PepsiCo $1 billion Green Bond Funds Sustainability Goals

This article was written by Elana Cole, ERS, on October 15, 2019.

On October 7, PepsiCo priced their first green bond at roughly $1 billion. This green bond will fund a series of strategic sustainability initiatives to promote the company’s development goals to advance their 2025 Sustainability Agenda. Alongside this announcement, PepsiCo also named their first Chief Sustainability Officer, Simon Lowden, to help drive this effort and help lead the company’s sustainability agenda.

“PepsiCo 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.”

Ramon Laguarta, PepsiCo Chairman and CEO

The three main priorities of the funding’s initiatives are sustainable plastics and packaging, decarbonization of their operations and supply chain, and water sustainability. The green bond’s most notable contribution to the company will support their new target to reduce the use of virgin plastic by 35% by 2025. The funding will support the purchase of sustainable packing materials, such as bio-based polyethylene terephthalate (PET) bottles in addition to compostable and biodegradable snacks flex film. Other contributions target reducing greenhouse gas emissions across the value chain with efforts to support electrification of current company vehicles, as well as raising awareness of water sustainability and following efficient practices during operation.

As PepsiCo, one of the world’s leading food and beverage companies, embarks on this new sustainability journey, they hope to lead by example and open up future opportunities for other companies to head down a more sustainable path as well.

Green Bonds

Green bonds are innovative ways for businesses and government entities to raise funding for new and existing projects. Projects that are issued a green bond are intended to have material, positive net benefits for the climate or environment. Green bonds are a small fraction of the $5.8 trillion U.S. investment-grade corporate bond market, but they are increasing in popularity at an exponential rate as companies develop initiatives to combat climate change. A total of $580 billion of green bonds were sold through 2018, and an additional $170–$180 billion are estimated for 2019 based on the market’s activities today.