PepsiCo, ADM partner to cut carbon through regenerative agriculture

Dive Brief:

• PepsiCo and Archer Daniels Midland are partnering on regenerative agriculture projects that could reach 2 million acres of farmland by 2030, a meaningful step in helping each company achieve its carbon reduction goals.
• The 7.5-year agreement will initially enroll corn, soy and wheat farmers in Kansas, Minnesota, Iowa, Illinois, Indiana and Nebraska. The growers will receive financial incentives, plus technical and agronomic support for using practices like cover crops, reducing tillage and engaging in responsible pesticide use. The companies said their efforts could eliminate 1.4 million metric tons of greenhouse gases.
• A growing number of U.S. companies have turned to regenerative agriculture — a series of practices that enrich the soil while removing CO2 from the atmosphere — as a way to help them lower their environmental footprints.

Dive Insight:

As companies look for new ways to boost their environmental stewardship while maximizing their resources, partnerships like the one between PepsiCo and ADM could become more common. The broad reach of the two businesses across the food and agricultural supply chains should enable them to have influence across a wider swatch of the U.S. 

“This partnership with ADM marks a sea change in how PepsiCo engages with strategic partners,” Jim Andrew, PepsiCo’s chief sustainability officer, said in a statement. It is expected to help PepsiCo reach almost one-third of its goal to reduce carbon emissions to 7 million acres by 2030. “By enabling greater collaboration through strategic partnerships like this one, we can strengthen the livelihoods and resilience of the farmers we work with.”

For its part, ADM has committed to reducing its Scope 3 greenhouse gas emissions across its supply chain by 25% by 2035 compared to a 2019 baseline. 

PepsiCo and ADM are the latest companies to turn to regenerative agriculture.

Alcohol giant Diageo has launched a regenerative agriculture pilot for Guinness on barley farms in Ireland. Molson Coors has worked with barley farms in Colorado, Idaho, Montana and Wyoming to implement new practices, including weather stations and soil moisture probes. And in 2019, General Mills committed to using regenerative agriculture methods on 1 million acres of farmland by 2030.

While companies are under a lot of consumer and investor pressure to address climate change, they have received criticism even when they act. One drawback of regenerative agriculture, for example, is that it’s hard to track the progress being made by the companies, leading to questions about how much they are doing to follow through on their initial pledges.

ADM and PepsiCo said as part of the deal they plan to use trusted, third-party measurement systems.

The decision to partner by sharing resources and insight could be a model for other companies going forward and help minimize some of the challenges businesses face when it comes to their environmental stewardship.

A report issued last month by Rabobank noted efforts by the beer industry to use regenerative agriculture as a way to lower emissions throughout its supply chain are facing “significant hurdles.” The financial services company noted that “regenerative agriculture” and “sustainability” can be hard to define and progress difficult to measure, while it can be hard for participants to agree upon a uniform strategy.

PepsiCo has also run into problems reducing its footprint, something the partnership with ADM might be able to help. PepsiCo said in July that its Scope 3 emissions — which account for 93% of the company’s emissions — increased by 5% from a 2015 baseline, due to “unprecedented business growth.” 

With CPGs depending on numerous other players for ingredients, shipping and packaging, and reacting to how consumers use their products, they can only go so far to address emissions internally, making partnerships like ADM and PepsiCo increasingly important.