Sustainability
PepsiCo

#BusinessCase: Sustainability Initiatives Have Saved PepsiCo Over $375M Since 2010

Burgess COMMENTARY
Good article BUT ... There is a dangerous flaw in the idea that the improvement of business processes should result in more profit ... in a world that is truly sustainable, it is sustainability with respect to PEOPLE and PLANET that matters, if there is profit arising at the same time, that is a bonus. Peter Burgess http://www.truevaluemetrics.org
Peter Burgess

#BusinessCase: Sustainability Initiatives Have Saved PepsiCo Over $375M Since 2010

PepsiCo’s support for the Liter of Light program is helping clean up plastic bottle waste while providing inexpensive and environmentally friendly bottle lights to light-needy households. | Image credit: PepsiCo

Related: Waste Not,Business Case,PepsiCo,Finance/Insurance/Investment,Food/Beverage ,

The water, energy, packaging and waste-reduction initiatives have been tallied up, and PepsiCo, Inc. asserts that its environmental sustainability initiatives have saved the company more than $375 million since its goals were established in 2010. The company proudly announced this week that it also delivered double-digit net revenue and operating profit growth during the same time period, demonstrating a solid business case.

The results of PepsiCo’s Performance with Purpose commitment are detailed in its 2014 Corporate Social Responsibility Report, Global Reporting Initiative (GRI) Report, and first-ever sustainability microsite, howwillwe.com. PepsiCo says the microsite is “an interactive and immersive experience” to engage users in discussion around how we will grow sustainably, thrive in a changing environment, and create opportunity.

'Performance with Purpose helps drive our business growth and prepares us to meet the needs of our changing world,' said Indra Nooyi, Chairman and CEO of PepsiCo. 'As leaders gather this month to adopt the UN Sustainable Development Goals, PepsiCo will reflect on progress made to date and renew its focus on doing more in the years ahead. By continuing to apply our scale and capabilities to address shared societal challenges, we will further strengthen our company and the communities where we operate.'

PepsiCo set 10 goals with various deadlines as part of Performance with Purpose, the first of which is to annually “deliver superior long-term financial performance and sustained shareholder value.” Five goals are environmental with focuses on water use, packaging, solid waste, greenhouse gas (GHG) emissions, and sustainable agriculture. The remaining four are divided between annual talent goals and “human” goals for 2020.

PepsiCo surpassed two of its 2015 environmental goals in 2014 by reducing water use per unit by over 20 percent since 2006 and diverting over 90 percent of its waste from landfills. The company’s absolute water use decreased by about one billion liters in 2014, delivering savings of roughly $17 million.

There were year-over-year improvements on each of the three remaining environmental goals and the beverage giant claims it is on track to meet them. Compared to the previous year, in 2014 PepsiCo saved $48 million through the reduction of 89 million pounds of packaging materials and increased its use of food-grade recycled polyethylene terephthalate (rPET) by 23 percent. Despite production volume growth, PepsiCo improved energy efficiency of its legacy operations by nearly 16 percent in a flat comparison to its 2006 baseline. For its agriculture goal, the company increased the number of acres covered by its Sustainable Farming Initiative (SFI) by more than 20 percent over the prior year, an expansion to growers in 11 more countries.

It also seems that PepsiCo may finally be addressing the palm oil issue, with a commitment to exclusively purchase 100 percent RSPO-certified palm oil for its products by the end of 2015 and have traceability to the mill level by 2016. Earlier this year, PepsiCo was attacked by consumer advocacy group SumOfUs for its “irresponsible palm oil sourcing policy,” and was called a laggard on sustainable palm oil by the Rainforest Action Network (RAN). However, a few weeks before the RAN progress report was released, PepsiCo was among companies pressuring the RSPO (Roundtable on Sustainable Palm Oil) to strengthen its standards. Only time will tell if the company can meet its 2015 goal and avoid further backlash.

Hannah Furlong is an Editorial Assistant at Sustainable Brands, based in Canada. She recently completed her Bachelor's in Environment and Business Co-op from the University of Waterloo. Hannah has been actively working on startups for two years, and is interested… [Read more about Hannah Furlong]