Director of sustainable development says firm is aiming to put economic value on environmental and social impacts of supply chain

PepsiCo is preparing to launch a new global initiative to promote sustainable agriculture, as part of an attempt to help businesses put an economic value on the environmental and social impacts of their supply chains.

Dan Bena, PepsiCo’s director of sustainable development, told BusinessGreen that the drinks giant is planning to launch the new initiative next year, building on work currently being undertaken by on-farm auditing firm Validus.

The study is designed to help PespiCo measure the social return on investments (ROI) and put a financial value on the environmental and local economic impacts associated with its supply chain.

Bena said that in addition to helping PepsiCo improve its supply chain management, it is hoping to use the research to create a framework that will allow other businesses to better monitor and measure the impacts of their supply chains.

“[When we started looking at doing this] we quickly realised that we needed to go and look at standards, but we soon realised that no such standards existed,” he said. “No agency can handle the diversity of the agricultural industry.”

The review is focusing on resource management, such as water, energy and emissions, as well as farm productivity, preservation of soil fertility, and biodiversity. It will also cover social impacts, such as the effects on farming communities, human rights, and compliance with local laws, standards and regulations.

Bena said that the environmental element of the review is being conducted this year, and the social and economic aspects will be audited next year. The project is part of a growing trend amongst firms seeking to put an economic value on their environmental impact.

Earlier this year, sports brand PUMA released the first section of an initial environmental profit and loss statement, and a number of other companies, including Adidas, are now understood to be looking to follow suit.

Despite the fact that some critics have shunned such audits as a publicity stunt with questionable results, others are keen to point out that the move marks an important step forward for companies attempting to increase their transparency and better monitor greenhouse gas emissions and environmental impacts.

PUMA was understood to be shocked that its water use and greenhouse gas emissions (GHG) in 2010 cost as much as €94.4m (£82.7m), suggesting the audit will drive change within the business.

Similarly, Bena acknowledged that PepsiCo’s first audit may not live up to the rigour demanded by some green groups, but he maintained it is a step in the right direction.

Commenting on how PepsiCo’s own impacts will be reduced following the results, Bena predicted that the social element will represent the largest challenge, while the environmental aspect would be less complex to tackle.

“Comparatively, the environmental part is going to be easy to solve because there the technology exists to improve farming practices… The economic aspect will also be relatively easy because we already have examples of improvements we’ve made there,” he said.

“But the most difficult part will be tackling the social element, because there we will probably have to supersede what’s technically available locally.”