Navigating the Road to Sustainability with PepsiCo and AEA

By Nate Greensphan 

As logistics professionals, it’s incumbent on us to lead the charge when it comes to increasing sustainability. The global transportation industry plays a central role in delivering essential products to the locations where they’re most needed, which provides enormous social benefits. But, at the same time, the transportation industry, by nature, has a large carbon footprint. 

At Redwood, we view sustainability as not just a challenge, but also as an opportunity. By measuring and monitoring our own environmental impacts, partnering with our customers to provide those same insights, and adopting best practices across the board, we can make a real difference.  

What’s the best way to achieve that vision? How are other logistics leaders navigating the road to sustainability as part of their commitment to Environmental, Social and Governance (ESG) excellence? This was the topic of a recent LinkedIn Live event sponsored by Redwood called “Driving ESG Excellence: Navigating Sustainable Practices in Modern Logistics.” Joining me for the event were Kristen Banks, Senior Sustainability Manager at PepsiCo, and Heidi DuBois, Global Head of ESG at AEA Investors. 

First, let’s talk about these great panelists and their sustainability expertise.

PepsiCo products are enjoyed over 1 billion times a day in more than 200 countries, generating more than $86 billion in net revenue in 2022. The company sources over 30 agricultural crops and ingredients, which are processed at over 1,000 facilities worldwide. Products are moved approximately 1.3 billion miles by a company-owned fleet — and even farther through transportation providers including Redwood. Banks focuses on reducing PepsiCo’s Scope 3 greenhouse gas emissions — emissions from assets that PepsiCo doesn’t own and control — which account for more than 90% of its emissions.

AEA is a leading global private investment firm with approximately $20 billion of assets under management. (Full disclosure: Redwood is part of AEA’s portfolio.) Founded in 1968, AEA has recognized the value of ESG management for decades. AEA believes that ESG excellence paves the way for more sustainable businesses that unlock greater long-term value and positively impact society. Led by DuBois, the firm integrates ESG considerations into each phase of its work, from investments to portfolio operations.

Sustainability: No Longer Optional, but Imperative 

One of the topics I discussed with Banks and DuBois is the critical importance of sustainability for every business today. I asked them why they think ESG, and sustainability in particular, has become a top-of-mind imperative. 

“I think it comes down to a few things,” said Banks. “The first is that sustainability is really in the news a lot more these days. We’re already seeing the impacts of climate change. So it’s hard to avoid that. Because of that, investors and customers are really starting to pay attention —and those are hard groups for any company to ignore. And then I'm a sustainability person, so I do truly believe it is the right thing to do.” 

DuBois agreed with Banks, adding that there are also practical business and financial considerations driving greater sustainability. “Globally, that shift from a carbon to a low-carbon economy is under way. The energy transition, I do believe, will happen,” she noted. “And that creates a lot of economic incentives to contribute to that shift. For example, the Inflation Reduction Act will help accelerate that economic shift, and those who don’t take advantage of those incentives will be left behind competitively. As an organization, you want to be the supplier of choice.”

Generating Positive Environmental and Financial Outcomes

DuBois pointed out that sustainability and other ESG considerations have been proven to positively impact the financial performance of businesses, creating yet another incentive. “Now that the real payoffs of sustainability are becoming more widely accepted, one clear goal is the protection of investors,” stated DuBois. “So that’s another pressure point in terms of supply chain and logistics, especially for larger companies that are subject to public reporting.”  

Banks emphasized that, for PepsiCo, making informed environmental and financial choices is essential. “There are always trade-offs with any investment,” she remarked. “With sustainability, the cost calculation is made differently. One thing we’ve done at PepsiCo is generating an internal carbon price — putting a dollar value on the greenhouse gas emissions associated with an action. That forces us to take into account those previously externalized environmental impacts, bring those into the financial conversation. And then once you start doing that, you can start making choices around investments, while also taking into account the sustainability impact.” 

It Takes a Village

Another point our panelists agreed on? No matter how much any company prioritizes sustainability, it’s impossible to go it alone. Sustainability really requires a partnership approach that extends beyond the four walls of the enterprise.

“Addressing your Scope 1 and 2 emissions, the ones from your own operations, is absolutely the right place to start,” said Banks. “But Scope 3 is really important for us at PepsiCo, since our Scope 3 accounts for 92-93% of our total emissions. It’s massive. Its the overwhelming majority of our emissions. When it comes to starting Scope 3, I think it can be quite intimidating. But starting somewhere is the first step.” 

“When we think of PepsiCo specifically, transportation is about 18% of our footprint globally. So we cannot meet our sustainability goals without working with our transportation providers,” Banks continued. “So we do have specific and time-bound requests that we make to different parts of our supply chain. And we really do try and provide as much support as we possibly can, because we want to all be making sustainability progress together.”

“Clearly when you’re looking at your supply chain, logistics is a significant aspect of that,” added DuBois. “So building relationships with your logistics partners is a great way to think about how they can help you reduce your emissions or at least track your emissions.”

Redwood Hyperion is a great example,” DuBois noted. “Redwood can track and deliver information about your load emissions, as well as open up avenues for carbon credits that are high-quality. There are a lot of ways that logistics can contribute,  but relationship building from day one — really asking the questions and learning what the customer wants, and what the provider can do — that’s critical. Opening up those conversations is a great start.” 

Watch the archived LinkedIn Live event with PepsiCo and AEA here.  Or learn more about Redwood Hyperion, the innovative sustainability tool that provides shippers with freight emissions visibility — the first step toward a greener supply chain.