PepsiCo Plans to Be Carbon Neutral By 2040—Is it Enough?

PepsiCo Plans to Be Carbon Neutral By 2040—Is it Enough?

Last month, PepsiCo announced that it doubled its carbon reduction goal, and now vows to be carbon neutral by 2040, a decade ahead of the date set by the Paris Agreement—the legally binding international treaty designed to reduce global greenhouse gas emissions. 

As part of this goal, PepsiCo also shared its intention to cut greenhouse gas emissions more than 40 percent by 2030, by optimizing soil health, recycling, and renewable energy. According to the company, this move alone is expected to result in the reduction of over 26 million metric tons of greenhouse gas emissions—the equivalent of taking more than five million cars off the road for a year.

Additionally, the overall plan includes short-term goals such as “supporting adoption of regenerative farming practices” and “transitioning to 100 percent renewable electricity globally,” but many of the benchmarks are vague and potentially don’t address certain issues that PepsiCo may need to contend with in order to be truly carbon neutral.

Carbon neutrality, defined as a balance between emitting carbon and absorbing carbon from the atmosphere, is a public effort many companies are focusing on. However, the actual mechanics of it can be murky, as it typically involves a combination of reducing CO2 emissions and offsetting what you can’t reduce—basically funding CO2 reduction efforts elsewhere to compensate for the CO2 you do produce. Renewable energy is a type of carbon offset, but it doesn’t always translate to zero carbon emissions because there’s a gap between power consumption and renewable generation.

Is PepsiCo’s goal achievable, and does it do enough to address the damage that the brand has already done to the environment? Or is it too little, too late?

With so many companies making bold carbon neutral goals focused on the future of the planet, it can be easy to forget that there’s already a great deal of CO2 in the atmosphere, which is having a negative impact on the environment and accelerating climate change.

I think one of the things that often gets missed is that, of the carbon that is currently causing our climate to change, 95 percent of it is already in the atmosphere,” Erica Dodds, COO of the Foundation for Climate Restoration, tells LIVEKINDLY. ”So when I hear a commitment like PepsiCo’s, I’m really excited that they’re starting to think about not putting any CO2 into the atmosphere, but for me, there’s still the next step of dealing with the CO2 that’s already there. And we need to do it a lot faster than they’re planning to do it.

PepsiCo has begun switching to clean energy via windmills, solar panels, and biomass generators. | Unsplash

PepsiCo’s Plan, In a Nutshell

To achieve its goals, PepsiCo wants to target the company’s biggest opportunities for impact, starting with farming. To that end, the multinational corporation, which has farms and production facilities across the globe, is already making changes to its farmland in Illinois by using cover crops to improve soil health and to limit the need for fertilizer, which reduces greenhouse gas emissions and captures carbon in the soil. PepsiCo also reports it’s using low emission fertilizers, precision technology and regenerative practices to improve soil health, biodiversity and productivity at its farms in Mexico, Brazil, India, and elsewhere. Agriculture currently accounts for one third of PepsiCo’s emissions.

Additionally, the brand’s hoped-for progress extends to packaging, factory floors and delivery vehicles. PepsiCo says it will continue to reduce virgin plastic and find new ways to use recycled plastic in packaging, as well as adopt electric and natural gas power in warehousing, transportation and distribution facilities. The brand has also begun to make the long-awaited switch to clean energy via windmills, solar panels, and biomass generators at some of its production facilities worldwide.

Okay, But, In 2019, PepsiCo’s Carbon Footprint Was 57 Million Metric Tons

While PepsiCo’s carbon neutral declaration certainly sounds great, it’s important to remember that the company (along with others like it) has already caused a great deal of damage to the environment via CO2 emissions and other forms of pollution. According to a study from the American Association for the Advancement of Science, one-third of greenhouse gas emissions are tied to the global food system, and PepsiCo is the second largest food company in the world. The New York-based brand, which is second largest behind Nestlé, made over $67 billion in revenue in 2020 by producing everything from soft drinks to hummus. Per PepsiCo’s own data, the company’s global carbon footprint amounted to approximately 57 million metric tons of carbon dioxide equivalents in 2019.

PepsiCo has also been accused of greenwashing—when a company gives a false impression that a product is better for the planet than it actually is—so it’s especially important to examine this new goal closely.

