Sustainability governance

Why it matters

Approach

We believe strong governance is the foundation for delivering on our pep+ (PepsiCo Positive) agenda. PepsiCo’s sustainability approach is integrated into its business. Our governance framework reflects this approach, with an integrated structure that combines Board and senior leadership oversight with subject-matter and localized expertise that informs our strategy and how we execute it.

Governance

Sustainability initiatives have been woven into our business since we first articulated our purpose agenda twenty years ago, and we continue to believe our pep+ agenda will support PepsiCo’s success as a global company that creates long-term value for our shareholders and society.

Board of Directors

The full Board considers sustainability issues to be an integral part of its business strategy oversight. Throughout the year, management provides updates to the Board and relevant committees about sustainability, human capital management and public policy matters, including the company’s key programs, related goals and progress toward achieving these goals.

To assist the Board in its oversight of our sustainability agenda and progress, the Board established a Sustainability and Public Policy Committee (the Committee) in 2017. The Committee assists the Board in providing more focused oversight of key sustainability, inclusion and public policy matters. It is comprised entirely of independent directors and reflects a mix of public policy, risk, international and science-related skills, qualifications and experiences. In addition, the Committee reviews PepsiCo’s sustainability programs and goals and monitors our progress toward achieving such goals. See the Committee’s charter for further information.

Evaluating and supporting Board skills and competencies

PepsiCo has a comprehensive orientation program for all new directors as well as continued education programs to assist directors in enhancing their skills and knowledge to better perform their duties, which include overseeing sustainability-related matters. See Corporate governance for further information.

Senior leadership

Embedding sustainability within our business requires the commitment of our senior leadership, who drive the necessary mindset throughout their respective areas of oversight. Our Chairman & CEO, his direct reports and top functional leaders have direct oversight of the sustainability agenda, strategic decisions and performance management and receive updates regularly. This ensures sustainability is a focus for every member of our senior leadership team.

Strategy and progress against our sustainability goals is reviewed during bimonthly meetings of the Sustainability Committee — an Executive Committee sub-committee comprised of members of our senior leadership management team, including the Chief Sustainability officer (CSO), Chief Financial Officer, General Counsel, Chief Science Officer, Chief Operations Officer, Chief People Officer, Chief Consumer and Marketing Officer, Chief Corporate Affairs Officer and the Chief Executive Officers of certain of PepsiCo’s reportable segments. It is also reviewed as part of the expanded Executive Committee agenda. This provides opportunities for our senior leadership to align on major strategic issues relating to sustainability and keep sustainability in focus among competing priorities. In between these meetings, senior leadership team members remain actively engaged in executing our sustainability goals.

Global Sustainability Office

PepsiCo's Global Sustainability Office (GSO) is charged with coordinating and informing the company’s sustainability agenda. It is led by the company’s CSO, who reports directly to the CEO and works closely with leaders from across the business to drive continued progress against our sustainability agenda and embed sustainability into our long-term strategic planning.

The GSO is also responsible for collecting, managing and cross-functionally reporting sustainability data. Data integrity is vital to maintaining trust with our stakeholders, informs our goal-setting process, helps us measure progress and is used to inform investment decisions. See About our reporting for further detail.

Regional sustainability offices

In addition to the GSO, PepsiCo has established regional sustainability teams, each with its own dedicated leadership structure and sustainability team who lead the regional execution of our pep+ strategy. They also respond to sustainability issues unique to their location, address regional and local challenges and identify ways to interact with their specific stakeholders.

Risk management

PepsiCo’s Enterprise Risk Management program leads the company’s general risk management process, provides ongoing guidance, tools and analytical support to the PepsiCo Risk Committee, identifies and assesses potential risks, including those related to sustainability, and facilitates ongoing communication between all the parties involved in the Risk Management Framework, as well as with PepsiCo’s Board of Directors and other Committees of the Board. See Corporate governance for more information.

Strategy

Guided by our governance structure, we aim to drive progress towards our pep+ ambitions while managing both internal and external risks and challenges. As part of our approach, we continuously evaluate our goals and path forward in light of evolving business needs and external pressures to adapt to changing conditions. In addition to the work led by the teams above, we also use the following levers to take action:

Resource allocation

PepsiCo applies rigorous financial discipline to sustainability investments, including a prioritization framework. The prioritization framework to assess sustainability projects is anchored in Net Present Value (NPV) analysis, and assesses sustainability projects for financial impact as well as for capital efficiency in anticipated environmental impact per dollar invested while also considering other factors such as enterprise risk and ease of implementation from an execution standpoint.

Soliciting feedback

We have created feedback mechanisms in order to capture the perspectives of our own workforce to help inform our decisions and activities. Furthermore, we continually engage with external stakeholders such as shareholders, consumers, customers, suppliers, communities, employees, local governments, NGOs and other stakeholders in order to hear feedback from and collaborate with them. For more information about this outreach, see Stakeholder engagement.

Continuous Evaluation

We believe long-term transformation requires agility to identify what’s working, what isn’t, and adjust our approach to focus our impact where we believe we can be most effective. We regularly review our sustainability goals, investments, and initiatives and consider changes that are from time to time warranted, including in the context of new developments, such as business growth and necessary investments relating to our initiatives, as well as external developments. This enables us to respond to new opportunities and evolving challenges in a way that balances business demands with our sustainability vision over the short and long term.

What's next?

With our sustainability leadership team in place around the world, we plan to further embed sustainability into the strategies, daily operating activities and vision of all our businesses.