Sustainability at PepsiCo Generated $375 Million in Cost Savings

We want companies to improve their environmental and social performance because emotionally and intellectually, we know such moves are better for the planet and for people, too.

But pragmatically, whether a company is publicly owned or privately held, most companies will not take on such an agenda unless they are threatened with regulation--or, if they can be convinced of the business case and resulting financial benefits.

So PepsiCo’s recent claim that since 2010, it has reaped $375 million in savings due to its sustainability initiatives, is encouraging news. This announcement, outlined in PepsiCo’s most recent annual sustainability report, should pique the interest of companies that are being pushed to become more responsible, efficient and ecologically sound within their operations and supply chains.

Improved water efficiency is one reason PepsiCo has been able to reduce its expenses the past several years. Smarter water consumption, in part, helped the company decrease its operational water use by 23 percent in 2014. That 264 million gallons (about one billion liters)saved helped PepsiCo shave $17 million in related expenses last year. The company has also been a consistent supporter of Water.org, an NGO co-founded by Matt Damon that has delivered market-driven clean water projects affecting 1.6 million people around the world.

Waste diversion has also allowed PepsiCo to reduce some its costs. Zero-waste has become the common goal of many consumer product and food companies as they have become sensitive to criticism that the goods they sell are creating copious amounts of garbage with which municipalities struggle to manage. Zero waste only covers what a company is able to do within its own factories and offices, but it is still an important first step. PepsiCo has disclosed that currently only seven percent of all its waste is sent to landfill. Shipping less waste, whether it is plastic, paper or food byproducts, helped the company reduce those expenses by $3.5 million last year.

In a press release announcing the company’s latest sustainability report, PepsiCo points out that reductions in energy consumption and packing efficiencies contributed to the company’s cost savings. Indeed, smarter logistics and a cleaner fleet of vehicles would contribute to the company’s overall fuel savings, but unfortunately PepsiCo doesn't offer specifics beyond that it reduced its overall greenhouse gas emissions in 2014 by 16 percent. Reduced packaging was part of that equation--after all, less packaging means less weight, and smarter design on that front reduced PepsiCo’s need for such materials by 89 million pounds during 2014.

The $375 million figure that PepsiCo offers, even if divided over five years, is certainly impressive. The reality is that water and municipal waste are priced too low compared to the actual value they offer both businesses and consumers, so to run up cost savings in the millions of dollars is not a small feat. If PepsiCo were more amenable to disclosing how it achieved that total, these recent achievements would be even more laudable.

Image credit: PepsiCo