2019 SUSTAINABILITY REPORT: OUR STRATEGY


A message from our CEO, Ramon Laguarta


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The past few months have been among the most challenging in recent memory.

COVID-19 has profoundly transformed how we work, parent, shop, learn, and socialize. It has caused unfathomable grief and taxed our social infrastructure like nothing before, revealing hidden societal pain points, reopening old wounds, and creating fresh ones.

At PepsiCo, we have been working with our Foundation to offer immediate community relief where we can. That includes donating more than $60 million to support people impacted by COVID-19, providing 50 million meals, protective gear for healthcare workers, and other vital resources.

But we know that systemic problems require systemic solutions, and the pandemic has brought into sharp focus the larger need to address our long-term sustainability challenges. It is clearer than ever that organizations like PepsiCo and our partners need to take bold steps to catalyze positive change and bring about a stronger, more sustainable future for us all.

Over the last few years, we’ve made important progress toward this goal. We reoriented our company around a new mission—to Create More Smiles with Every Sip and Every Bite, with a focus on bringing smiles to our consumers, customers, associates and communities, the planet, and shareholders—and a new vision—to Be the Global Leader in Convenient Foods and Beverages by Winning with Purpose.

We also set three lofty aspirations that will help us achieve these goals: becoming Faster by winning in the marketplace; Stronger by transforming our capabilities, cost, and culture; and Better by integrating purpose into our business strategy and brands, whilst doing even more for our planet and people.

HIGHLIGHTS VIDEO


Learn more about the progress PepsiCo is making to help build a more sustainable food system.

As part of our efforts to become Better, we were proud to sign the Business Roundtable’s 2019 Statement on the Purpose of a Corporation. This standard for corporate responsibility aligns with our existing values and strategy to lead the company for the benefit of all of our stakeholders.

But we know that being a Better company is about more than words. It’s about doing the most good for the most people. That’s why we are focused on using our scale and expertise as one of the world’s leading food and beverage companies to tackle the long-term challenges facing the global food system.

Even before the COVID-19 pandemic, the food system was under tremendous stress.

Around the world, topsoil is degrading, packaging waste is piling up, more regions are experiencing water scarcity, and climate change is dangerously accelerating. These pressures threaten the long-term ability to feed a growing global population.

PepsiCo has not only an opportunity, but a responsibility to use our scale and reach to help build a more sustainable food system—one that can provide nutrition and enjoyment, and drive economic growth and social development, while protecting and restoring the planet.

To do so, we’re transforming our business in fundamental ways, including how we grow our food, make our products, and inspire positive change in our communities.

We are aiming to grow our food in a way that regenerates land, ecosystems, and farming communities.

That means making agriculture more intelligent, inclusive, and gentler on the earth:

  • We continue to expand our Sustainable Farming Program (SFP)reaching more than 40,000 farmers around the world with training on sustainable farming practices like field agronomy, efficient fertilizer- and water-use, plant protection techniques, and respect for workers’ rights.
  • We’ve set up a global network of Demonstration Farms—more than 230 farms across nine countries—with a focus on teaching farmers how to increase yields, whilst minimizing their environmental footprint and enabling impactful peer-to-peer learning with neighboring farms outside of our supply chain.
  • We’re advancing diversity and respect for human rights. For example, we are empowering female farmers in India through our collaboration with the US Agency for International Development (USAID) to help make agriculture more inclusive and productive.

We are aiming to make our products in a way that is circular and minimizes waste.

That means replenishing the water we use locally, using water more efficiently, and helping ensure water security:

  • In 2019, PepsiCo locally replenished more than 1.6 billion liters of water through watershed conservation projects in high water-risk areas around the world.
  • We joined the Alliance for Water Stewardship (AWS) with the aim to adopt the AWS’s globally recognized best practice in water stewardship across our high water-risk facilities and have completed four pilots around the world.
  • We’ve delivered safe water access to 44 million people in underserved communities since 2006, far surpassing our goal of 25 million people by 2025. We are now setting a new goal to reach 100 million people by 2030.

