Forging a Path to Net-Zero

As Chief Sustainability Officer of one of the world’s leading food & beverage companies, Jim Andrew has two important mandates. The first is to deeply embed PepsiCo's aggressive transformation agenda – pep+ (PepsiCo Positive) — across their entire value chain, globally. With ambitious 2030 goals, their entire business has eight years to fundamentally transform the way it operates, and it is essential they take action and make rapid progress every year.  Jim is tasked with making sure there are clear paths and plans to achieve each of the targets and to provide the case for change, tools, and incentives to ensure PepsiCo continues to move forward at pace.

In 2019, following the disturbing findings in the 2018 IPCC Report, PepsiCo accelerated the revaluation of their science-based climate target, through comprehensive modelling and forecasting, to develop an end-to-end strategy for their entire business. In 2021, PepsiCo’s 1.5°C aligned 2030 reduction target was approved by the SBTi and announced, along with a goal of reaching net-zero emissions by 2040. That stake in the ground marked the acceleration of their race to reduce Scope 1, 2, and 3 emissions, including a coordinated effort to decarbonize their fleet (Scope 1), a rapid shift to renewable electricity (Scope 2), and a whole-of-company effort to reduce their indirect emissions (Scope 3).

Transforming the Way the Business Operates

To reach aggressive milestones like these, PepsiCo need to not only transform the way the business operates, but to embed sustainability into each associates’ decision making – no matter their function or role. The second mandate is to cultivate what Jim refers to as a “pep+ mindset” across the company. They need all 300,0000 associates to be educated, engaged and thinking through the full implications of every decision. No longer is it enough to only consider operational and financial aspects, they need everyone, everywhere and every day to also put sustainability considerations at the heart of every decision.

One way they are looking to accelerate this pep+ mindset is by introducing the Business Travel Inset Program (B-TIP). The program collects a fee from each business unit that is directly linked to the greenhouse gas emissions generated by each associate’s business-related air travel. They then invest those fees into regenerative agriculture projects within their supply chain to reduce and sequester an equal amount of carbon.

And while the “insetting” of the carbon is important, perhaps the most important aspect of the program is the addition of a step in the company’s travel booking tools, which require their associates to confirm the business necessity of their travel before they can book it and acknowledge that a fee will be taken from their business’ budget to balance out the carbon ‘cost.’

This highly visible policy change serves as a regular reminder, and education moment, to employees throughout the business to be mindful of the true cost of the decisions they make, while helping to reduce PepsiCo's Scope 3 emissions in the process.

Balancing out the Cost

Putting an internal price on carbon, and on business air travel in particular, is an effective and easy first step other companies can take to help build the sustainability mindset of their employees. Below are some learnings from the PepsiCo journey so far:

• Walk before you run: This wasn’t a company-wide initiative to begin with, and they didn’t start with insetting. Their first pilots were run with members of the Global Office of Sustainability. The team wanted to visibly demonstrate their climate leadership, so they calculated the GHG impact of their travel and found projects to help offset it. From there, they explored moving from projects outside their supply chain (offsets) to projects completed within their supply chain (insets). Their last step was launching the program company wide, and the prior work laid a firm foundation for getting it approved.

• Choose how much you want to control: Before putting an internal cost on GHG emissions, PepsiCo decided whether they were going to inset or offset the relevant emissions.

• Get to know your supply chain: Society is rooted in agriculture. As a food company, it was easy for PepsiCo to find agriculture projects within their value chain to generate the needed insetting credits. Other industries might have to get creative to identify a project – but chances are it can be done. Ask, what does your company buy or produce that comes from the earth? Do you have a cafeteria? Do you buy paper goods? Do you make anything with natural fibers? All of these might be good places to start when looking for a place within the value chain that your company can inset Scope 3 emissions.

• Find a trusted partner: Finally, look for a trusted partner. Land sector GHG accounting is a new field and incredibly complex. Make sure to find a partner with a proven track record, backed by science, with a clear process for reporting progress. PepsiCo chose to work with the Soil and Water Outcomes Fund (SWOF) on a project in Northern Illinois. They take regular on-farm emissions and sequestration measurements and calculate how much investment is needed from PepsiCo to finance projects that will neutralize the impact of their travel. There are a number of similar organisations who can help you get started on your own journey.

The pandemic brought to light how much business travel before COVID-19 wasn’t necessary. In 2020, global business travel fell by more than 50% as the world shifted to working online, with many private sector organisations reporting growth in quarterly earnings.

Some travel will always be necessary, but with the new perspective and innovative digital tools the pandemic introduced, the answer to “what is necessary?” has changed, as did the empowerment to challenge what was normalized as business-as-usual. It is with this empowerment and innovation that PepsiCo is challenging their associates to think and act differently and to truly bring sustainability into their business decision making so their business, planet, and communities are successful in the short and long-term. This shift in mindset takes time, but the introduction of programs like B-TIP is helping to advance their commitments to progress, educating their associates, and moving us all closer towards the transformation we desperately need.