But PepsiCo is also one of the world’s greatest polluters. | Andriy Onufriyenko / Getty Images

PepsiCo’s Packaging Is Still Polluting The Environment

Another area PepsiCo needs to focus on in terms of its carbon neutrality target? Its packaging. Not only is plastic packaging a pollution disaster (of which PepsiCo is one of the worst offenders), it’s a huge source of CO2 emissions. Carroll Muffett, head of the Center for International Environmental Law, told NPR in July 2019 that “emissions from plastics production and incineration could account to 56 gigatons of carbon between now and 2050.” That’s 56 billion tons, or almost 50 times the annual emissions of all of the coal power plants in the U.S.

Even though PepsiCo has said it will continue to reduce its use of virgin plastic and find new ways to use recycled plastic in its packaging, the company has been called out for greenwashing in the past. In September 2020, a report published by the Changing Markets Foundation accused Coca-Cola, PepsiCo, and Mars of “warping, reframing, or ignoring” environmental commitments. The report found that PepsiCo has said it plans to make 50 percent of its plastic packaging from recycled materials in the EU by 2030, but has set a global target of only 25 percent by 2025.

And Dodds notes PepsiCo could do even more going forward. “I’m guessing that they have a lot of packaging that is not environmentally friendly,” she says. “If they’re able to substitute products that either sequester CO2, or just have lower emissions or are reusable, that goes a long way as well.

Creating packaging out of sequestered CO2 is a relatively new technology that basically turns CO2 from the atmosphere into a bioplastic, which can then be used as packaging material. This means that instead of simply cutting down on CO2 emissions when producing plastics, PepsiCo could actually remove CO2 from the atmosphere, potentially offsetting CO2 emissions elsewhere in its supply chain. According to the Earth Institute at Columbia University, IKEA is using this carbon negative bioplastic, known as AirCarbon, to make furniture, while Dell, Hewlett Packard, and the Body Shop use it for packaging.

What Does 100% Renewable Energy Actually Mean? Offsetting Emissions, Explained

With regards to the phrase “renewable energy” (and renewable electricity) things can get a bit imprecise. Per the Stanford University School of Earth, Energy, and Environmental Sciences, renewable energy doesn’t always mean zero carbon. More specifically, corporations that claim to be 100 percent renewable don’t actually cover all their power use with renewables because there’s a gap between power consumption and renewable generation due to the way both quantities are measured. 

Instead, these companies purchase or generate enough renewable energy to match 100 percent or more of their electricity use over the course of the year. Corporate renewable energy is typically purchased via green electricity products or certificates, but it can also be generated on the company’s own premises.

As Jeff Gibbons, a sustainability expert with Bridge House Advisors explains, even if PepsiCo were to electrify its entire fleet of vehicles, they would still require power of some kind. “What I suspect will happen is that there’s going to be some things that they can do to significantly bring down their annual carbon emissions as an enterprise, but that they might have to offset a smaller portion as they approach that [carbon neutral] date,” he says. In other words, PepsiCo might eventually run out of economically viable options to reduce carbon emissions in order to meet their goal, so offsetting a portion of their emissions (via a carbon-saving project, renewable energy enterprises, carbon sequestration etc.) will be necessary. 

Since PepsiCo won’t be able to reduce all of its CO2 emissions while still producing and delivering products to consumers, the brand will need to offset the emissions it can’t reduce in order to truly reach carbon neutrality. The company’s overall plan does call for increased offsetting over time in order to be carbon neutral by 2040, but the details are sparse.

On the carbon dioxide removal side, there are a lot of new and upcoming technologies that will allow for companies like PepsiCo to actually use carbon sequestering materials in their processes. The biggest one that I think people should be aware of is new technologies that can sequester carbon dioxide permanently in concrete, which is the second most used material on earth,” Dodds explains, noting that this method is more enduring than storing CO2 in the soil, which can be upended if there’s a change in agricultural practices. “Certainly, a company like PepsiCo has a lot of infrastructure that they need to build. Using carbon sequestering concrete can actually offset a lot of the emissions that they’re not able to reduce by electrifying and mitigating other emissions.

