PepsiCo 2020 Green Bond Report
PepsiCo2020 GreenBond ReportOctober 2020
PepsiCo 2020 Green Bond ReportUse of Proceeds for our first Green Bond issued October 9, 2019Table of ContentsA Letter from our Chief Sustainability Officer 3Sustainability at PepsiCo 4Our Sustainability Journey 4Helping to build a more sustainable food system 56About the Green Bond Our Green Bond Framework 6Eligible Green Projects 7Governance 89Progress: 2017–2019 10Featured Projects 10Ramping up rPET procurement Incorporating green design at PepsiCo’s Valhalla R&D Campus 11Increasing water efficiency in our manufacturing plants12 13Assurance 13Independent Accountants’ Report Management Assertion 14Special Note on Forward-looking Statements 14Additional PepsiCo Sustainability Resources2019 Sustainability Report2019 Performance Metrics SheetESG Topics A–Zpepsico.com/sustainabilityPepsiCo 2020 Green Bond Report 2
A Letter from our Chief Sustainability OfficerDear Friends,When I recently tookover as PepsiCo’s ChiefSustainability Officer,I was thrilled by thechance to lead one of themost innovative, forwardthinking corporatesustainability teams inthe world.JIM ANDREWChief Sustainability Officerand Executive VicePresident, Beyond theBottle Businessespepsico.com/sustainabilityAmong the innovations we’re mostproud of is our first ever Green Bond,a 1 billion offering being used toadvance our ambitious sustainabilityagenda: to help build a moresustainable food system.It’s been one year since we issuedthe bond, and we are pleased toreport that we have put 447 millionof the proceeds to use, supportingour efforts in three categories—packaging, decarbonization, andwater—whilst also advancingseveral of the UN’s SustainableDevelopment Goals. You can readmore in this report about some ofour featured projects in these areasthat the proceeds from the GreenBonds have helped fund, includinghow we’re working toward buildinga world where plastics need neverbecome waste by using morerecycled polyethylene terephthalate(rPET) in our packaging, the workbeing done to mitigate climatechange at our Valhalla campus, andour water efficiency efforts at ourVallejo Sabritas Mexico City snacksplant. We are incredibly proud thatwe’re among the first corporationsin the food and beverage industryto issue a green bond, andwe’re excited about acceleratingour momentum to furtheralign business and purpose.This alignment has taken on newimportance over the past year,as society has endured challengesthat were previously unthinkable.Through it all, we have continuedadvancing the important workto help make PepsiCo a Bettercompany by integrating sustainabilityeven more deeply into our business.This includes everything fromimplementing new agriculturaltechniques, to using water moreefficiently, reducing plastic waste,improving choices across ourportfolio, cutting greenhouse gasemissions, and lifting up peopleand communities. We are makinginvestments in each of these areas,with the recognition that manyof the sustainability issues we faceare interconnected and need tobe addressed holistically.But we also know PepsiCo can’ttackle these immense challengeson our own. Partnership andcollective action are critical. Onlyby working together can wemake the progress that’s essentialto long-term sustainability andresiliency. Ultimately, that’s whatPepsiCo’s Green Bond is all about:action. While we know there is stillmuch to be done, we look forwardto continuing to work with ourpartners to invest in — and ultimatelybuild — a more sustainable futurefor our communities.Green BondHighlights» Approximately 200 million toprocure recycled PETplastic (rPET) for ourNorth Americanbeverage packaging» More than 110 millionto help transition ourcompany-owned fleet tolower-carbon models» 98 million to builda green R&D facility inValhalla, New York» 9 million to improvewater-use efficiency inour plantsPepsiCo 2020 Green Bond Report 3
