A CEO perspective: Tackling the climate crisis with urgency and collaboration
Four months ago, I asked for advice from a former CEO on how to address the sustainability challenge, he told me, “Silviu, you have to start by changing the mindset of your organisation.” In my case it was exactly the opposite, it was the organisation that changed my mindset. In every town hall, in every meeting with colleagues across Europe, I heard a clear message to do more and to do it faster.
Over the last two years, we consulted with specialists, we talked with our customers, we moved some of our best talent to the sustainability team and we evaluated hundreds of ideas. What we now have is a ten year plan that we call “pep+” (PepsiCo Positive), which will transform our business end-to-end and put sustainability at our core of how we create growth and value by operating within planetary boundaries and inspiring positive change. We have a roadmap, a team of extremely passionate employees and the right resources to deliver. Across our company, we are committed to having a positive impact on the planet and people. This includes through our agricultural procurement, across our value chain, where we are driving for a 40+% greenhouse gas reduction by 2030, targeting net-zero by 2040, and providing consumers with more sustainable and healthier choices in our brands.
Like PepsiCo, many businesses have expanded their sustainability agendas. Most large food manufacturers have accelerated their Net Zero and environmental commitments. Overall, the private sector is well advanced on public commitments and actions to address climate change.
Last month I attended COP26, the biggest event since the Paris Agreement in 2015. In all previous conversations I have had with customers, governments, and NGOs, the need to act was undisputed.
COP26 confirmed that the challenge now is not so much about the direction of travel but the speed of travel. We have ahead of us a “decade of action”. In fact, we have only nine years left - nine planning cycles, nine harvests, to achieve the 2030 sustainability goals.
We’re in a very different place in 2021 than pre-COVID, with a number of accelerators driving action. First, the pandemic has amplified the importance of sustainability and the realisation that terrible things are happening to our planet. Unlike COVID-19 however, there is no vaccine for climate change.
The second accelerator is that the impact of climate change has become more visible. At the first COP in 1990 the conversation about climate change looked like an abstract concept. Today we can all see the dramatic weather events. Hurricanes. Fires. Flooding. Extreme temperatures. We have all made the mental shift from why we need to act, to how we get there.
The third amplifier is the EU Green Deal which sets the blueprint for making the European economy carbon neutral by 2050. The Green Deal offers a very ambitious framework to transform the food systems and the economies.
All of this means there is fantastic momentum, but still this is not enough.
There are tensions in the system which need to be resolved urgently so we can move forward together to tackle climate change and transform the food system from a source of GHG emissions to unleashing its potential as a carbon sink.
The first is we need to balance between innovation and scaling of existing solutions. Innovation is critical to make the impossible, possible. From using carbon-capture technology to turn our waste potato peelings into a 90% organic fertiliser for farmers, to digital watermarking on packaging to help aid sorting so that more gets recycled, there are plenty of amazing and inspirational projects. We need this ingenuity to tackle the environmental crisis. But in the rush to develop “new” solutions we need to make sure we don’t overlook proven winners, which just need to be scaled to make a real difference. Take Deposit Return Schemes as an example, which charge a small amount to consumers when they buy a plastic bottle, but which they get back when they return them for recycling. Where DRS is in place in Europe, it is helping ensure 90% of plastic bottles are collected and can be available to be recycled in markets such as Germany and the Nordics. This is not a new solution but it needs to be more widely implemented across Europe.
If we put DRS in place across the continent, we are closer to making bottle to bottle recycling a reality. This is the path to creating a world where packaging never becomes waste.
The second tension we need to resolve is how we view investment. Placing sustainability at the core of business strategy will trigger a shift in mindset from treating sustainability as a cost to viewing sustainability as a strategic investment with high future returns and that can even drive growth.
Sustainability doesn’t always cost more in the long run. Investment costs can be offset by productivity gains.
Reducing water and electricity use makes business sense as well as benefiting the environment. In the same way, solar generated electricity is practically free after five or six years.
The third big tension we face is the need for smarter policies which enable sustainability and business growth – and I am not talking just about carbon pricing.
We need to create a framework which moves as many sustainability topics as possible to a pre-competitive level where we can collaborate with industry players, policy makers, non-government organisations and others in the supply chain with greater impact.
This is more effective than each company or organisation having parallel and potentially duplicative processes.
Co-creating smart policies can be a massive catalyst. It is vital that, as policies are being drafted, the impact is seen from the perspective of many different stakeholders. A great example is around packaging. We need the right policy changes to ensure that more types of packaging, such as flexible plastics, are extracted from the waste stream and made economically viable for waste companies to recycle. The right policies in place could also support the creation of a stronger market for recycled materials.
Europe is well placed to provide the right frameworks. The EU Green Deal has been hugely important in accelerating efforts, as has the EU Single-Use Plastic Directive and the Farm to Fork Strategy. Translating strategy and policy into action requires a lot of collaboration and co-creation across thousands of value chains. The faster we can make that happen the faster we will reach inflection points that will deliver the impact for the sustainable future we are all working towards.
For all of us who attended the Glasgow conference, the spotlight now falls on what we do, not what we say. The last thing we need is to lose the current momentum. At PepsiCo, we are more committed than ever to a “decade of action” on climate change and to do our part collaboratively that will have a real and lasting positive impact on planet and people.
Silviu Popovici, Chief Executive Officer, Pepsico Europe
