By Perry Cleveland-Peck July 24, 2024 5:30 am ET|WSJ Pro Share
Jim Andrew has clear goals and expectations for his company’s suppliers and believes that through partnerships and systemic change, reducing emissions is possible
The man in charge of sustainability at one of the biggest food and drinks companies on the planet says the most carbon-heavy thing he does is eating.
But if the occasional chocolate is an indulgence for Jim Andrew, PepsiCo’s chief sustainability officer, he accepts that his company’s consumption of carbon is a far bigger challenge.
And the biggest challenge of all he says is the emissions that come from PepsiCo’s supply chain, so-called Scope 3 emissions. No company can reduce these emissions by itself, says Andrew. It requires partnerships between business and government to drive systemic change, something for which he is an enthusiastic advocate.
PepsiCo managed to lower its supply-chain emissions by 1% last year, against a 2015 baseline, but it has a way to go to meet its goal of a 40% reduction by 2030. Andrew has told his suppliers he wants specific commitments from them “and those that help us meet our goals are the ones who are going to see continued progress and prosperity,” he says.
The snacks and soda giant has launched a number of initiatives in its journey to net-zero, including a Sustainability Action Center to drive supplier engagement and pep+ REnew, to help value chain partners access renewable electricity. It has issued $2.25 billion in green bonds since 2019 to invest in its PepsiCo Positive transformation. It also doubled its regenerative farming footprint to 1.8 million acres globally, against a goal of 7 million acres by 2030, with multiyear partnerships to scale action announced with Walmart and ADM.
WSJ Pro Sustainable Business interviewed Andrew last month shortly after PepsiCo released its sustainability report. The conversation has been edited for clarity and brevity. Listen to the whole conversation here.
WSJ Pro: Did you have a green epiphany?
Jim Andrew: My background is in corporate strategy, and that’s really the mindset that I bring as we think about how we take a path that’s good for the planet, good for people, but also good for PepsiCo. For us, PepsiCo Positive [pep+], is not just a sustainability strategy, it’s really a strategic business transformation. We put sustainability squarely at the center of this very large and complex company. What we’re trying to do is enormous in scale and scope, but there is potential for massive impact, not only in PepsiCo but beyond. We’re talking about systems change.
WSJ Pro: Aside from flying, what is the most carbon-heavy thing you do regularly?
JA: Eating. My food footprint. A third of all human-caused GHG is from the agri-food system. I don’t eat very much meat. But I do like to consume a couple of things that have relatively high footprints: milk, coffee, chocolate, scotch!
WSJ Pro: Do you have a favorite sustainable product that isn’t a company product?
JA: My aim is to reduce by maximizing use. I hate waste. There’s a couple of services I really like. Amazon allows returns at Whole Foods Market. That, I think, is genius. You can return things and they don’t require packaging. It gets returned in bulk, which saves a lot of GHGs. Simple, but when you multiply by the size of Amazon, it makes a huge difference. The other is any of the donation services. I drop a lot of stuff off at Salvation Army. Our family will go to the trouble of cleaning it, boxing it up and bringing it to the store. Because it can still have a life and the money goes to other good causes.
WSJ Pro: PepsiCo is about to release its latest sustainability report. What are the biggest challenges that the company faces in this area?
JA: The biggest challenge is reducing Scope 3 emissions. It’s about 94% of our total, including transportation, packaging, agriculture. It requires systemic changes. Industry and government need to work together and we aim to support a whole set of partners and suppliers. You got to have clear expectations. We have touched about 2,000 suppliers since 2021. We’ve told them we want four things: set or commit to set a science-based emissions-reduction target, share your SBT-aligned decarbonization plan and annual progress with us, report to us your Scope 1 & 2 emissions—which are part of our Scope 3—and if you are an ag supplier, what are you doing to help us build regenerative agriculture. No company can do this by themselves. It’s about collaboration and partnership to drive system change.