We’re also accelerating our efforts to reduce greenhouse gas emissions throughout our value chain:

  • In April, we signed the UN’s Business Ambition for 1.5oC, reinforcing our commitment to science-based targets and more aggressive climate action.
  • We announced that we are shifting to 100% renewable electricity through a range of solutions for direct operations in our largest market, the United States, building on progress we’ve made elsewhere around the world.
  • We continue working to limit emissions from our fleet of vehicles. Compressed natural gas vehicles represent about 46% of Frito-Lay North America’s long-haul inventory, and over the life of our EV fleet, we will have driven 12 million all-electric miles.
  • And our ‘Sustainable from the Start’ program is providing our teams with tools to consider the environmental impact of their decisions throughout the innovation process, including an estimate of the carbon and water footprints of a product and the recyclability of its packaging.

We continue to drive progress toward a world where plastics need never become waste by focusing on reducing, recycling, and reinventing packaging:

  • In 2019, we announced our goal to reduce our virgin plastic content across our beverage business by 35% by 2025. We are also working to make 100% of our packaging recyclable, compostable, or biodegradable by 2025—we are about 90% complete.
  • Through innovation and partnerships, we’re reinventing packaging. We’ve piloted plant-based, compostable packaging for brands like Lay’s Artesanas in Chile, which has made environmental sustainability a core part of its value proposition. In addition to being compostable, these bags are primarily made from renewable, plant-based materials and use less energy to produce—reducing their carbon footprint by 60%.
  • Between 2018 and early 2020, PepsiCo and The PepsiCo Foundation have donated more than $65 million globally to advance recycling and collection.

Finally, we are aiming to inspire consumers and communities to make better choices and enable positive change.

That means delivering a portfolio of options that minimize the use of single-use plastics, while still meeting consumers’ individual needs, whether they’re at home, away from home, or on-the-go:

  • SodaStream, the #1 sparkling water brand in the world by volume,1 is changing consumer behavior, and we estimate expansion of the business will avoid 67 billion single-use plastic bottles by 2025.
  • We’re rolling out new water stations that allow consumers to customize still or sparkling water with a range of flavors, along with a QR code for reusable bottles and an app that remembers your preferences, lets you set hydration goals, and automatically tracks your water consumption.

We’re also continuing to integrate purpose into our brands, using our scale to inspire and lift up people and communities:

  • LifeWTR is using its bottles as canvases to highlight emerging artists and designers around the world and working with organizations like Scholastic to provide art supplies to communities that don’t have art classes in school. LifeWTR bottles will be made from 100% rPET starting in 2020.
  • We launched the Stacy’s Rise Project, which provides $10,000 grants and business support to women entrepreneurs in the food and beverage space. This year, we expanded the Project from five entrepreneurs to 15.
  • In the U.S. and Latin America, Doritos Rainbow has partnered with the It Gets Better Project to celebrate and support the LGBTQ community.

At the same time, we continue improving choices across our portfolio:

  • We are reducing added sugars, sodium, and saturated fats in certain products and expanding our offering of products like baked chips, which have 65% less fat than regular chips, as well as zero- and low-sugar beverages. Today, you can find Lay’s Oven Baked in 23 markets around the world and Pepsi Zero Sugar has expanded into 95 markets.
  • We’re also broadening our portfolio of options by acquiring new brands that help meet consumers’ needs as part of a balanced diet, including Pioneer Foods, BFY Brands (the maker of PopCorners), Cytosport (the maker of Muscle Milk), and Bare.

We’ve laid out an ambitious agenda, focusing on the areas where we believe we can have the most impact. While we’ve made great progress, we know there’s even more to be done and that we can’t do it alone. Partnership is more important than ever before, and we’ll continue to work with our peers, governments, NGOs, and the communities where we operate, leveraging all the tools at our disposal to advance progress. We also issued our first “Green Bond” in 2019, generating nearly $1 billion to fund key sustainability initiatives.

