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The GreenBiz Interview

PepsiCo CSO: We can’t ‘lose sight’ of the long-term crisis

With less than a year under his belt as PepsiCo’s first chief sustainability officer, long-term marketing and brand management executive Simon Lowden already had plenty of to-dos on his daily agenda when the coronavirus outbreak became a pandemic.

While the focal point of his weekly check-ins with PepsiCo chairman and CEO Ramon Laguarta now includes short-term, urgent action items related to the COVID-19 pandemic, Lowden says his team is more energized than ever about its mission to tackle the longer-term crisis — mitigating climate change. Its latest commitment: signing the United Nations Global Compact Business Ambition for 1.5 Degrees C pledge, based on science-based targets.

"Ramon is an incredible leader, very close to this agenda. I spend two hours a week with him on sustainability right now," Lowden told GreenBiz. "Could you imagine that? It’s a $68 billion business. His operational time is clearly under pressure, and he still spends an hour and a half or so with me a week talking about pledges we’re getting into, commitments we’re making, partnerships with our customers, with peer industries as well as ensuring and supporting as we develop our go forward strategy and imperative plans around sustainability."

We caught up with Lowden about some of those priorities in an interview last week. Below is a transcription of that discussion, edited for length and clarity.

Heather Clancy: How has the COVID-19 pandemic changed the immediate focus of PepsiCo’s sustainability team? 

Simon Lowden: I’m really proud of what we’re doing with supply and demand, and we’re really proud of our frontline associates. We’re making sure that shelves are stocked and people can get all they need. For PepsiCo as a business, that’s our most important thing. I think what we’ve done is — when we start thinking about sustainability, then you orient towards support, right? — you think about communities. 

We’re donating through our foundation $45 million to bring food to communities, 50 million meals to at risk populations. We’re really leaning in quite hard to making sure we play a significant role in providing people with resources that they can’t get. So that’s one thing we’re doing. We’re also making sure that we do our best with our brands. 

I find myself being more inspired and probably more ambitious as we try and think about how we can operationalize sustainability across PepsiCo to new levels as we come through this.
I think you’d agree PepsiCo is known for entertainment and has become quite [an] expert at that over the years — it brings people together, brings community together, brings groups of friends together. That’s why our brand Pepsi partnered with Global Citizen supporting the "Together at Home" concert on April 18 … 

There would be two examples where I think as a company and as a sustainability team we’re trying to make sure we’re supporting the communities within which we operate. 

We’re doing that whilst we ensure we don’t let short-term — we hope short-term, probably medium-term — issues affect the longer-term ambition of our sustainability strategy. I would suggest at the moment we’re really bringing up our efforts on personal and community health, ensuring that we spend this time to understand what, how people are reacting to things, what it will mean from their point of view around broader sustainability agenda and ensuring that we don’t confuse short-term requirements with fighting our longer-term ambitions. 

Clancy: What happens to the work you had planned during this period when you are focused on that short term? 

Lowden: The work continues. You know very well this is such a rapid changing space that we’re actually always evaluating, reevaluating our posture, our strategies, our intent, what our key message should be. We’re doing that work right now ... 

How do we ensure we build a leadership posture and get results in the right place for a future? Particularly when climate, I believe, is going to be an ever more critical thing to address as we come through this virus pandemic. Just look at what’s happening. Right now, if you’re in China, you’re seeing skylines you didn’t know existed. If you’re in India, you’re enjoying smoke-free cities in Delhi and Mumbai, and seeing the Himalayas for the first time in years. If you’re in Italy, you’re seeing clean canals in Venice.

We’ll start seeing more and more of these sort of improvements driven through the lack of emission activity from mankind, and that’s something that’s going to have a demonstrative effect on what impact we can have. When you step back and say you know what? Climate change has been worsening. Our food system, which is under pressure right now in every fashion than it’s been before — it needs a transformation. There’s a lot of work to be done. We at PepsiCo believe we should be taking a leadership role in this. How can we ensure that what we grow and what we make and the products we produce, how can we ensure that’s doing the best thing for the planet? 

