Dive Brief:

  • PepsiCo will get all of its electricity in the U.S. from renewable energy sources such as wind and solar later in 2020, the company said in a statement. The U.S. is the food and beverage company’s largest market and accounts for nearly half of its total global electricity consumption.
  • PepsiCo’s efforts in the U.S. reflect similar initiatives in other parts of the world. The company said nine countries in PepsiCo’s European direct operations already get 100% of their electricity demand from renewable sources. In addition, 76% of the electricity needs of the PepsiCo Mexico Foods business were delivered through wind energy in 2018.  
  • “We have entered a decade that will be critical for the future of our planet’s health,” Ramon Laguarta, PepsiCo’s chairman and chief executive officer, said. “PepsiCo is pursuing 100% renewable electricity in the U.S. because the severe threat that climate change poses to the world demands faster and bolder action from all of us.”

Dive Insight:

Sustainability has become intrinsically woven into the day-to-day operations of nearly all food and beverage companies in the U.S. Along with PepsiCo, Coca-Cola, Nestlé​, Mars Wrigley, Hershey, Walmart and Unilever are just a few of the companies that have announced some type of sustainability goal. 

Along with the altruistic reasons, there is monetary motivation for companies to embrace sustainability through practices such as renewable energy, recyclable packaging or water conservation. According to Nielsen, 66% of all consumers are willing to pay more for sustainable brands. This figure is even higher for younger consumers, with 73% of millennials and 72% of Gen Zers agreeing to spend more for brands that incorporate sustainability into their operations.

As the spending power of younger shoppers increases and they start having families of their own, brands that are willing to make changes to their business model in the name of the environment could reap even greater long-term benefits through customer loyalty and additional sales.

PepsiCo has a long list of well-known brands such as Cheetos, Quaker, Tropicana, Aquafina and Mountain Dew. As a result, its decision to use electricity from renewable sources could benefit a wide range of products in PepsiCo’s portfolio if the New York-based snacks and drinks company decided to use it as a marketing tool. Publicizing its latest commitment on packaging, through commercials and on social media could help distance itself from competitors who have yet to follow through on their pledge or are still some time away from reaching it. 

AB InBev, the world’s largest brewer, has pledged to secure 100% of its purchased electricity from renewable sources by 2025. Beer from facilities that meet this goal will have a “100% renewable energy” symbol on the label. Currently, about half of its U.S operations‘ purchased electricity comes from renewable sources.

With sustainability no longer a luxury, companies such as PepsiCo must not only embrace the practice but increasingly show they are following through on their pledge. Last year, Greenpeace tracked the follow through of companies with sustainability pledges — specifically those tied to deforestation. It found that “not a single company was able to demonstrate meaningful effort to eradicate deforestation from its supply chain.” However, several have 2020 goals, so they have about another year to demonstrate progress.

As climate change headlines become more common, the pressure will be on multi-billion companies to play their part and prove they are backing up words with concrete action. Companies like PepsiCo that get ahead of the curve on sustainability stand the best chance of avoiding a potential PR nightmare later on and even profiting financially as their competitors come under fire.