Sustainability at PepsiCopepsico.com/sustainabilityOur Sustainability JourneyIn 2006, PepsiCo started on a journey to transform the way we do business with the fundamental belief that the success of our company is inextricablylinked to the sustainability of the world around us, and each year we continue to make valuable progress.20092006Performancewith Purposeintroduced, integratingsustainability intodaily operationsNaked Juice first100% rPET bottlein the U.S.2010Food for Good launches,an initiative that makeshealthy food moreaccessibleAll-electric deliverytrucks hit the road2017SodaStream joins the family, theexpansion of this business providesthe potential to avoid 67B singleuse plastic bottles through 2025201325% Water-useEfficiency Goalachieved ahead oftarget date2019ClimateLeadershipAwardrecipientWins prestigiousStockholm IndustryWater Award20161st Demonstration Farm launchesin India. In 2020, 230 farms aroundthe world are testing and sharingbest practices201820121st ever PepsiCo Green Bondissued; proceeds from the 1B offering will fundkey sustainability initiativesSustainableFarming Programlaunches2020Safe Water Access Goal exceeded5 years early, helping 44M peoplesince 2006, with new goal to reach100M people by 2030Transition to100% renewableelectricity in U.S.direct operationsPepsiCo 2020 Green Bond Report 4
Sustainability at PepsiCoHelping to build a moresustainable food systemAt PepsiCo, we believe that there is an opportunity tochange how the world produces, distributes, consumes,and disposes of foods and beverages in order to tacklethe shared challenges we face.We aim to use our scale, reach, and expertise to helpbuild a more sustainable food system; one that canmeet human needs for nutrition and enjoyment, andcontinue to drive economic and social developmentwithout exceeding the natural boundaries of the planet.Our sustainability agenda focuses on six overlappingpriorities within our food system: agriculture, water,packaging, people, product, and climate. Our prioritiesmeet three important criteria:AgriculturalSourcingPepsiCo sources crops from60 countries and supports morethan 100,000 jobs in and throughoutour agricultural supply chain. Thestandards we apply and promotehave a significant impact on theenvironmental, social, and economichealth of agricultural communitiesaround the world.pepsico.com/sustainability» They relate to the most pressing sustainabilitychallenges, risks, and opportunities facing PepsiCoand our food TE» They matter most to PepsiCo’s key stakeholders; and» They offer the opportunity for PepsiCo to makea positive difference at a systemic level, within andbeyond our own value chain.PepsiCo’s sustainability strategy targets every stageof our complex value chain to use resources moreefficiently, reduce greenhouse gas (GHG) emissions,replenish water, improve our products, and recapturepackaging materials.To learn more about how we’re working to use ourglobal scale to help build a more sustainable foodsystem, see our 2019 Sustainability Report.Research & Development,Manufacturing, and PackagingAcross our manufacturing facilitiesaround the world, we bring togetherinnovators and operations teamswho work to use water, energy, andingredients efficiently to createour foods and beverages.DistributionPepsiCo products are distributedin more than 200 countries andterritories. We’re reducing GHGemissions with carbon-efficientdelivery trucks and programs thatimprove fleet efficiency.ConsumptionPost-ConsumerPepsiCo products are enjoyed byconsumers more than 1 billiontimes a day. We’re responding tochanging consumer preferencesby transforming our productportfolio and reformulating manyof our foods and beverages toreduce added sugars, sodium, andsaturated fat.PepsiCo’s sustainable plastics visionis to help build a world whereplastics need never become wasteby driving the shift from a linearsolution to a circular economy forpackaging.PepsiCo 2020 Green Bond Report 5
About the Green BondIn October 2019, PepsiCo issued itsfirst Green Bond, a 30-year, 1 billionsenior notes offering with a fixedrate coupon of 2.875% per annum.The net proceeds from this offering have been andwill continue to be allocated to investments inEligible Green Projects (as defined below), givingfurther momentum to our sustainability agenda.PepsiCo expects to allocate the majority of theGreen Bond proceeds within three years of the dateof issuance.This report describes PepsiCo’s use of proceeds todate, and the expected sustainability impact of theseinvestments.Green Bond DetailsIssuer» PepsiCoIssue date» October 9, 2019Currency» USDTenor» 2019–2049IssuedAmount» 1 billionNet Proceeds» Approximately 974 millionUse ofProceeds» An amount equal to the net proceeds from the issuance of the GreenBond will be allocated to fund, in whole or in part, “Eligible GreenProjects,” which