Pepsi – Becoming a Model for Sustainability – Part 1

It is always with some hesitation that I look at large corporations to investigate  sustainability initiatives and programs they are implementing within their corporate cultures.  Green and Eco-marketing has now become such an essential part of a business plan that you are sure to lose out on some market share if you don’t have a green initiative in your operations.  Separating the green-washing from practices that are genuinely implemented by firms to truly benefit communities, employees, and the environment has always been a tricky task.  It traditionally takes a lot of effort, time and energy on behalf of the company to be able to break through the first wave of skepticism in order to get the message across.

One such firm that has taken noteworthy steps is PepsiCo.  One of the world’s largest food and beverage firms, with over $39 billion in revenues and employing over 185,000 people world wide, PepsiCo has the size to effect a substantial difference not only in how it runs its operations and manages its corporate responsibility, but also as a role model for other multi-national companies facing the challenge of changing their internal controls.

Here, in part 1 I will take a look at the environmental focus PepsiCo is taking with many of its initiatives; in Part 2 examine some of the social and community based projects the company is tackling.

Environmental Steps

Energy

Pepsi’s mantra is ‘Performance with Purpose‘, which nicely defines the work and  publicly stated goals of reducing water consumption by 20%, electricity by 20%, and fuel consumption by 25% before 2015 from 2006 levels.  Results from 2007 coming out of Pepsi’s beverage operations are already showing significant positive movement, with reductions of 9%, 9%, and 7% respectively.  Part of it’s energy achievements were met by purchasing 100% REC’s (renewable energy credits) for all of its US operations; according to the EPA, Pepsi remains the single largest purchaser of credits that support renewable energy programs.  PepsiCo has also just opened a new manufacturing plant in China that uses 22% less water and 23% less energy than similar plants.  Built to meet LEED standards, you can read more about the new facility here – Green Beverage Plant.

Water

Regular readers will know of our fears regarding water consumption and the vast amounts consumed in manufacturing and industrial processes throughout the world.  The food and beverage industry is a big consumer despite increased efficiency and new clean-technology solutions starting to gain ground in helping preserve water as our blue gold commodity.  On a conservation front, PepsiCo has already reduced its water consumption in its Indian manufacturing plants by 55% over the last 5 years; the new plant in China will save an additional 100,000 tons of water per year alone over traditional facilities.  In 2007, Frito Lay, the snack division of PepsiCo, won recognition from the EPA as a water efficiency leader.  PepsiCo is also expanding its efforts in reaching the community by helping local farmers improve irrigation methods to reduce freshwater consumption within agriculture,  as well as making grassroots donations to organizations committed to bringing fresh water to developing countries.  They have further shown their commitment to critical water issues by joining the United Nations CEO water mandate.

Waste and Carbon Footprint

PepsiCo recently undertook a study in conjunction with the Carbon Trust, a UK government organization that would evaluate the carbon footprint of a bag of potato chips including everything from planting the potato seed to transportation to stores, all packaging and then finally the disposal of the bag itself.  The results have led to massive savings in energy use and water use per pack and have garnered wide acclaim from public consumers applauding the efforts  to make changes at all levels within production.  In addition to taking other positive steps in reducing plastic use in containers, improving recycle ability of products as well as the type of product used, their efforts extend to all parts of the production process.  For example, every piece of an orange is used in producing the Tropicana juice line; by-products from Pepsi’s Quaker oat production allow the hulls to be used as animal feed.  All of these initiatives have led to one of the most significant results: the demands PepsiCo has placed on its supply partners to stand accountable for their own operational and manufacturing standards to ensure they match up to the similar levels.

In part 2 of this post we will look at some of the social impacts that PepsiCo has been working toward, in particular the work CEO Indra Krishnamurthy Nooyi is spearheading to create lifesytle changes and bring healthier products to the market place.

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