PepsiCo knows it will be a challenge to lower its carbon footprint, with some of its metrics currently headed in the wrong direction. Last year, the CPG giant reported that scope 3 emissions from its supply chain rose 5%, but the company is betting regenerative agriculture can help it reach its goal of achieving net zero emissions by 2040.
As part of its Pep+ sustainability platform launched in 2021, the CPG has committed to spreading regenerative agriculture practices across its key ingredient footprint, equal to 7 million acres. It estimates this will cut at least 3 million tons of greenhouse gas emissions by the end of this decade.
PepsiCo said a key part of its goal is improving the livelihoods of over 250,000 suppliers across its supply chain. But convincing farmers to actually embrace these practices could prove difficult.
According to Rob Meyers, PepsiCo’s vice president of sustainable agriculture and global sustainability, the process can be especially challenging with farmers who have produced food the same way for generations.
“There are a lot of benefits to these practices we’re promoting and the outcomes we’re trying to drive, but some of those benefits are not well understood. There is real financial risk,” Meyers said. “It requires that farmers are willing to go out on a limb and make that change, sometimes ahead of many of their peers.”
Dan Huber, a farmer in Columbia, Iowa, said he enrolled in the Pep+ program in 2021 and is impressed with the results of implementing cover crops — specifically, the crop cereal rye, which targets weeds — into his operations. He said he was unsure at first whether it would be effective at improving the crops he grew, and that he had to develop a strategy for how the rye would be integrated into his farm.
“I was skeptical. It was no fun to plan it, and you do need to have your own sprayer, but it did suppress weeds,” Huber said. “There is definitely an economic benefit.”
Sustainable agriculture ambitions
Pep+, PepsiCo’s sustainability platform launched in 2021, was designed with the intention to set time-bound goals for green projects like regenerative agriculture.
The company upped the stakes of its investment in green projects over the last few months. The CPG giant issued a $1.25 billion green bond in July, which is set over a 10-year period and will distribute funds toward regenerative agriculture and other projects. Then in September, PepsiCo said it was partnering with ADM to conduct regenerative agriculture projects — involving corn, wheat and soy farmers in the Midwest — that could reach two million acres of farmland by 2030. And last week, the CPG announced a set of grants to 14 business projects across 11 countries to improve their agricultural technology.
One main element of PepsiCo’s sustainability platform is a Sustainable Farming Program, focused on direct growers.
In order to embed regenerative agriculture practices within its farmer network, Meyers said PepsiCo has worked to create a peer-to-peer environment, where farmers more familiar with regenerative practices help the others.
“We try to find and work with high quality, trusted, credible partners that can provide technical assistance and good agronomy advice for the farmer that’s relevant to them,” Meyers said.
The CPG giant is making a point to stress the economic benefits of regenerative agriculture to its suppliers. Savings from reducing the use of synthetic fertilizers, herbicides and insecticides can help drive profit, it said in its “Positive Ag Supplier Playbook” published in May. The company pointed to Mexico’s sugar cane industry seeing yields increase after embracing a regenerative approach.
Meyers said the company is focused on potato and corn farming operations, ingredients the company relies on most for products such as Fritos and Lay’s chips. The company is training farmers to adopt practices such as the use of cover crops, crop rotations and increasing diversity within the soil.
“We've got programs where we're looking at different opportunities for farmers to be more efficient and to give them the tools and the resources to understand how they can apply inputs more efficiently, in order to make their land more productive and ultimately, more profitable for that production,” Meyers said.
PepsiCo aims to become net water positive, replenishing more than it consumes, by 2030. Its network of farmers is key in this. Meyers said that efforts to replenish its water usage are focused in areas of high water risk and drought. These include programs that work with farmers to improve their irrigation systems and technology that helps utilize water more efficiently and prevents the input of pesticides.
“We're using some risk assessment methodologies to understand that things may be okay today, but what are they going to be like, five years from now for farmers?” Meyers said.
The CPG giant also plans on enacting programs to educate consumers that may not be aware of their sustainability developments. One way the company has already done this is through a QR code on the back of Lay’s chips bags that lead to a webpage detailing where the potatoes were grown.
“Consumers are really interested in where their products are grown and where they end up,” Meyers said. “I think for a company like PepsiCo to make a connection between farmers and consumers is going to be an important role for us to play.”