Sustainability LIVE: Climate Week – PepsiCo Decarbonisation

November 12, 2024

undefined mins

Jim Andrew, Chief Sustainability Officer at PepsiCo, discusses the company’s decarbonisation achievements and the systemic shifts needed for sustainability

At Sustainability LIVE: Climate Week NYC, PepsiCo’s Chief Sustainability Officer, Jim Andrew, shared insights on the food and beverage giant’s path to decarbonisation and system-wide transformation.

Speaking with moderator Scott Birch, Jim highlighted PepsiCo’s recent achievements in reducing emissions, fostering collaborative partnerships, and driving change across its extensive global value chain.

In a conversation filled with examples of concrete actions, Jim detailed the critical role of systemic collaboration, policy, and innovation in realising PepsiCo’s ambitious sustainability goals.

Decarbonising operations: PepsiCo’s approach to Scope 1 and 2 emissions

PepsiCo has made substantial progress in reducing its direct emissions (Scope 1 and 2), which Jim attributes to a multi-faceted approach encompassing operational efficiency, employee engagement, and sustainable infrastructure.

Since 2015, PepsiCo has decreased its Scope 1 and 2 emissions by 33%, including a 13% reduction in 2022 alone.

Jim notes that PepsiCo’s large, complex operations, which span beverage production and extensive food manufacturing, require a targeted approach that addresses each part of the supply chain.

A key component of this strategy is PepsiCo’s ‘Sustainable Operations from the Start’ programme, which ensures new facilities incorporate advanced energy efficiency standards and renewable energy from inception.

Jim cites PepsiCo’s new US$320m facility in Poland, which features rooftop solar, off-site solar and extensive electrification, as a model for sustainable design.

“These facilities have 30- to 50-year lifespans,” Jim explains, underscoring the importance of making long-term investments in green infrastructure.

Beyond infrastructure, PepsiCo’s fleet electrification efforts have also contributed to emissions reductions. In 2022, the company added 700 electric vehicles (EVs) to its fleet, including the launch of Tesla’s class-eight electric semi-trucks.

“The transition to EVs is crucial, but without an updated electric grid and charging infrastructure, progress is limited,” he notes, illustrating how system-level obstacles can hinder even the most well-planned sustainability initiatives.

Jim Andrew, Chief Sustainability Officer at PepsiCo

Managing Scope 3 emissions: Partnering for sustainable transformation

For PepsiCo, like most consumer goods companies, Scope 3 emissions—those produced across the value chain—make up the majority (94%) of the company’s carbon footprint.

With a supply chain of over 100,000 suppliers, PepsiCo recognises the need for systemic change and collaboration with suppliers to reach its climate targets.

To that end, PepsiCo has set clear sustainability expectations for its top 2,000 suppliers, including requirements for science-based targets, Scope 1 and 2 emissions reporting and decarbonisation plans.

For agricultural suppliers, PepsiCo has added an emphasis on regenerative agriculture to promote long-term soil health and carbon sequestration.

“We’re looking for partners who are aligned with our goals,” Jim says, noting that PepsiCo prioritises suppliers who demonstrate a commitment to sustainability.

PepsiCo’s approach to managing Scope 3 emissions includes economic incentives to encourage suppliers’ sustainable practices. For instance, PepsiCo has signed a seven-year agreement with ADM, one of its major agricultural suppliers, to support mutual investments in sustainability.

The company has also implemented financial incentives for suppliers in countries like Brazil and Mexico, providing quicker access to capital for those meeting sustainability benchmarks.

“There’s a perception that sustainability always costs more, but we’ve found that it doesn’t have to,” Jim says, underscoring PepsiCo’s efforts to dispel myths and provide realistic financial frameworks for sustainable investment.

Jim Andrew, Chief Sustainability Officer at PepsiCo

The need for system-wide change: Collaborating to address complex global challenges

Jim emphasises that achieving PepsiCo’s sustainability goals will require more than changes within the company; it will necessitate a system-wide shift across sectors.

“Climate change is the largest change management effort society has ever faced,” he states, explaining that transformative progress depends on collaborative action across agriculture, energy and transportation.

Using EVs as an example, Jim points out that while PepsiCo is ready to transition to electric vehicles, the limited availability of charging infrastructure and the need for an updated electric grid present significant challenges.

To tackle these complex, interdependent challenges, Jim advocates for strong governmental policies that can expedite infrastructure development and provide incentives for sustainable investments.

“System change requires policy, technology and incentives,” he says, highlighting how government action can help industries move faster and more cohesively.

An example of PepsiCo’s commitment to systemic change is its involvement in the Clean Energy Buyers Alliance (CEBA), a coalition of more than 400 companies working to increase access to renewable energy globally.

Through this alliance, PepsiCo collaborated with the Vietnamese government to implement policy changes that make power purchase agreements (PPAs) available, accelerating renewable energy adoption in the region.

“This is a significant step forward,” Jim notes, “and it showcases the power of collective action in driving policy that supports renewable energy”.

Engaging employees and fostering a sustainable culture

Jim also highlights PepsiCo’s commitment to embedding sustainability across its global workforce of 318,000 employees.

Initiatives such as PepsiCo’s ‘Recon’ programme engage employees in identifying localised sustainability improvements within their facilities. More than 200 ‘green teams’ have been established across PepsiCo’s operations worldwide, allowing employees to actively participate in the company’s sustainability efforts.

PepsiCo has also implemented a Travel Impact Programme (TIP) to reduce business travel emissions, nudging employees to consider alternatives to air travel.

The programme levies a charge on each flight taken, which is then allocated to PepsiCo’s agricultural projects to help offset emissions, reinforcing the message that individual actions contribute to broader company goals.

“It’s a small initiative, but it encourages everyone to think about their impact,” Jim says, emphasising how culture change at the individual level supports PepsiCo’s larger sustainability mission.

Jim Andrew, Chief Sustainability Officer at PepsiCo

Looking ahead: Scope 3 challenges and finding new partners

Reflecting on the road ahead, Jim acknowledges that Scope 3 emissions remain one of PepsiCo’s biggest challenges, requiring continual innovation and partnership-building.

“What keeps me up at night is Scope 3,” he admits.

To address these emissions, PepsiCo actively seeks new partnerships across sectors, tapping into technologies and solutions outside of its traditional supplier network.

Jim shares that PepsiCo is constantly scouting for partnerships in unexpected areas, from pharmaceutical industry water management solutions to innovative agricultural practices.

Jim underscores the need for continued collaboration with stakeholders and government officials to drive progress.

“Systemic change is a journey,” he says, encouraging companies across industries to work together to achieve ambitious climate goals.

In closing, Jim highlights the importance of learning from other sectors and remaining open to new ideas, whether through events like Sustainability LIVE: Climate Week YNC or in daily business operations.

PepsiCo’s commitment to addressing climate change, he notes, is about “moving fast and at scale”.

Through systemic collaboration, policy advocacy, and a shared vision with its partners, PepsiCo aims to lead the food and beverage industry towards a more sustainable future.