several of these systems in Mexico and across Latin America and will extend this proven technology to other sites to further reduce our emissions.
Global progress toward transition to 100% Renewable Electricity
PepsiCo is making progress in moving toward renewable electricity around the world and to date has achieved 100% renewable electricity4 in 18 markets, including the United States. We are also continuing to invest to add new, renewable energy to the grid. For example, in the U.S. we currently are partnering on two solar electricity projects and two wind electricity projects. The long-term virtual power purchasing agreements (PPAs) are underway in Nebraska and Texas.
Achieved 100% Renewable Electricity:
Cleaner Logistics and Distribution
A major driver of emissions is transport and distribution – getting products from warehouses to store shelves. We are investing in new, cleaner transport options, advancing zero and near-zero emissions technologies, using electric and renewable natural gas in warehousing, transport and distribution facilities, and forming strategic partnerships.
Expanding our green fleet in Latin America
One of the key ways we can move toward cleaner logistics is by moving our products in a way that has a lower carbon impact. In Latin America, PepsiCo has begun moving toward a fleet that’s driving a significant reduction in emissions.
Across Mexico, our more than 300 hybrid trucks are 40% more efficient (per truck) than conventional diesel trucks.
In Mexico and Brazil, our nearly 30 compressed natural gas (CNG) trucks helped us decrease CO2 (carbon dioxide) emissions by more than 30% and NOx (nitrogen oxide) emissions by 98% per truck. In 2021, we expect to acquire more CNG trucks for our Latin American sites.
To date, we have more than 15 electric vehicles (EV) in operation in Brazil, Colombia and Guatemala, and will expand our EV fleet with more vehicles and to other countries, including Mexico, where pilot tests are being performed.
Frito-Lay’s progress in Modesto, California
Frito-Lay has made significant progress in the transformation of its Modesto, California manufacturing site. The 500,000-square-foot Modesto facility’s implementation of zero and near-zero emissions freight technologies in 2020 has led to sustainable impact – reducing the Modesto site fleet’s absolute GHG emissions by more than half (53%), or 2,790 metric tons of absolute GHG emissions, as well as lowering fleet diesel usage by 78%. The site has also achieved 100% renewable electricity for direct operations through a combination of on-site generation and renewable electricity certificates.
Route optimization in Russia
Throughout Europe, PepsiCo is expanding our use of AI technology to enable better logistics planning and reduce emissions in distribution. In Russia, where the program has rolled out, we used analytics technology to map and model a more efficient manufacturing footprint for our snacks business, which led to locating a new snacks factory in Siberia. This decision is expected to help to avoid an estimated 10.5% GHG emissions in our snacks transport by 2025.
Vending machines and coolers
We have a goal to reduce absolute Scope 3 GHG emissions by at least 20% by 2030. One project helping to reduce our Scope 3 emissions is rolling out improvements in vending and cooler equipment in retail, in which we reduced GHG emissions by 50% in 2020, compared to 2015, by offering more energy-efficient models as replacements. Transitioning to hydrofluorocarbon (HFC)-free equipment has been a major focus for PepsiCo. All of our company-owned units in Europe and North America are now HFC-free, and we have set a goal of transitioning all units globally by 2025.
Progress Throughout our Value Chain
To accelerate progress toward our bold new climate targets, we are focusing on areas of greatest opportunity for impact, including regenerative agriculture and packaging. We continue to expand programs that help farmers produce better yields, improve soil health and decrease deforestation.
Potato fields yielding positive results at our demonstration farm in Gia Lai, Vietnam.
In particular, we collaborate with farmers to use low-emissions fertilizer, precision agriculture technology and cover crops that improve soil health, to reduce GHGs and capture carbon in the soil. Across our global network of Demonstration Farms, including in Mexico, Brazil, Pakistan, Thailand, India and Vietnam, we’re using sustainable practices to reduce carbon emissions while increasing yields and farmer livelihoods.
To improve the carbon footprint of our packaging, we are working toward an ambitious reduction target in our use of virgin plastic by light-weighting, finding new ways to use recycled plastic (rPET) and using low-carbon, renewable materials in our packaging.
In April 2020, we joined with Guidehouse, Mars, Incorporated and McCormick & Company to form the Supplier Leadership on Climate Transition consortium (Supplier LoCT), to engage and assist suppliers in climate action and solutions. This initiative provides suppliers with the resources, tools and knowledge they need to progress toward and achieve their climate goals. The collaborators mentor and train suppliers in GHG emissions reduction strategies and recognize suppliers for their progress, and in so doing help the Supplier LoCT members meet their own science-based climate targets.
Internal Carbon Pricing
We are implementing innovative processes that enable GHG emissions mitigation, including two internal carbon pricing programs. The first seeks to eliminate the carbon impact of employee air travel, while the second is aimed at building carbon impact into carrier selection for third-party logistics in North America. These efforts will help to reinforce climate considerations in our business decisions and we will continue to roll out additional programs that enable GHG emissions mitigation.
Reducing GHG Emissions from Seed to Shelf
We’re working to cut carbon emissions across our value chain by more than 40% by 2030 – more than doubling our previous climate objective. Our goal is to achieve net-zero emissions by 2040, one full decade earlier than called for in the Paris Agreement.
Here are some of the ways we’re doing it:
Measuring the Environmental Impact of our Product Portfolio
We are committed to understanding the full environmental impact of all our products.
Sustainable from the Start
We’re working to put sustainable thinking at the center of product design. Created in 2017, our Sustainable from the Start program empowers product developers to consider the environment at each stage of the product life cycle, from design, manufacturing and packaging to transportation and end of life. It provides tools to estimate carbon and water footprints of products in development that can then be compared against category or product average benchmarks. The tools also help determine the recyclability of packaging formats chosen.
Transparent environmental labeling
We encourage consumers to make better choices for the planet through transparent environmental labeling. In 2020, we created guidelines for PepsiCo brands that serve as a best practices toolkit for on-pack sustainability communications, highlighting product sustainability attributes and encouraging proper packaging disposal. Created in partnership with the PepsiCo Design Center, the toolkit includes a set of icons intended to help our brands that seek to put elective environmental claims on-pack.
1. Measured versus a 2015 baseline.
2. Measured versus a 2015 baseline. Third-party limited assurance provided. Results reflect the inclusion of the Pioneer Foods portfolio.
3. Measured versus a 2015 baseline. Results reflect the inclusion of Pioneer Foods, Rockstar and BFY; Pioneer Foods portfolio is included only in fuel/energy related activities within Scope 3; BFY and Rockstar are included only in purchased goods and services within Scope 3.
4. 100% renewable energy data refers to manufacturing locations only.