Dive Brief:

  • PepsiCo said in a statement it is aiming to become net water positive, or replenish more water than it uses, by 2030. If the company were to achieve its goal, PepsiCo said it would be among the most water-efficient food or beverage manufacturers operating in high-risk watersheds.
  • The company said the stringent water-use-efficiency standards would cover more than 1,000 company-owned and third-party facilities, with nearly half located in high-risk watersheds. This would save more than 11 billion liters of water annually.
  • PepsiCo’s commitment to improve its water consumption comes as food and beverage giants across the world look to reduce their environment footprint through a host of measures, including the use of recycled material, renewable energy, sustainable growing practices and curbing of emissions. 

Dive Insight:

PepsiCo, with brands such as Mt Dew, Aquafina and Fritos, uses plenty of water to make the products that collectively generate billions of dollars in sales each year. In 2020 alone, the company consumed more than 28.1 billion liters of water.

Its newest pledge builds on earlier commitments. Its 2020 sustainability report showed the company wants to improve water-use efficiency by 15% in its agricultural supply chain (focused on corn and potatoes) in high water-risk areas by 2025. It also wants to return 100% of the water used in manufacturing in high-risk areas by 2025. A year ago, PepsiCo replenished 18% of the water compared to 10% in 2019 and 9% in 2016.

“Time is running out for the world to act on water. Water is not only a critical component of our food system, it is a fundamental human right — and the lack of safe, clean water around the world is one of the most pressing issues facing our global community today,” Jim Andrew, chief sustainability officer at PepsiCo, said in a statement announcing its net water positive initiative.

David Grant, PepsiCo’s sustainability director of global water stewardship, told The Wall Street Journal returning more water back than it consumes would include measures such as injecting water back into aquifers in high-stress areas and working on conservation projects that make it easier for the land to absorb rainwater.

PepsiCo did not say now much money it would spend on the water commitment, but Grant told the paper it would make “a significant investment at sites around the world.”

A study by Nielsen in 2018 found nearly half of consumers are likely to change what they buy to meet environmental standards. In many cases, they will make the switch even if it means paying more for the products.

Food and beverage companies, however, not only have a vested interest in improving their environmental footprint to appease consumers, but for their long-term future and bottom line. The global food sector accounts for 70% of the world’s fresh water use, according to Ceres. The group cites U.N. estimates saying demand for water will be 40% more than supply by 2030.

In June, Barclays said in a research note water scarcity is “the most important environmental concern” for the global consumer staples sector, which includes food and beverage companies. Consumer staples face a $200 billion impact from water scarcity, the U.K. bank said.

For this reason, water has become a major area of focus for large CPGs. Danone, Diageo, General Mills, Hormel Foods, Kellogg and PepsiCo are among the businesses who have participated in the Ceres and World Wildlife Fund AgWater ChallengeLaunched in 2016, the AgWater Challenge encourages large food and beverage companies to be more conscious about their water usage.  

Even meat and poultry processor Tyson Foods, a long-time critic of green groups, is working with the Environmental Defense Fund on a land stewardship initiative that will allow it to cut back on its water use, reduce greenhouse gas emissions and help farmers yield more food.

Food and beverage companies have drawn fire from some critics for making pledges and failing to meet those goals, or not being transparent enough on their progress. However, as more businesses like PepsiCo commit to greater water stewardship, pressure will be heaped on other CPGs to do the same from both shareholders and consumers.

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