PepsiCo today reported continued progress in the company's efforts to strengthen its palm oil supply chain, including new steps taken to promote human rights, responsible land use and supplier transparency. These moves support PepsiCo's previously announced goal for 100 percent of the palm oil it uses to be sustainably sourced by 2020.
In its annual Palm Oil Action Plan Progress Report, the global food and beverage company disclosed that 89 percent of the palm oil it expects to use during 2017 has been traced to the mill level, up from 65 percent in 2015. PepsiCo has also taken steps to extend traceability beyond the mill to plantation level across its entire palm oil supply chain, which it aims to achieve by 2020.
As part of the report, PepsiCo unveiled robust new efforts designed to improve practices in the palm oil sector. Alongside advanced traceability protocols, this includes the introduction of a scorecard that will enable the company to work with certain direct suppliers of palm oil to improve their performance in areas such as human rights, deforestation, peat loss and land use policies. PepsiCo has also formalized its grievance system for dealing with allegations of inappropriate supplier conduct. Under this process, reports of non-compliance with PepsiCo's standards are thoroughly investigated and support is provided to ensure that the issues are addressed. In instances where a supplier fails to take sufficient corrective measures, they can be subject to significant action, as illustrated by a recent example that involved the removal of a supplier from PepsiCo's supply chain.
"PepsiCo takes environmental and social issues within the palm oil industry very seriously, and we are making significant investments to improve every aspect of our palm oil supply chain," said Rob Meyers, Sustainability Director at PepsiCo. "We have made important progress, achieving substantially greater visibility into our suppliers' activities and moving closer to our goal of sustainably sourcing 100 percent of our palm oil by 2020. PepsiCo is committed to doing much more, and we believe that the steps we are taking to promote higher standards among palm suppliers will place us at the forefront of our industry."
PepsiCo's goal to source 100 percent physically certified sustainable palm oil by 2020, using the Roundtable for Sustainable Palm Oil (RSPO) standard, was outlined in its 2015 Palm Oil Action Plan. This initiative sought to address significant concerns about the environmental and human rights impacts associated with some palm oil production. Last year, PepsiCo's plan was evaluated by the World Wildlife Fund (WWF) in a global ranking of consumer goods companies, and it received the highest possible score for leading the way on essential actions on progress on sustainable palm oil.
Further progress in meeting the objectives of the Action Plan includes:
- Currently, 16 percent of the palm oil that PepsiCo buys is RSPO physically certified sustainable. The company expects that figure to rise to 30 percent by the end of 2017, and it aims to maintain a similar rate of progress to meet its 100 percent goal by 2020.
- 98 percent of the palm oil that PepsiCo currently uses comes from suppliers who are RSPO members.
- PepsiCo has begun to invest in the improvement of practices in key sourcing regions. For example, it is sponsoring the National Interpretation of the RSPO Principles and Criteria in Mexico and supporting a program that will provide training on High Conservation Value (HCV) and High Carbon Stock (HCS) assessments.
"We are pleased to see the progress that PepsiCo has made on the implementation of their Palm Oil Action Plan, and the level of transparency demonstrated in this report," said Darrel Webber, Chief Executive Officer of the Roundtable on Sustainable Palm Oil. "The progress made on the ground in the plantations and at the mills relies heavily on the commitment of our membership, sometimes on the other side of the world, increasing their purchasing of certified sustainable palm oil for the products that they make or sell. It is paramount that all actors avoid short-termism while setting time-bound commitments and working to implement those commitments with urgency. This, together with reporting on progress transparently, will put us on the path to a more sustainable palm oil industry, and to more sustainable communities in the producer nations."
PepsiCo products are enjoyed by consumers one billion times a day in more than 200 countries and territories around the world. PepsiCo generated approximately $63 billion in net revenue in 2016, driven by a complementary food and beverage portfolio that includes Frito-Lay, Gatorade, Pepsi-Cola, Quaker and Tropicana. PepsiCo's product portfolio includes a wide range of enjoyable foods and beverages, including 22 brands that generate more than $1 billion each in estimated annual retail sales.
At the heart of PepsiCo is Performance with Purpose – our fundamental belief that the success of our company is inextricably linked to the sustainability of the world around us. We believe that continuously improving the products we sell, operating responsibly to protect our planet and empowering people around the world is what enables PepsiCo to run a successful global company that creates long-term value for society and our shareholders. For more information, visit www.pepsico.com.