I find myself being more inspired and probably more ambitious as we try and think about how we can operationalize sustainability across PepsiCo to new levels as we come through this. Maybe one big manifestation of that is that we just signed the United Nations Global Compact Business Ambition for 1.5 Degrees C pledge, which is based on science-based targets.

We’re setting our emissions reduction target across our entire value chain, so that’s inclusive of Scope 3 as well as Scope 1 and 2, to limit global warming to 1.5 degrees above the pre-industrial level. We’re developing alongside this a longer-term strategy to ensure that we can get to net zero emissions by 2050. That ambition is what we’re working against now. And you’ll hear more about how we’re going to do that over the coming months.

Clancy: Why was that important for you to do?

Lowden: I think what we talk about now and what we do now shouldn’t deflect from what’s critical in 10 to 15 years’ time. This is what Earth Day is all about. We want to make sure that in years to come we have a planet that’s able to be lived in and enjoyed by generations and generations to come. I think we have a big role in that.

I think if you stand back and look at PepsiCo’s business, we have probably three areas where we can certainly play our part in the climate action plans.

One is around our agricultural footprint. We spend significant dollars every year on crops — on corn, potatoes, wheat, oranges, etc. And the agricultural supply chain, the agricultural industry has a massive opportunity to be a positive effect on what’s happening with climate change. And we’re doing a lot of work. We work with tens of thousands of farmers around the world, many of them smallholders. We’re making sure we bring to them through what we’re calling demonstration farms, new capability, new technology, new innovation that’s going to enable them to increase yield as well as decrease the consumption of, say, water per hectare they sow.

Simon Lowden, PepsiCo CSO, Brazil field

By the same token, not just doing that but ensuring that the pesticides they use and the fertilizers they use are the right amounts at the right time of the growing season. And ensuring when they leave that field fallow it’s a carbon sink. That’s a big responsibility we have. Not only is it ensuring the farmers are economically, fiscally trained the right way and healthy, but the land we leave behind and the land that’s being used is healthier than it would have been without our expertise and is able to play its role in the climate change dynamic. So that’s one great example.

Another great example is our manufacturing side. We have 100-something manufacturing sites around the world. In the U.S. we said we’re going to move to 100 percent renewable electricity across the U.S. businesses. Now the U.S., I think, uses just under 50 percent of our global electricity around PepsiCo. We’ve already got similar efforts underway in Mexico and in Europe. …

We have bottling partnerships. We have packaging supplies. We have customers. How can we actually act as a catalyst?
I think for PepsiCo it’s not just about all operations but it’s about how we then leverage the partnerships we have. We have bottling partnerships. We have packaging supplies. We have customers. How can we actually act as a catalyst? I’m sure you’ll have heard PepsiCo’s strategy about being "faster, stronger, better" — faster around growth, stronger about the muscles we build and better about ensuring we do those things in a way that’s going to leave the planet in a better place than we found it. That’s going to become an operational mandate for PepsiCo.

Clancy: I’ve been reading distressing stories about food going to waste because of the restaurant crisis. Have you changed your production help farmers during this particular time? 

Lowden: We’re doing our best by the people we source from. I would say that we are operationally moving ahead as effectively as we can across most of the geographies around the world. I would say that our relationships with our suppliers, including our farmers, are as strong as ever. Of course, we take all precautions to ensure that across the full supply chain — whether it be from farmers or out to customers — that we’re paranoid about the continuous safety of our products and making sure our manufacturing locations practice social distancing, practice deep cleaning where appropriate, adhering to all of the local and new federal guidelines. We feel pretty good about that.

We are looking at the supply chain from a food security standpoint. We put in some measures to control, to ensure that we control the spread of the virus, which could of course lead to massive disruption of supplies. If that were to happen, then the holding pattern would equally be changed. I guess we’re taking pretty strong action. We’ve worked with the world leaders, a number of food security and humanitarian organizations to ensure we’re lending our voice to keep trade flowing and particularly in places like Europe where we’ve got cross-border trading challenges and multi-country trading challenges. …

Clancy: But how would you say this crisis has affected your relationships with your collaborators and partners?

