PepsiCo Chairman and CEO Ramon Laguarta recently called for a fundamental rethink of how companies approach sustainability, arguing that the debate should not frame sustainability against profitability but view it as a question of short-term versus long-term risk.
Speaking at a panel discussion during the World Economic Forum Annual Meeting in Davos, Laguarta said corporate strategies often misinterpret sustainability costs as a drag on profits, rather than as investments critical to long-term growth.
“For PepsiCo, the debate is not about whether we grow or whether we are sustainable. Growth is our business model,” Laguarta said. “But long-term growth requires generating value without depleting the resources that enable future growth.”
He said this reframing must be owned at the highest levels of corporate leadership, including boards, CEOs and senior management teams, and translated into a strategic framework that is operationalized across the organization.
Laguarta pointed to PepsiCo Positive (pep+), the company’s sustainability transformation programme launched in 2021, as an example of integrating sustainability into core business operations. He said the programme is built around defined pillars, governance mechanisms and measurable targets embedded within operating plans.
Last year, PepsiCo reset parts of its sustainability strategy after acknowledging in its 2023 sustainability report that it was unlikely to meet some of its near-term targets. The reset included pushing its net-zero emissions target from 2040 to 2050, changing its emissions baseline year to 2022 from 2015, updating packaging sustainability goals and introducing new 2030 emissions reduction targets. The company also restructured how it tracks Scope 3 emissions, separating them into energy and industry emissions, and forest, land and agriculture emissions.
Laguarta said PepsiCo views itself as a first mover in materials innovation within the food and beverage industry and believes its scale allows it to absorb the cost of experimentation required to drive systemic change.
“For the long term, we need to manage nature and profitability together,” he said, acknowledging that the transition involves trade-offs and internal challenges.
While progress has been made in scaling new materials and infrastructure, Laguarta said sustainable agriculture remains an area requiring significantly more effort. He highlighted the need for stronger collaboration between the public and private sectors to help farmers adopt practices that improve soil health, water efficiency and input use.
“This is not about everyone doing small things in isolation,” Laguarta said. “This is about joining forces to deliver complex, large-scale change. It requires leadership, resources, accountability and discipline to make that shift happen.”