Copy of PepsiCo’s next-generation answer to the sustainability question

In 1893, pharmacist Caleb Bradham created “Brad’s Drink,” which was intended as a cure for upset stomachs . The beverage was later renamed Pepsi-Cola in a bid to stay competitive.?

This was the first in a series of reinventions that Pepsi has undergone throughout its 100-year history, culminating in its current form as PepsiCo , one of the world’s largest food and beverage companies .??

It would be easy for a business like PepsiCo to rest on its laurels, but its journey so far makes it clear that reinvention is very much in the company’s DNA.?

In fact, sustainability has become the name of the game, says Wern-Yuen Tan, CEO of APAC and chief commercial officer at PepsiCo.

“There is an urgency when it comes to sustainability concerns driven by the critical state of our planet but also by the expectations of our consumers, investors, and the communities we serve,” he says.?

Where profits and purpose meet?

PepsiCo isn’t new to the sustainability beat - it first started exploring greener processes in 2006 with its “Performance with Purpose” program. That saw the company shift to using all-electric vehicles, invest in renewable energy, and emphasize the role of grower-sourced crops.?

However, intensifying environmental challenges such as climate change, water scarcity, and plastic waste are spurring the company to do more - and faster.?

“Acting now isn’t just about avoiding the adverse effects of these global challenges but seizing the opportunity to lead and innovate for a sustainable future,” Tan shares.??

Indeed, research shows that sustainable companies benefit from more value creation, lower costs, and other non-financial rewards.?

PepsiCo experienced this for itself when it began cutting out the use of virgin plastics and incorporating more sustainable farming practices, which Tan says resulted in “more resilient and responsible supply chains.”?

Going further with Pep+?

In the face of mounting environmental challenges, PepsiCo has ramped up its sustainability efforts with its PepsiCo Positive (Pep+) strategy. Launched in 2021, Pep+ aims to transform the entire business - from how it sources its ingredients to how it creates and sells its products.?

Many other businesses around the world are also trying to improve sustainability in this way. A study from Ernst & Young found that eight in 10 supply chain executives are increasing efforts toward sustainability in their operations.?

Tan explains that three pillars - positive agriculture, positive value chain, and positive choices - form the foundation of Pep+, which are underpinned by specific, time-bound goals.?

For example, under positive agriculture, the company is encouraging the adoption of regenerative practices across the seven million acres of land that it uses to grow its crops and ingredients by 2030.?

“We’re also aiming to reduce our value chain’s absolute greenhouse gas emissions by 40% by 2030, including a 75% reduction in emissions from our direct operations,” Tan says. The company is gunning to completely shift to more sustainable packaging and increase the diversity of ingredients in its products as well.?

“We want to be able to offer choices that align with our customers’ evolving preferences and well-being but which also reflect our belief that the business must play a role in driving positive change,” he says.?

Change across the chain?

Since its implementation, Pep+ has been expanded across several components of PepsiCo’s supply chain, with renewables taking center stage.?

In APAC, 97% of the electricity in the company’s owned operations comes from renewable sources. Apart from that, this year, the firm will open four greenfield facilities in the region - two in China and one each in Indonesia and Vietnam - that will be operating with net-zero emissions from the start.???

Further, the company is supporting electrification by adopting more electric vehicles into its logistics processes. Its snacks business in China, for instance, increased the use of EVs between 2022 to 2023 and also boosted the distance travelled by its 37 electric delivery vehicles by 80%.?

Additionally, it’s running several pilot projects: electric trucks are being rolled out in Thailand, while Australia is now a testing ground for using hydrogen fuel for long-haul routes.?

Another focus for the business is investing in open innovation on new projects and inventions that line up with the company’s vision for a net-zero future by 2040.??

For instance, the company’s Greenhouse Accelerator program supports APAC startups involved with the circular economy, sustainable agriculture, and climate solutions spaces. The winner of the 2023 edition, Powered Carbon , produces eco-friendly fertilizers with a 25% smaller footprint than its conventional counterparts, based on the early testing results.?

As part of the accelerator program, participants also get one-on-one mentoring with PepsiCo’s senior executives, who work closely with these founders to assess and solve their unique challenges.?

The program doesn’t just provide startups with access to resources or mentorship, but it also enables them to try out their innovations. Powered Carbon, for example, has tested its fertilizer on potatoes in PepsiCo’s Guangdong Farm in China.?

Another participant, Adiona , trialed its SaaS solution for last-mile delivery route planning and optimization at PepsiCo’s Tingalpa plant. Early results showed a significant reduction in both distance traveled and carbon dioxide emitted from Tingalpa’s logistics routes.?

In total, the 2023 edition saw seven pilot projects being launched, with more expected to come this year after the firm opened applications for 2024 .?

Digital for agility and resilience?

What would a company’s sustainability strategy be without strong digital capabilities to empower it??

For PepsiCo, its digital-driven investments are spread across various solutions, including drone monitoring, smart manufacturing automation, and real-time data analytics.?

These solutions enable more efficient decision-making and help PepsiCo maximize its resources. In China, for example, PepsiCo used soil analytics tech to “shorten feedback loops from months to days, helping farmers optimize fertilizer use to enhance crop yields and reduce input costs,” Tan shares.??

That said, PepsiCo encountered “unique challenges” in trying to modernize its legacy infrastructure without disrupting its operations, he admits.??

To overcome this, the company focused on rolling out changes in phases, as well as emphasizing investments that would have the biggest and most immediate impacts, such as upskilling its workforce.?

More than an aspiration?

Over the coming years, Pep+ and the sustainability agenda will continue to play significant roles in shaping the company. While it’ll take some effort, these initiatives are “investments in our future and the future of the planet,” Tan says.??

Through Pep+, PepsiCo will remain focused on its goals to cut back its use of virgin plastics by 50% across its global portfolio by 2030, and to achieve net-zero by 2040. These aren’t just aspirations, he concludes, but they are commitments to building a brighter future.

“Ultimately, sustainability is a journey that requires collaboration, innovation, and a continuous commitment to improving.”?

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PepsiCo is one of the world’s biggest food and beverage companies with a mission to transform the food system and create a more sustainable future for all. Apply for PepsiCo's second APAC Greenhouse Accelerator Program by March 22 at this link .??

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