PepsiCo has closed on a $1.25 billion 10-year green bond that the company will use toward decarbonization of its operations, plastic waste reduction, regenerative agriculture, and pursuing net-positive water impact.
Overall, PepsiCo says it will use an amount equivalent to the net proceeds from the bond to fund eligible green projects with a focus on its pep+ (PepsiCo Positive) sustainability agenda. The company says that the focus will be on positive agriculture and a positive value chain.
This is PepsiCo’s second green bond. The first was worth $1 billion and issued in 2019, in which $858 million of the proceeds have gone to eligible projects in plastics and packaging, decarbonization of operations and supply chain, and water sustainability, according to the company.
Because the food and beverage company uses more than 25 crops from more than 30 countries, a top use of the funds will be toward regenerative agriculture. PepsiCo says it will adopt regenerative agriculture practices across its supply chain, including watershed enhancement, reduction in fertilizer use, farmer training, and improvement projects.
The company also has a goal of reducing greenhouse gas emissions by more than 40% against a 2015 baseline by 2030. The green bond will be used in areas such as on-site renewable energy, increasing the energy efficiency of its operations, and investing in more sustainable buildings. The company says the funding may also go toward the expansion of clean transportation.
One of the top priorities of the pep+ endeavor is to use 50% recycled packaging by 2030, and the company will use proceeds from the bond to continue that effort.
The company also plans to be net-water positive by 2030 by reducing total water use and replenishing more than 100% of the water it uses back into local watersheds. The bond will be used to finance water recycling and reuse projects.
Sustainable financing has dropped off this year after seeing record numbers in 2021. According to Climate Bond Initiatives, green bonds in the first quarter of the year totaled $83.5 billion, a year-over-year decline of 38%.
Still, several of at least a billion dollars have been issued in 2022, including Equinix securing a $1.2 billion green bond and Verizon issuing a $1 billion green bond for the fourth consecutive year. Last year Walmart priced a $2 billion green bond, which Bloomberg reported was the largest by a US corporation.
PepsiCo plans to publish an annual update of the allocation of the proceeds of the green bond until it has been completely distributed. The green bond framework for the new financing was designed to align with UN Sustainable Development Goals, PepsiCo says.
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