WSJ Pro: Would you part company with a supplier if they weren’t coming up to scratch?
JA: What we’ve said is these goals are very important to us. We have clear goals…and expectations. We are going to help our suppliers on the economics like long-term procurement agreements in areas like agriculture. Our Sustainability Action Center is a one-stop shop to drive supplier engagement, streamline data collection, share resources on education or the procurement of renewable electricity. We have a Clean Energy Procurement Academy to spur renewable-energy policy changes in countries like China, Japan, Taiwan, South Korea. We’re going to work with our suppliers, and those that help us meet our goals are the ones who are going to see continued progress and prosperity.
WSJ Pro: So are you on track to meet your 40% reduction by 2030 goal?
JA: These are challenging, aggressive goals. And they are not linear. They require system change. Like many companies, a lot of it’s going to be in Scope 3. We got that reduction in 2023 because we’ve really seen focused efforts to engage our supply chain bearing fruit. We continue to invest, to look for new ways and new partners. And we’re also continuing to make a lot of progress on our Scope 1 and Scope 2, which last year were down 13%. It’s a team sport.
WSJ Pro: Tell me about the latest developments in regenerative agriculture at PepsiCo?
JA: We are a large beverage company, with an even larger food company—we’re about 59% food. We see the impact of climate change every day on food systems and we need a sustainable source of crops to ensure we can run our business. Last year, we doubled our regenerative farming footprint to 1.8 million acres globally, strong progress against our goal of 7 million acres by 2030. Regenerative agriculture can be a powerful tool to help combat climate change. It helps address mitigation, helps farmers have more resilience. The population keeps growing. We need farmers to keep farming. What we can do is provide advice and tools. Farmers are going to make the decision, because every farm is different. A great example is a web-based tool we’ve developed and made public, leveraging crop research and climate projections to plan for the impacts of climate change. This started with work we were doing in Thailand and Vietnam. We recommended specific practices to help Southeast Asian farmers adapt to local climate change on potatoes, corn, rice rotations. Pragmatic things like the right varieties, how you manage water and the right soil treatments. We use demonstration farms so that farmers learn from farmers. And over two years we saw a 32% increase to farmers’ income. That’s the kind of results we need.
WSJ Pro: Your boss has spoken of his ambition to make Lay’s chips sustainable from end to end. How is that progressing?
JA: It starts with how we help farmers be more resilient and optimize the use of their inputs. Then there’s transportation. We’re making significant investments in low- or no- emissions fuels vehicles. Sometimes that’s electricity—we were the launch customer for the Tesla Semi trucks—but also biofuel. We then get into our factories, basically very large kitchens. We have plants that for hundreds of days don’t use water from the municipal system because we’ve made substantial investments in reuse, including rainwater harvesting. We’ve got 12 plants that use biogas with “fuel” coming from things like potato peelings from making chips. In packaging, we’re looking at ways to make it circular but also bio compostable. So it’s thinking about the system, all the players involved, because sometimes a benefit in one place requires an unlock in another. Government and NGOs have to be a part of that.
WSJ Pro: Where do offsets fit into the picture at PepsiCo; do you use any?
No. We use renewable electricity certificates, which have been used for decades and are widely accepted. We are focused on insets, taking the steps needed within our supply chain and our own operations; we don’t buy offsets because we want to support the projects that reduce emissions within our supply chain. That’s fully aligned with the criteria for net zero outlined in SBTi’s net-zero standard.
WSJ Pro: What sustainability worry keeps you up at night?
JA: We have got to move bigger and faster. And that’s not just PepsiCo, it’s everybody. If I take a company perspective: we know what to do and we’re doing it as quickly as we can. But it’s system change: We can buy all the electric trucks we want but if we can’t recharge them…I’m an eternal optimist, but I’d love to see the world moving faster and bigger. (Click here for the original article)
Write to Perry Cleveland-Peck at perry.cleveland-peck@wsj.com
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