Lowden: I’d say that from an action point of view it’s a reinforcer, maybe an accelerator. I’d also say for the longer-term initiatives — we’re working with our competitors and our peer groups and industrial partners to find alternative packaging solutions, education platforms for consumers around recycling, new material development for our products. I think what people are realizing in the face of this is whatever change we’re going to make in the food and beverage category when it comes to sustainability more than ever requires a system change, more than ever requires partnership, and we have to move together. So I’d say that actually it’s a reinforcer of the need for organizations to work together. 

Clancy: COVID-19 has put a real strain on municipal recycling programs around the world. How has this affected your packaging commitments and strategy?

Lowden: It hasn’t affected our medium-term ambitions. We still have our goals to reduce virgin plastic content by 35 percent across beverages. We still have goals to ensure our packaging is 100 percent recyclable, compostable, biodegradable. We’re pledging millions and millions of dollars — more than $51 million between July 2018 and July 2019 — to boost recycling rates, a big endeavor around the U.S. in recycling partnerships. In no way, shape or form are we stepping back from those ambitions. Our SodaStream business still grows healthily, and we know that if that grows well that we’ll be able to effectively replace nearly 70 billion bottles from the marketplace over the next few years.

None of those targets from our point of view are affected. Will there be short-term pressures? Maybe. I’m not sure we know yet to be honest with you. It’s certainly putting a strain on some programs, but we look at those as opportunities. We’re all safe harboring at home. This gives us the chance to think about our own practices, right? They say it takes what, four weeks to develop new muscles? I have really relaunched my own recycling efforts. Right? I’ve relearned what can and can’t be. I’ve relearned what can and can’t go into certain different trashcans and making sure that I’m doing my part 100 percent as I live at home and use more food materials.

I think we have a big opportunity to ensure that we use this chance to educate people as they’re sheltering in place. And so that’s what we’re going to start doing. 

Clancy: How does PepsiCo plan to commemorate the 50th anniversary of Earth Day given the crisis? Has your strategy changed? How has it changed?

Lowden: Well, we’re not doing it face to face. So look. It’s really important to us. It’s a really important milestone for the planet and for us as a company. Of course, this virus has impacted it, like it’s impacted any other event. However, I think the energy behind the scenes is as high as ever. Actually it’s quite motivating to see a number of people, organizations, the broader world community to be very energetic still behind Earth Day. We want to make sure that we play our role in coming together as part of a global community and making sure that we can use this platform for positive change. … 

My job is to make sure we don’t lose sight of the sustainability agenda and climate change we’re facing.
We’re going to have recycling rallies and ensure that people are spending time with their kids at home. I should mention I’ve got two kids [in their 20s]. They’ve never been happier with the job I’m doing now. They think it’s the best thing I’ve done at PepsiCo, quite honestly. They’re a massive push for me, and I’m sure many people at home have got their kids and their families who want to be part of a movement around doing something good for the planet. 

We’re also taking this moment to be a bit more reflective and give our employees a chance to think about collective responsibility. Today we’re facing disruption — everybody’s lives, personal, business lives are disrupted. It’s not business as usual. It gives us a chance to think about our actions and what they’re going to impact tomorrow. So we’re going to take this chance to talk to and educate people again and our employees again that protecting our planet and the well-being of each of us will require all of us to do our part.

Clancy: What do you feel your most important priority is as a chief sustainability officer in this time?

Lowden: I think my most important thing I can do in my role is to ensure that whilst we’re in this sort of short-term operational stress, which our frontline teams and our operation units are dealing with, that I ensure I hold the torch and ensure the sustainability agenda including the climate change agenda is driven forward through PepsiCo and that we don’t let what’s happening now deflect from what must be our longer-term leadership in this space. So that’s what I think my role is.

Climate change, it’s not getting any better. I have to make sure that even as we operate business in the new reality — or the short-term reality — my job is to make sure we don’t lose sight of the sustainability agenda and climate change we’re facing.

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