One corporation that has already invested in carbon sequestration is Microsoft. In addition to vowing to be carbon negative by 2030, the software giant will use this technology (along with other methods) in order to remove all the carbon the company has emitted, either directly or by electrical consumption, since it was founded in 1975.

Aside from carbon sequestration, PepsiCo could turn to reforestation to help offset the carbon emissions it can’t reduce. However, as Gibbons notes, it’s not enough to simply offset CO2 emissions by planting some trees. That’s because offsets need to be managed and maintained. In the tree example, PepsiCo would need to care for the trees and ensure they aren’t cut down because, if that were to happen, they would no longer be fulfilling their role as a carbon offset. 

IKEA, which has set its own ambitious goal to be climate positive by 2030, recently purchased 11,000 acres of U.S. forest in Georgia. Aside from preventing the forest (which contains lumber that is harvested and regrown) from being developed, IKEA created permanent easements. This legally prevents the forest from ever being split up and helps protect its status as a carbon offset asset for the Swedish furniture giant, which currently owns 616,000 acres of such forests across the United States and Europe.

PepsiCo must make significant changes to be carbon neutral by 2040. | Unsplash

Experts Weigh In On PepsiCo’s Plan

While PepsiCo has a plan to achieve carbon neutrality by 2040, whether or not the company can actually do it remains to be seen, as such a goal requires the brand to make significant changes across all parts of its value chain.

I don’t think it’s easy, or cheap, but I definitely think it’s feasible. There are so many solutions that are already available,” Dodds tells LIVEKINDLY. According to her, some of these “inexpensive” fixes include not tilling the soil or using too much fertilizer. Instead, she noted that PepsiCo should aim for crop diversity and allow for grazing, as well as cover crops, which can “drastically reduce or even offset [carbon] emissions” by storing much of the CO2 in the soil itself.

I also think it’s important to remember that no one can do everything at once. I wouldn’t want to downplay the importance of carbon neutral, or carbon negative commitment because they’re not also restoring the ocean, or simultaneously adopting more environmentally friendly practices. They should absolutely do that,” Dodds adds. “But this is an area that also needs a lot of work and the more bold commitments we can get, the better.

John Harsch, the President of Sustainable Environmental Consultants—a firm that delivers innovative sustainability solutions to food and beverage companies—agrees that PepsiCo’s goal is within reach. “One of the key points to reaching sustainability goals from a CPG [consumer packaged goods] company or other companies is continuous improvement,” he explains to LIVEKINDLY. “Being able to set short-term and long-term goals and then measuring the outcomes of the impacts of those practices, year on year, is how we feel companies can get there.

Looking Forward

While PepsiCo’s carbon neutral goal is flawed and doesn’t always go far enough in addressing the environmental damage the company has inflicted thus far, it’s certainly a step in the right direction. And even PepsiCo knows there will likely be some missteps along the way. “It will be massively challenging for us to do this,“ PepsiCo Europe’s supply chain vice president Chris Daly told FoodNavigator. There will be times when we get it right and there will be times, no doubt, when we learn from getting it wrong. All of that is valuable.

Other food brands have made concerted efforts to be more sustainable as well. For example, Nestlé joined Danone and eight other major bottled drinks companies in a September 2018 pledge to ditch plastic bottles and move to zero-waste packaging by 2030. Nestlé also co-founded the Future Food Initiative in February 2019, which focuses on the development of sustainable food and beverage products, with an emphasis on plant-based nutrition. 

In a similar vein, PepsiCo recently announced it partnered with California-based Beyond Meat to develop an array of vegan foods and drinks.

According to Gibbons, part of the reason why PepsiCo and other large corporations are paying closer attention to things like carbon emissions, deforestation and pollution is because society has reached a point where it makes economic sense. “We’re at the very beginning of the energy transition … Policy is going to catch up. It always does, but that’s what I’m most excited about,” he says. “There’s going to be pockets of energy transition, new technology that helps solve this problem that is going to start entering the markets at scale, just because the economics are there.”

Gibbons also believes PepsiCo, Nestlé, IKEA, and other large multinational corporations are starting to step up to the plate because various governments have been too slow to react. “Since these corporations are global, they see some things that we as Americans don’t always see because they’re running a global enterprise,” he says. “They know this problem is real, and they also know that governments are not going to come together to solve it. They have to solve it.