With the help of partners and the leadership of our first-ever Chief Sustainability Officer, Simon Lowden, we will look to build on the tremendous progress we’ve made and double down on our efforts in the months and years ahead. We know that the success of our company and the prosperity of our societies go hand in hand. Only by working together can we emerge from the current crisis stronger than before, less vulnerable to future shocks, with more resilient communities, a more sustainable food system, and a brighter future for all.

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Ramon Laguarta

PepsiCo Chairman of the Board of Directors and Chief Executive Officer

June 2020


1. Total global volumes taken from GlobalData’s Global Packaged Water Report 2018, compared with SodaStream company information.

COVID-19 RESPONSE

As the coronavirus (COVID-19) continues to spread throughout the world, we are taking proactive steps grounded in science to protect the safety of our products, care for our more than 260,000 associates and their families, and support our communities around the world. To help meet the needs of those hardest hit, PepsiCo has provided more than $60 million to provide vital resources to those who need it most, including more than 50 million nutritious meals for at-risk populations, protective gear for healthcare workers, testing, and screening services in underserved communities in more than 40 countries. People and communities are the heart of PepsiCo’s business, and we are fortunate to be in a position to give back in this time of need.

More than

$60 million and

50 million meals donated

in early 2020 to support communities most impacted by the COVID-19 pandemic 

Learn More

OUR FOCUS AREAS & KEY HIGHLIGHTS


Our strategy for building a more sustainable food system focuses on six priority areas. These address the most pressing challenges facing the food system and offer the most opportunity for PepsiCo to use our global scale to make a positive impact at a systemic level:

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Nearly 80% of our potatoes, whole corn, oats, and oranges are sustainably sourced, progress toward our goal of 100% by 2020.


Learn more about how we’re helping to build a more sustainable food system.

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We delivered safe water access to 44 million people in underserved communities since 2006, and set a new target to reach 100 million people by 2030.


Learn more about how we’re working to support a long-term, sustainable supply of water for all.

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In 2019, we set a new target to reduce 35% of virgin plastic content across our beverage portfolio by 2025.


Learn more about how we’re working toward our vision of a world where plastics need never become waste.

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As of 2019, 47% of our beverage portfolio volume in our top 26 beverage markets met our 2025 added sugar reduction target, progress toward our goal of 67%.


Learn more about how we’re making it easier for consumers to make choices that feel good for themselves and are good for the planet.

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We reduced absolute GHG emissions by 6% across our value chain in 2019, progress toward our goal of 20% by 2030.


Learn more how we’re taking action to address climate change and reducing greenhouse gas emissions across our value chain.

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Since 2016, we've invested $38.5 million to support initiatives that provide women with essential resources for workforce readiness and programs that support women in the food system and farming.


Learn more about how we're advancing human rights, promoting diverse and inclusive workplaces and increasing the earnings potential of women around the world.

OUR CSO's PERSPECTIVE


simon-lowden

“From the way we grow our crops to the transport of our products and the coolers that display our brands, PepsiCo has already made significant progress in reducing greenhouse gas emissions throughout our value chain — but we know tackling climate change will require even more, and we can't lose sight of that.”

Simon Lowden
Chief Sustainability Officer

What are some of your observations in your first year as PepsiCo’s Chief Sustainability Officer?

The world is facing some big challenges, but one thing that encourages me is the collaboration on sustainability across the CPG industry and the business community more generally. When it comes to sustainability, it’s about collective action and making progress that’s essential to the future of our businesses and planet. The business community is stepping up and setting ambitious targets that we all know will require partnership, and there is genuine excitement about driving change together. What is critical now is that these plans are followed up with concrete actions … and we at PepsiCo will make sure we do.