is defined in the prospectus for the Green Bond andwhich generally refers to projects that meet our Green Bond EligibilityCriteria in accordance with PepsiCo’s Green Bond Framework.FixedCoupon Rate» 2.875% per annumOur Green Bond FrameworkPepsiCo’s Green Bond prospectus defines “EligibleGreen Projects” as new and existing investments1 madeby PepsiCo during the period from three years prior tothe date of issuance of the notes through the maturitydate of the notes, in three categories:» Sustainable plastics and packaging;» Decarbonization of our operations and supplychain; and» Water sustainability.We are focusing on these categories to make alasting impact on environmental priorities within oursustainability agenda.pepsico.com/sustainability1 Investments include expenditures on capital projects andother sustainability related spend.PepsiCo 2020 Green Bond Report 6
About the Green BondEligible Green ProjectsSustainable plastics andpackagingDecarbonization of ouroperations and supply chain» Purchases, either directly or viaour intermediary suppliers, of:» Improving the energy efficiencyand/or reducing greenhousegas emissions of our operations; Recycled PET (“rPET”) for usein product packaging; Bio-based PET (“Bio-PET”) foruse in product packaging; Compostable, biodegradableand/or recyclable materialfor use in product packaging» Investments1 in projects drivingmore sustainable productpackaging.Water sustainability» Investments1 linked to improvingwater-use efficiency at PepsiColocations;» Procurement of project-specificrenewable energy;» Investments1 to replenishwatersheds where PepsiCooperates in high water-risk areas;» Cleaner transportation, suchas replacement of fossil-fuelpowered vehicles with electricvehicles;» Working with small-holderfarmers to access drip irrigationand other water savingtechnologies.» Green buildings that receive athird-party verified certification;» Investments1 toward reducingthe greenhouse gas footprint ofour agricultural supply chain.1 Investments include expenditures oncapital projects and other sustainabilityrelated spend.pepsico.com/sustainabilityPepsiCo 2020 Green Bond Report 7
About the Green BondGovernanceThe framework for our first Green Bondincorporates recommendations from theGreen Bond Principles and is based onfour core components:» Use of proceeds;Use ofProceeds» Project evaluation and selection;» Management of proceeds; and» ReportingProjectEvaluationandSelectionManagementof Proceeds» Net proceeds from the issuance of the Green Bond will be allocated tofund, in whole or in part, “Eligible Green Projects,” which is defined onPage 6. Allocations are made to investments1 in Eligible Green Projectsmade by PepsiCo during the period from three years prior to the date ofissuance of the notes through the maturity date of the notes» PepsiCo’s Sustainability team assesses and determines Eligible GreenProjects» Following final approval, PepsiCo’s Sustainability team recommendsallocation of proceeds, and provision of description of Eligible GreenProjects to PepsiCo’s Finance department» PepsiCo’s Finance department tracks the allocation of net proceeds toapproved projects. Pending allocation, net proceeds are temporarilyinvested in cash, cash equivalents, short-term investments, or used torepay other borrowings» Second Party Opinion (from Sustainalytics), on alignment of our GreenBond Framework with the International Capital Markets Association(ICMA) Green Bond Principles 2018Reporting» PepsiCo publishes Annual Use of Proceeds reports until full allocation,including progress allocating net proceeds and select impact metricsaccompanied by management’s assertion of the amount of the netproceeds that was allocated to Eligible Green Projects» Independent Auditor provides Assurance Report on management’sassertion1 Investments include expenditures on capital projectsand other sustainability related spend.pepsico.com/sustainabilityPepsiCo 2020 Green Bond Report 8
