How Will Pepsi Meet New Packaging Goals After Recent Failure on Past Commitments?
With companies lining up in recent months making commitments to groups like As You Sow and Ellen MacArthur Foundation’s New Plastic Economy project on plastic packaging, it is important to understand if companies will actually follow through on ambitious commitments.
We were pleased to see PepsiCo announce a commitment on Sept. 13 to reduce use of virgin plastic content in its beverage packaging by 2025 through increased use of recycled content and alternative delivery systems, but announcements like this deserve closer scrutiny. Long before plastic pollution became an environmental crisis in the public consciousness, As You Sow was engaging Pepsi to use more recycled plastic content, and use its influence to increase container recycling rates to provide more materials for recycled content.
Over two decades of engagement with Pepsi, there’s good news and there’s bad news about its record on delivering on commitments.
First the good news. In 2003, both Coca-Cola Co. and Pepsi committed to As You Sow to use at least 10 percent recycled PET in plastic beverage bottles in the U.S. market by 2005. Pepsi met that goal and has done so continuously to the present. Coke briefly met the goal, but then fell back a year later and could not sustain it. As Pepsi noted last week, it has become one of the world’s largest buyers of recycled plastic. Yay! Its Naked Juice brand has used 100 percent rPET for many years, demonstrating that full circularity in plastic packaging is possible. Yay again!
Now for the not-so-good news. Simon Lowden, president of Pepsi’s global food division, leader of its plastics agenda, said in a release that if there was more recycled plastic available, “we'd buy it — and if there were more markets where we could use it, we would. We are committed, and partnership is key." The irony here is that Pepsi recently spent eight years supposedly working on ways to develop huge new supplies of recycled plastic and failed.
In 2010, our group withdrew a shareholder proposal in exchange for a bold commitment by Pepsi to work with peers to increase the U.S. beverage container recycling rate to 50 percent for PET plastic, glass bottles, and aluminum cans by 2018. Between 2010 and 2018, the company said it undertook a variety of partnerships, pilots, large-scale programs, and packaging innovations, but has little to show for it. The container recycling rate is lower today than it was when the company made the commitment! The company issued scant public reporting on its progress; up until recently only one brief mention in a 2013 sustainability report. Last year, when it became apparent the company would not come close to meeting its goal, we encouraged it to develop a revised plan for increasing recycling rates, and publicly discuss what happened. In December, after filing another shareholder proposal to nudge it along, the company quietly posted this report on its website.
We appreciate that the company provided some public information but the report is less than candid about what it did and what went wrong. The report did not even clearly state basic metrics. When the company made its commitment in 2010, the American Beverage Association recycling rate was 38 percent. The rate briefly increased in 2013 to 40 percent, then dropped to 36 percent by 2016, the latest year for which data has been released. Instead of stating this, the company chose to express its progress by saying it “helped recycle 425 million bottles and cans since 2001.” This information is presented with no context as to what it represents in relation to increasing recycling rates. One way to place this in context is to compare the amount of bottles sold to those collected. An estimated 591 million bottles and cans are sold daily in the U.S., according to the Container Recycling Institute. This suggests that Pepsi’s eight-year effort collected less than one day’s worth of sales of U.S. beverages.
The company discusses a promising if modest investment in reverse vending machines to help address on-the-go recycling, but said it was ultimately not successful and scaled back, without discussion as to what went wrong other than “costs soared due to labor and resource constraints.”
To be sure, increasing recycling rates is a daunting and complex task. The report notes this complexity, asserting that packaging must be better designed for recycling, access to curbside collection improved, infrastructure strengthened, and more dependable ends markets developed. However, there is no evidence of efforts to make these things happen at scale. Despite saying it would work with peers, there is no mention of partnerships with other companies, which would be essential to build the scale of efforts needed to increase recycling rates. It cites being a member of the Closed Loop Fund in its report; it seems misleading to suggest the fund’s efforts were designed to help meet the 50 percent container recovery goal. Also, it is unrealistic to suggest that the fund’s initial $100 million budget could create needed change at scale. Fund founder Ron Gonen has rightly stated that billions of dollars of investment are needed to fix U.S. recycling infrastructure.
Pepsi’s report did not clearly acknowledge failure to meet the 50 percent goal or propose a revised effort to meet amended goals. Instead, it replaced a quantitative goal with a vague assertion to “work to increase recycling rates,” a rather stunning retreat of ambition. In early 2018, the company indicated that its revised plan would consist largely of a $10 million donation to the Recycling Partnership. The donation was announced in July 2018 in the form of a challenge to help raise $100 million to improve recycling by making it easier for 25 million households to recycle. The partnership does terrific, much-needed work, and we wish it every success. However, Pepsi’s plan envisions that $75 million will magically materialize from strapped public sources, with only $25 million coming from corporate sources. The bigger problem is that it is simply not ambitious enough. About 2 billion additional containers must be collected to increase the U.S. recycling rate by 1 percent. If the full $100 million is raised, enabling collection of about 7 billion more bottles and cans, the resulting progress, perhaps a 4 percent increase, will still fall far short of the dramatic increase needed to demonstrate that very high levels of recycling are achievable — and soon!
Most perplexing is that a company as influential and powerful as Pepsi certainly knows the size and scope of collaboration and resources needed to increase the U.S. recycling rate, but showed little evidence of using such influence during its eight-year effort to drive bold, scaled new activities and relationships that would result in significant rate increases.
Before this recent announcement, Pepsi set a goal last October to use an average of 33 percent rPET by 2025. Given this recent failure to deliver a big audacious 50 percent collection goal, it is fair to ask the company to explain where it will secure the increase level of rPET. In February, Dave Cornell, former technical director of the Association of Plastics Recyclers, told Plastics News that for Pepsi, Coke, and others to meet their stated recycled content goals will require a herculean effort to more than double the U.S. recycling rate for PET bottles to 70 percent. The work of the Closed Loop Fund and Recycling Partnership are genuinely appreciated, but their size and scale are far from adequate to be able to deliver a doubling of bottle and can recycling rates. Programs and budgets on a far larger scale are needed.
So what will it take, Pepsi? Perhaps a national coalition in which Pepsi and its friends at the American Beverage Association use their lobbying muscle to drive a national deposit law? A joint beverage-fast foods-retail-consumer goods sector leadership team descending on Capitol Hill demanding a national extended producer responsibility law for packaging?
It’s time to think big — far bigger than before. With growing global concern over plastic waste permeating virtually every area of our lives, the stakes are far higher now and company commitments must be carefully monitored, and called out promptly when they lag behind. Stakeholders should reject any more tepid, voluntary corporate half steps that don’t move the needle. We tried that for many years. We deserve a credible, well-designed plan from Pepsi and other major packaging producers and users that finally addresses our embarrassingly low U.S. recycling rates at scale.