Since taking on this role, I have also been bowled over by the passion PepsiCo associates have for sustainability. We have a lot of energy from both the top down and bottom up, showing dedicated leadership to do our part in helping to build a more sustainable food system. That’s the kind of energy we need to drive positive change.

How do PepsiCo’s brands fit into the company’s sustainability strategy?

We’re going to make supporting the communities and issues that matter most to both our consumers and our planet a priority for our brands. 

PepsiCo’s brands are enjoyed by consumers more than a billion times a day—they’re powerful drivers of culture with enormous global reach. There is responsibility and opportunity that comes with that. As we continue to accelerate efforts across our business toward a more sustainable future, harnessing brand purpose has the power to inspire consumers and bring about positive change.

So, in addition to manufacturing our products in a responsible way and investing in programs that help new products be sustainable from the start, we’re also developing brand propositions that inspire, make life more enjoyable, restore and care for our planet, and help communities thrive. The scale and reach of our brands have the power to be a real force for good.

With urgent calls for climate action rising, how is PepsiCo thinking about climate change? 

There’s no question that climate change is one of the defining issues of our day. In some ways the current pandemic is shining a spotlight on some vital truths, like the importance of heeding the advice of experts and following the science, as well as what can be accomplished when the global community rallies behind a critical issue. Global emissions have fallen significantly because of sheltering in place, revealing clean air and visible horizons for the first time in decades in some of the most polluted parts of the world, which also reminds us the direct impact our actions have on the planet.

But even before COVID-19, the threat of climate change has demanded faster and bolder action from all of us. The resilience of our food system and the future of our planet depends on it. It’s why earlier this year we announced that we’re shifting to 100% renewable electricity for direct operations in our biggest market, the U.S., which builds on progress we’ve made globally, including nine countries in our European operations that already meet all electricity needs from renewable sources. It’s also why we recently signed the Business Ambition for 1.5°C pledge, committing to reduce our emissions in line with limiting global warming to 1.5°C, while also developing a long-term strategy for achieving net-zero emissions by 2050.

From the way we grow our crops to the transport of our products and the coolers that display our brands, PepsiCo has already made significant progress in reducing greenhouse gas emissions throughout our value chain—but we know tackling climate change will require even more, and we can’t lose sight of that. 

How are you thinking about the future of agriculture, as part of PepsiCo’s sustainability agenda?

About 70 percent of the world’s fresh water use, and roughly a quarter of global greenhouse gas emissions, comes from agriculture alone. Transforming agriculture to support the growth of a more sustainable food system is vital, and we’re in a position to help catalyze systemic change.

Agriculture is the foundation of PepsiCo’s business—we use more than 25 crops sourced from across 60 countries to make our foods and beverages. So, our scale and reach means that the practices we use, and the standards we apply, can have significant influence and impact.

Through our Sustainable Farming Program, we work with more than 40,000 farmers around the world providing training and techniques like efficient fertilizer- and water-use, helping them increase productivity and resiliency, as well as support for workers’ rights. And on our more than 230 Demonstration Farms, we’re testing and measuring local techniques and solutions, and then hosting Innovation Days for peer-to-peer learning with neighboring farmers. That best-practice sharing enables a ripple effect for wider adoption of sustainable practices, as well as improved livelihoods. I see a lot more potential in this area.

Additionally, through regenerative agriculture practices—like introducing cover crops—we can actually sequester carbon into the soil, improving the climate impact of the farm while also increasing soil fertility and supporting biodiversity.

So sustainable agriculture is absolutely a big part of our agenda, and key to making progress toward our ambitious goals. I’m really proud of the great work our teams are doing in this area and see a lot of opportunity for us to have a big impact.

DOWNLOADABLE REPORT


For a summary of our 2019 Sustainability Report and other downloadable PDF reports, visit our Downloads Page.

Downloads Page
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PEPSICO SUSTAINABILITY RESOURCES


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