Today, PepsiCo reported progress towards its ambitious Performance with Purpose 2025 Agenda sustainability goals, announced last year. The company improved performance against goals in each of the Agenda’s three focus areas – Products, Planet and People – while returning over $7 billion to shareholders.
In its latest Sustainability Report, released today, PepsiCo also reasserted its aspiration to deliver sustainable change across the company, its value chain, the food and beverage industry, and the wider world through Performance with Purpose.
“Last year, we doubled down on Performance with Purpose, our vision to deliver top-tier financial results over the long term in a way that’s responsive to the needs of the world around us,” said PepsiCo Chairman and CEO Indra K. Nooyi. “Since then, we’ve been working hard to advance our 2025 Agenda, from making more nutritious products, to limiting our environmental footprint, to empowering people and the communities where we do business. As this year’s Report shows, we are making real, meaningful progress all over the world.”
Highlights from PepsiCo’s 2016 Sustainability Report include:
- Products: PepsiCo reduced added sugars, saturated fat and sodium in its beverage and snacks portfolio volume in 2016, compared to 2015 baselines. The company also continued to move its business towards more nutritious products, increasing net revenue from its Everyday Nutrition portfolio to 27 percent of the company’s total and delivering more than 260 million servings of nutritious foods to communities in need.
- Planet: PepsiCo reached one-quarter of its 2025 goal for annual water replenishment, with approximately 2.7 billion liters locally replenished in high-water-risk watersheds. It also worked with the PepsiCo Foundation and partners to reach more than 2 million people with safe water access in 2016 alone (bringing the total to 11 million people between 2006 and 2016).
- People: Through its expanded Sustainable Farming Initiative (SFI), PepsiCo directly engaged with farmers who grow 34 percent of the crops it sources. This program helps growers and their communities get more out of the work they put in while reducing water usage and greenhouse gas emissions (GHGs). In 2016, PepsiCo also increased female representation among its management to 38 percent and empowered 6 million women and girls through investments in local communities (reaching nearly 50 percent of its 2025 goal).
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While critical progress has been made across the Performance with Purpose 2025 Agenda goals, Dr. Mehmood Khan, PepsiCo’s Vice Chairman and Chief Scientific Officer for Global Research and Development, emphasized that coordinated action at scale is vital in addressing interrelated challenges in public health and nutrition, climate change, resource scarcity and human rights.
“The global food system is at an inflection point,” he said. “The vast network of farmers, traders, processors, suppliers, manufacturers and retailers that feed our world must embrace change. This year, I have been inspired by the response to our new Performance with Purpose goals. We understand that there is much more to be done to achieve our objectives, but we also know that, by working together, we will succeed in creating a healthier and more sustainable future for us all.”
Sustainable Brands caught up with Dr. Khan to dig deeper into how PepsiCo is delivering on its 2025 Agenda.
What actions were most influential in delivering on PepsiCo’s water replenishment and safe water access goals? In which regions did you see the greatest improvements? What steps is it taking next to ramp up its water stewardship efforts and make good on its 2025 targets?
MK: PepsiCo’s water replenishment and safe water access goals are part of a holistic strategy aimed to rethink, replenish and reuse water across our value chain. And very important — our strategy also includes work with farmers to improve water use efficiency in agriculture, which is the largest user of freshwater.
On replenishment, our work is focused on returning locally the water we consume to make our foods and drinks in high-water-risk areas. In 2016, we replenished about 2.7 billion liters of water locally, more than a quarter of the way to our overall goal. In India and Jordan, we saw great results last year and replenished far more water than we consumed. To do it, we supplied Indian farmers with efficient irrigation equipment, trained them on efficient practices like using cover crops that help the soil retain more water, and invested in water-saving technology like i-Crop. In Jordan, we funded municipal water treatment to provide clean drinking water to residents, and worked with Jordanian water authorities to create ponds and dams that make water available for area residents and farmers. Those are some of the ways that we deliver our replenishment results. That said, we cap the local water replenishment benefit that we claim at 100 percent of PepsiCo’s local water consumption. Where we replenish more than we use, we don’t count that overage in our replenishment calculation because we don’t want overachieving regions like Jordan and India to inflate our global progress.