Progress: 2017–2019As of December 31, 2019, PepsiCo had allocated 447 million in proceeds from the issuance ofits first Green Bond to Eligible Green Projects.This represents more than 40% of the net proceedsand includes investments in all three eligiblecategories of packaging, decarbonization, andwater. Individual investments have ranged fromapproximately 350,000 to 200 million, and spannedfive continents. While projects within the threecategories focused on a wide breadth of solutions,they all shared the common effect of supportingPepsiCo’s vision for a sustainable food system. 1 billionGreen Bondusing or transitioning to 100% rPETpackaging in the U.S. (Tazo, Naked,LIFEWTR)The proceeds of PepsiCo’s Green Bond help usto invest in delivering our sustainability goals,including commitments to increase recycledcontent in our plastics packaging, reduce absoluteGHG emissions, and improve operational water-useefficiency in high water-risk areas. Between2017–2019, we made progress against these globalgoals, as illustrated below.Approximately210,000 metric tons60,000 metric tonsannual CO2e emissions avoidedthrough capital expenditures 447 million allocatedbetween 2017–2019Packaging / 45% 201million3 brandsGoal performanceIncrease recycled contentin our plastics packagingto 25% by 2025Goal performance during3-year span of allocation3%3%201720184%2019More thanissued October 2019 237Green Bond impactmetricsCO2e avoided in North Americathrough incorporation ofpurchased rPET into beveragepackagingCategory breakdownDecarbonization / 53%pepsico.com/sustainabilitymillionWater / 2% 9 millionGoal performance during2-year span of allocation2Total Emissions: Reduceabsolute GHG emissionsby at least 20% by 2030(2015 baseline)6%3%1.2 megawattssolar power generation capacityinstalled1.3 billionliters of water use avoided throughCAPEX investments2 Performance measured against 2015 baseline for Decarbonization and Water metrics2018Improve operationalwater-use efficiency by 25%in high water-risk areasby 2025 (2015 baseline)2019Goal performance during3-year span of allocation29%2%20174%20182019PepsiCo 2020 Green Bond Report 9
Featured ProjectsThe projects described here illustrate how the Green Bond proceeds are being used to drive oursustainability agenda.Some examples of our brands that aremoving toward 100% rPET in the U.S.include Naked juices and smoothies,Tazo Chilled bottles, and LIFEWTR.Ramping up rPET procurementBy displacing virgin plastic with recycled plastic,PepsiCo can help to reduce plastic waste while loweringour dependency on non-renewable fossil resourcesand boosting the carbon and resource efficiency ofour packaging.PET is the main material used to make beveragebottles and is the most widely recycled plastic. rPETis part of a closed-loop recycling solution for beveragebottles, carrying a lower carbon footprint thanvirgin PET — specifically, 63% lower GHG emissionsand 79% lower energy consumption.3PepsiCo is already one of the largest customers of foodgrade rPET in the world. If there was more available,we would buy it, and if there were more markets whereit could be used, we’d utilize it. Currently demandoutpaces supply, especially for food-grade rPET.PepsiCo purchased several hundred million pounds ofrPET for beverage packaging in North America between2017 and 2019, for an aggregate amount of 200 millionallocated to the Green Bond’s net proceeds. Thisrepresents a 17% increase in rPET purchased in NorthAmerica during this period and helped PepsiCo toincrease the recycled content of our packaging from3% to 4% globally at the same time. We estimate thatincorporating this rPET into our packaging has alsoavoided nearly 210,000 metric tons of CO2e emissions.4rPET carries a lower carbonfootprint than virgin PET:63% lower GHG emissions and79% lower energy consumption.We estimate that therPET purchased fromGreen Bond proceedshelped PepsiCo toavoid nearly210,000metric tonsof CO2e emissions.3 GHG emissions reductions calculated between 0% rPET and 100% rPET at the raw material stage. Analysis conducted by Franklin Associates.4E missions reductions from the incorporation of rPET instead of virgin PET into our North American beverage packaging were calculated by multiplying the volume of rPET purchased between2017–2019 by the difference in the emission factor of 0% rPET and 100% rPET.pepsico.com/sustainabilityPepsiCo 2020 Green Bond Report 10
