On PepsiCo, Sustainability and its $1 billion Green Bond
Last week, PepsiCo Inc. announced its first Green Bond, US $1 billion to fund its sustainability agenda. PepsiCo Chairman and CEO Ramon Laguarta said the firm “is deeply committed to using our scale for good and advancing the purpose behind our sustainability agenda: to help build a more sustainable food system." In a press release, the company “outlined six priority areas where the company believes it can make the best contribution – agriculture, water, packaging, products, climate and people”.
PepsiCo's objectives include:
"reduce 35% of virgin plastic content across its beverage portfolio by 2025...
"funding projects that purchase compostable, biodegradable and/or recyclable material for use in product packaging, and by investing in the development of packaging that includes bio-based PET bottles and compostable and biodegradable snacks flex films ...
"reduce absolute greenhouse gas emissions across its value chain by 20% by 2030 …
"improve energy efficiency, utilize cleaner transportation that replaces fossil fuel-powered cars with electric vehicles, and train farmers on ways to improve soil health ...
"replenish 100% of the water it consumes in its manufacturing operations and improve its operational water-use efficiency … funding projects focused on water recycling and reuse, alternative crop rotation / tree planting, and providing smallholder farmers with access to drip irrigation and other water-saving technologies."
OUR TAKE
Green bonds seem like an attractive financing vehicle for projects in areas such as renewable energy, energy efficiency, water and waste management management, biodiversity, clean transportation and build environments.
While most green bonds have been issued by government and NGO entities, increased focus on sustainability and issuances by PepsiCo and other businesses should increase green corporate financing.
Given the broad scope and multi-year duration of PepsiCo’s green objectives, it may be hard to track its green initiatives as markets and management objectives change.
Note: Green bonds issued by corporations and governments could exceed $182 billion in 2019, according to Bloomberg.