PepsiCo CEO Ramon Laguarta said the conversation around the cost of sustainability and “green premiums” needs to be reframed by corporations, during a Tuesday panel at the World Economic Forum in Davos, Switzerland.
The debate should not be about sustainability or profitability, but rather a question of short-term costs and long-term costs, Laguarta said at the annual meeting in Davos.
“For [Pepsi], the debate is: We clearly are about growth. So, growth is our business model, but growth for the long term means that we need to generate this growth without depleting the resources that will give us future growth,” Laguarta said Tuesday.
While the Pepsi executive said that’s a “very simple framing of the problem,” it’s one that needs to be owned by a company’s board, CEO and management teams, and then developed into a strategic framework to operationalize it across the business.
Laguarta pointed to the food and beverage company’s PepsiCo Positive program — launched in 2021— which he said has clear pillars, is integrated into operating plans, has governance mechanisms and has measurable objectives. Last year, the company reset its sustainability strategy, which included adjusting its net-zero target date from 2040 to 2050 and using 2022 as its baseline emissions year, rather than 2015.
The reset came after Pepsi’s 2023 sustainability report flagged that the company was unlikely to meet its 2025 sustainability targets. The reset also included updated packaging sustainability targets and new 2030 emissions reduction targets. As part of the reset, Pepsi divided the tracking of its scope 3 emissions reduction targets into two categories: energy and industry emissions and forest, land and agriculture emissions.
Pepsi’s new strategy also included aligning its targets with a 1.5 degrees Celsius warming scenario, rather than one that targeted limiting warming to “well below 2 degrees Celsius,” Pepsi Chief Sustainability Officer Jim Andrew previously told ESG Dive sister publication Packaging Dive.
“We’ve learned a lot [since 2021], and the world has changed a lot, and so we wanted to incorporate those learnings and those external realities into any changes that we’ve made,” Andrew said at the time.
Pepsi’s CEO said Tuesday that the company views itself as a “first mover” in new materials technologies for its industry and, as a company with a larger profit-and-loss margin, one that can afford “some cost of experimentation.”
“We see ourselves as a company that, for the long term, needs to manage nature and profitability, and that's something we are getting better at, but obviously with hiccups and trade-offs internally.”
While Laguarta said there’s been progress in scaling new materials and infrastructure, he added more needs to be done to scale sustainable agriculture.
The CEO said during the panel there is an opportunity for the public and private sector to enable farmers to shift agricultural practices, which would positively impact soil health, water use and use of inputs.
“This is not about everyone doing the little thing,” he said. “This is about all of us joining forces and making change at scale that is very complex. It is a very complex topic, but I think we need leadership and we need resources. We need accountability, we need discipline. We need everything that it takes to make a change at scale.”