What’s next? We’re working to deliver improvements across our 8-point Positive Water Impact strategy. For replenishment, that means we’ll invest in high-risk watersheds and projects like reforestation, wetlands rehabilitation, aquifer recharge and seasonal water storage. Already important work is underway with The Nature Conservancy across Latin America and here in North America. And we’ll continue to apply those learnings in our work around the world, keeping in mind that every single replenishment project must support the local community and deliver quantifiable, local benefits.
For our safe water access goal, we’ll build on what we’ve learned in reaching 11 million people over the past 11 years. Going forward, the PepsiCo Foundation will focus on programs in China, India and Latin America, where the need for safe water access is greatest and we have the ability to reach large number of people and maximize impact.
How is PepsiCo engaging farmers to deploy responsible agricultural practices and build resilient communities? What are some of the most significant changes the company has witnessed since the rollout of the program?
MK: Our efforts to sustainably source ingredients, drive down GHGs, limit water use and respect human rights are all intrinsically related. We tackle all of them through our SFI. It’s a holistic way we work with our direct growers to improve economic, social and environmental outcomes on farms around the world. Our procurement and agricultural teams have been in fields rolling SFI out since 2013, and we now have active programs with growers in 33 countries. Our goal is to expand it to 7 million acres over the coming years and help these farmers get more crops from their efforts, use less water, create fewer emissions and have better protections for workers. That kind of engagement, in turn, helps us meet our sustainable sourcing and other sustainability targets, as well as supports our secure supply of crops.
There are fascinating learnings from all around the world that we’re folding into the continued expansion of SFI. In Maharashtra, India, we worked with farmers on about 2,600 acres to replace flood irrigation with drip irrigation and that alone helped save more than 800 million liters of water last year. And that’s not just us claiming it — it’s validated by Deloitte. Another example, in water-stressed regions of the UK, we set a five-year goal to reduce by 50 percent the GHGs and water use on the farms of our local potato growers. And we achieved it. That was done by applying technology and techniques developed with Cambridge University to grow potatoes for our Walkers crisps. Now, we are applying that knowhow elsewhere. It’s an example of the kind of change we’re working to scale through SFI.
In the report, you speak to the need for collaborative action across the value chain to create a healthier future. How is PepsiCo engaging various players across the value chain and encouraging them to buy into and help drive the systemic change the company aims to create? What areas have thus far presented the most significant challenges?
MK: In delivering on Performance with Purpose as well as in our ambitious new goals, our greatest assets are PepsiCo’s scale and our depth and expertise in a variety of areas. What’s really powerful is when we combine these two strengths. An example is operational water use efficiency, where we have already implemented effective water-saving technology across our vast global manufacturing network.
Now, the challenge is how we bring niche technologies and innovative industry players to the table not just to tackle issues across PepsiCo’s value chain, but to deliver solutions that are applicable to other companies and across economies. There’s a lot more we need to do in the precompetitive space. For example, creating new, biodegradable, compostable packaging materials. Developing new uses for materials that are considered waste today. Investing in renewable energy solutions that are scalable and economical. Creating a secure supply of healthier, sustainably produced cooking oils that can meet changing consumer demand and growing industry demand.
A great example of this is the Midwest Row Crop Collaborative (MRCC), a pre-competitive group addressing urgent agricultural and environmental issues in the U.S. Together, partners including Cargill, Environmental Defense Fund, General Mills, the Kellogg Company and World Wildlife Fund are working to expand agricultural solutions that protect air and water quality and enhance soil health, while also focused on producing enough food to feed the world’s growing population.
What’s unique about the MRCC is that it’s an “end-to-end” partnership aimed to deliver systemic and sustained change. Findings from soil health and watershed pilots currently underway in Nebraska, Illinois and Iowa can be replicated through some of the largest agricultural players involved. At the same time, MRCC is working to advance public policies and programs to scale the adoption of conservation practices. There could be major and necessary unlocks through collaboration like this.
Delivering systemic change requires that we conceive of new ways of operating and reimagine possibilities. It means we have to learn, implement and improve in our approach — continuously and rapidly. And the economics have to work, meaning we have to explain the return on investment and the benefits of new ways of working to business partners, to investors, to consumers, even to competitors and critics. Delivering systemic change requires urgency to act and fortitude to stay the course. These are all challenges that we at PepsiCo embrace.
****Across PepsiCo’s top ten beverage and food markets globally.