Thinking outside your walls: How the path to net zero requires a new approach to collaboration and knowledge sharing
Engaging the value chain around emissions reduction will be crucial to success, says PepsiCo.
Tackling emissions and achieving net zero has become a key part of every company’s environmental, social and governance (ESG) goals. “The threat of climate change is very real. It is one of the most important issues we will encounter in our lifetimes,” said Jim Andrew, PepsiCo’s chief sustainability officer. “What used to be hundred-year weather events are now happening every other year. We need to limit our planet’s temperature increase to 1.5 degrees Celsius to avoid even more severe consequences.”
Jim Andrew is Executive Vice President, Chief Sustainability Officer for PepsiCo.
It's a target that companies worldwide are seeking to meet — including many, like PepsiCo, that are part of the Science Based Targets Network, a group of companies, NGOs, consultancies and coalitions aiming to road-test measurement and reporting methodologies that can help maintain a balanced planetary ecosystem.
As part of PepsiCo Positive (pep+), a strategic end-to-end business transformation with sustainability and human capital at the center, PepsiCo reset its climate change targets, doubling the size of the task ahead of it. “We plan to reduce operational Scope 1 and 2 emissions by 75% and our Scope 3 value-chain emissions by 40% by 2030,” said Andrew. “In addition, we pledged to achieve net-zero emissions by 2040, one decade earlier than called for in the Paris Agreement. It’s not an easy task, but it is important to do for the future of the planet — and one we take seriously as one of the world’s biggest food and beverage companies.” To achieve those goals, PepsiCo has built out a climate action plan that includes scaling regenerative agriculture across the land it sources ingredients from, reducing virgin material usage in packaging and shifting to renewable electricity and fuels.
Alongside the environmental and social benefits of pep+, there are also business benefits. “We are building resilience for the future,” shared Andrew. “Our consumers are watching and factoring sustainability into the choices they make. This is an opportunity for growth and to create value for our shareholders.”
But for many companies on the path to net zero, it’s not always a straightforward journey, particularly when much of the emissions that make up a full greenhouse gas footprint can emanate from outside the four walls of your own manufacturing operations, like in the case of PepsiCo, where 93% of emissions come from its value chain.
This means companies need to be thinking differently and finding ways to support and encourage those along the value chain to also reduce.
“In order for PepsiCo to achieve our net-zero goals, we can’t underestimate the importance of our value chain embracing and implementing science-based goals of their own,” said Andrew. “Our science-based target covers everything from the farmers we rely on at the start of our value chain to our packaging manufacturers.” PepsiCo is asking all partners along the value chain — from suppliers to manufacturers and franchise bottlers — to set their own science-based targets. “It’s the biggest challenge in our journey to net zero. We know this is not going to be an overnight change. We are putting in place the levers and supports now that will have an impact in the future. We don’t have all the answers yet, but we’re making sure that what we do know, we’re sharing to maximize our impact,” said Andrew.
Asking suppliers and associated companies to overhaul the way they work is no small feat, but PepsiCo is taking a three-pronged approach centered around the principles of educating, enabling and incentivizing. An external-facing program, the Sustainability Action Center, aims to engage and equip value chain partners with tools to undergo their own sustainability journey. “We provide a quick assessment to determine their climate maturity level, and those results will then direct them to targeted resources appropriate to their level,” said Andrew. “It’s designed to avoid information overload and to encourage step-by-step action.” A global summit also educated partners on PepsiCo’s pep+ goals and best practices and a new Positive Agriculture playbook has been openly shared with all agricultural suppliers to provide guidance on how to implement regenerative practices on farms, which will deliver an overall reduction in greenhouse gas emissions.
But education is only half the task: To enable partners to make meaningful changes, PepsiCo announced a new initiative: pep+ RENew. “It’s a first-of-its-kind collaboration with Schneider Electric, to provide value chain partners with easy access to renewable electricity and speed their transition to renewable energy through PPAs and other options,” said Andrew.
And incentivizing companies to make a change is vital, too. “We know we’re making a big ask of those we work with, and that it’s not easy,” said Andrew. “We can use our size to send demand signals with others, and also our purchase decisions are meaningful.” In 2021, PepsiCo joined the EPA’s Green Power Partnership, ranking in the top 15 companies nationally in the last two quarters. “We are also members of the Clean Energy Demand Initiative of the State Department, which seeks to build RE demand in developing countries, with the first being Vietnam,” said Andrew.
Recognizing that innovation comes from small startups as well as big corporations, the company has also developed PepsiCo Labs. “It’s a place where we can pilot and scale new innovations,” said Andrew. More than 2,000 startups that could positively impact all parts of the PepsiCo business have been explored, with 150 pilots across 70 countries being put into action. “We’ve taken more than 25 of those ideas and supported them, actively scaling them to become businesses,” said Andrew.
It’s all part of making sure that the company leaves the planet in a better place than it was found. “Companies have to engage their value chain to be impactful in reaching their net-zero goals,” said Andrew. “It’s not possible to do it alone, no matter how big you are. You have to bring everyone else along with you to reach those targets and to ensure that we’re helping the planet.”
Read more about PepsiCo’s progress towards its pep+ ambition here: https://www.pepsico.com/our-impact/sustainability/2021-esg-summary/