The food and beverage multinational announced the closing of the ten-year bond on Wednesday (20 July). It is the second green bond to have been issued by PepsiCo within three years; it closed its inaugural green bond, priced at $1bn, in late 2019.
The first green bond from the company was used to fund
programmes around reducing PepsiCo’s use of virgin plastics in packaging;
replacing fleet vehicles with electric options; increasing renewable energy use
in the supply chain and improving water stewardship.
In launching that bond, PepsiCo appointed its first chief
sustainability officer – Simon Lowden, formerly chief marketing officer. Lowden
has since moved on to the Australian food and beverage firm Arnott’s Group.
The new green bond will finance projects in many of the same
areas, but regenerative agriculture has also been added to the list of focus
areas, as the company strives to “inspire positive change for the planet and
people” and operate within planetary boundaries.
In April 2021, PepsiCo announced an ambition to facilitate
the uptake of regenerative practices across seven million acres of farmland
globally – equivalent to the amount of agricultural land it uses.
Regenerative practices are those which work with natural
systems rather than against them, enhancing outcomes such as soil quality and
biodiversity. Building on this
commitment, PepsiCo last month joined a new task force overseen by the Prince
of Wales’ Sustainable Markets Initiative which aims to shift food systems
toward regenerative practices. Other task force members include Mars and
Nestle.
Investments from the new green bond will go towards farmer
training initiatives, covering topics such as water stewardship and reducing
fertiliser use.
For the use of the proceeds of both bonds, PepsiCo is
required to disclose its activities and future plans annually.
PepsiCo’s chief sustainability officer Jim Andrew said the
new green bond “will be pivotal to channelling investment into the critical
areas required to build a more sustainable and resilient food system”, building
on the “transformation” already enabled by the firm’s first green bond.
Climate, circularity, water
Aside from regenerative agriculture, the other key focus
areas for the proceeds of the new green bond will be reducing emissions across
operations and supply chains, improving the circularity of packaging and
enhancing water stewardship.
Emission-reducing projects set to receive funding include
on-site renewable energy generation; enhancing energy efficiency in buildings;
making manufacturing lines more efficient and upgrading cooling and vending
equipment. There may also be new funding for the EV transition in the
corporate’s fleet. PepsiCo is targeting a net-zero value chain by 2040
globally.
On packaging, PepsiCo’s main focus with this bond will be
reaching its target to use 50% recycled content in plastic packaging by 2030.
There will also be more funding for improved recycling infrastructure,
especially for flexible plastic packaging like crisp packets.
This may come as a disappointment to campaign groups such as
Greenpeace who have long been calling on FMCG majors like PepsiCo to use less
plastic altogether – virgin or recycled – and invest more heavily in
plastic-free and refillable alternatives.
The last focus theme for this green bond is water. PepsiCo
is notably aiming for a net-positive water impact by 2030, replenishing more
water than its operations use. Funding is likely to be allocated to improve
water efficiency and add water reuse and recycling systems to more
manufacturing locations. Investments will also need to be made in nature-based
solutions that enable replenishment, like wetland restoration. PepsiCo is also
looking to fund the scaling of drip irrigation or other water savings
technologies for farmers in its supply chains for key crops.
All issuances from the bond will need to comply with
PepsiCo’s green bond framework, updated in line with this week’s new package.