{"id":26322,"date":"2017-11-15T22:11:50","date_gmt":"2017-11-16T03:11:50","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/the-climate-change-concern-for-pepsico\/"},"modified":"2017-11-15T22:11:50","modified_gmt":"2017-11-16T03:11:50","slug":"the-climate-change-concern-for-pepsico","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/the-climate-change-concern-for-pepsico\/","title":{"rendered":"The Climate Change Concern for PepsiCo"},"content":{"rendered":"

The Climate Change Concern for PepsiCo<\/strong><\/p>\n

\u00a0<\/strong>Climate change will have a negative impact on PepsiCo\u2019s value chain in two large ways: the impact of higher temperatures and flooding on agricultural yield and a dwindling fresh water supply.<\/p>\n

First, climate change poses a direct danger to the availability and costs of agricultural raw materials. PepsiCo relies heavily on raw agricultural materials for their products. Through increasing temperatures, droughts, and extreme flooding, studies from the EPA that climate change harm the quantity, quality and cost of agricultural crops and the global food supply at large[1]<\/a>.<\/p>\n

PepsiCo should be alarmed by these prospects as their supply chain is so dependent on the availability, and prices of the agricultural market.<\/p>\n

Second, climate change is posing a significant threat to the global supply of fresh water \u2013 a key component of PepsiCo\u2019s supply chain. A report from the Intergovernmental Panel on Climate Change stated that increasing temperatures from climate change will lead to intense water scarcities throughout the world[2]<\/a>. In 2016 alone, the costs to businesses of conditions such as droughts, water scarcity, and pollutions was $14 billion, an 81% increase from 2015[3]<\/a>.<\/p>\n

This is troubling for PepsiCo because fresh water is not only a key ingredient for their beverages, but also because many of the areas affected are strong agricultural suppliers for PepsiCo. These suppliers rely heavily upon a clean water supply. In fact, 70% of all the world\u2019s fresh water is used by the agricultural industry.<\/p>\n

PepsiCo\u2019s Addresses The Concern<\/strong><\/p>\n

\u00a0<\/strong>PepsiCo has announced plans to address the climate change issues affecting their supply chain by focusing on two big areas: Greenhouse gas emissions (GHG), and increased water efficiencies<\/p>\n

GHG Emission Reduction <\/em><\/p>\n

\u00a0<\/em>In May 2017, PepsiCo announced its vision for GHG reduction as part of its Performance with Purpose<\/a>[4]<\/a> initiative. The plan lays out steps for achieving a 20% reduction in GHG emissions across the PepsiCo value chain over the next decade. PepsiCo focuses its efforts on reducing Scopes 1, 2, and 3 emissions across its supply chain.[1]<\/a>.<\/p>\n

\u00a0<\/strong>Scopes 1 and 2 Emissions<\/em><\/p>\n

Scopes 1 and 2 emissions include on-site energy generation, fleet fuel, and purchased electricity. PepsiCo plans to reduce their Scope 1 emissions in the following ways[5]<\/a>:<\/p>\n