Featured ProjectsIncorporating green design atPepsiCo’s Valhalla R&D Campusreduce energy consumption, generate renewableenergy, and use resources sustainably both duringconstruction and operation.PepsiCo’s Research & Development (R&D) functionis an important driver of innovation worldwide.Now, following a 98 million investment, our newR&D campus in Valhalla, New York will reflect ourcommitment to a sustainable future for PepsiCo.Through 235 kW of on-site renewable energy generationand energy-efficient technologies, the campus iscontributing to PepsiCo’s goal of reducing absoluteGHG emissions by 20% by 2030.The blueprint for the campus expansion began nearlya decade ago as a vision for consolidating the R&Dfacilities in New York and Connecticut into one leadingedge campus to meet R&D’s needs not just for today,but for the future of innovation at PepsiCo. Now a reality,the project is almost completed. Sustainability hasbeen a priority from day one, guiding our choicesat every stage of planning, design, and construction.Upon completion, it is expected to receive LEED(Leadership in Environmental and Engineering Design)Gold Certification through elements designed toIn addition to its low-carbon credentials, the Valhallafacility will also boast important water and wastefeatures, including water-efficient fixtures that areexpected to reduce water consumption by 40% andan 80,000-gallon rainwater harvesting system thatwill ensure only non-potable water will be used forirrigation. Nearly 90% of construction waste to date hasbeen diverted from landfill and construction materialshave incorporated recycled content where possible.In addition to reducing waste, this also lessens the carbonimpact of the campus upgrade.Valhalla R&D CampusKey Features320,000 ft2across 3 buildingsSolarControlDaylighting controls andoccupancy sensors to reduceenergy usageSolarPower681 Solar Panels (345 watts/panel) will generate 235 kWof solar powerOur R&D Campus in Valhalla, New Yorkreflects our commitment to a sustainablefuture for PepsiCo.pepsico.com/sustainabilityPepsiCo 2020 Green Bond Report 11
Featured ProjectsTechnologiesimplemented atour Vallejo, Mexicosnacks planthave enabled70%water reuseExpanding the existing membrane bioreactorwater reuse system at our Vallejo, Mexico plantis expected to reduce freshwater usage by anestimated 100 million liters per year.Increasing water efficiency in ourmanufacturing plantsPepsiCo’s operational water-use efficiency efforts focuson plants located within high water-risk locations.Within Latin America, projects implemented in theseareas have reduced the water footprint in our LatinAmerican food plants by an average of more than28% since 2015. This reduction was the result of moreefficient practices, such as implementa
» An amount equal to the net proceeds from the issuance of the Green Bond will be allocated to fund, in whole or in part, “Eligible Green Projects,” which is defined in the prospectus for the Green Bond and which generally refers to projects that meet our Green Bond Eligibility Criteria in accordance with PepsiCo’s Green Bond Framework.
4.1.1. PepsiCo believes Africa is a key market for future growth. A meaningful portion of PepsiCo’s existing portfolio is in developing and emerging markets where further expansion is a high priority for PepsiCo. Africa is an important component in PepsiCo’s expansion strategy due to its attractive macro-economic prospects and
PepsiCo Savings Plan PepsiCo 401(k) Plan for Hourly Employees --- Summary of Material Modifications This Notice is a summary of material modifications ("SMM") to the PepsiCo Salaried Employees Retirement Plan ("Salaried Pension Plan"), Plan Number 001, the PepsiCo Hourly Employees
PepsiCo Health and Insurance Benefit Programs Summary of Material Modifications This Notice is a summary of material modifications ("SMM") to the PepsiCo Employee Health Care Program (plan number 725) and the PepsiCo Disability Plan (plan number 630) (referred to singularly and collectively, as applicable, as the "plan").
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Please refer to PepsiCo’s Quarterly Report on Form 10-Q for the 12 and 24 weeks ended June 13, 2020 (Q2 2020 Form 10-Q) filed with the SEC on July 13, 2020 for additional information regarding PepsiCo’s finan
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Set up a new Bond - Connect the BOND to your home WIFI network a. Make sure you have a working wireless network b. Plug the Bond to an outlet c. The Light ring will be white while the BOND is in boot up mode d. BOND light ring will flicker green when the BOND is ready to be used BOND is launching - get notified! First Name Last Name Enter .
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