PepsiCo

PEPSICO’S SUPPORTING PAPER TO THE EUROPEAN COMMISSION PUBLIC CONSULTATION ON THE REVIEW OF THE REQUIREMENTS FOR PACKAGING AND PACKAGING WASTE IN THE EUROPEAN UNION 22 December 2020 PepsiCo welcomes the opportunity to input into the important work the European Commission is doing to further the sustainable packaging agenda with the revision of the essential requirements for packaging and packaging waste in the European Union. EXECUTIVE SUMMARY • PepsiCo supports the Commission’s objective to reduce packaging waste and strongly believes in the need for coherent and supporting policies for waste prevention that can be well translated into deliverables. Waste prevention measures should encourage recycling and uptake of recycled content incorporation even beyond packaging, anticipate the ban on landfill and discourage incineration to ensure that packaging needs never become waste.

…anticipate the ban on landfill and discourage incineration to ensure that packaging needs never become waste. • Mandatory Recycled Content targets should apply to all types of packaging and go beyond packaging while taking regulatory and technical barriers into account, to accelerate the shift towards a stronger market for secondary raw materials. • An efficient EPR schemes’ ecosystem based on strong and harmonized minimum requirements should be the channel to ensure packaging formats currently not recycled are collected and sorted. We are happy to work with regulators, recyclers, PROs and industry to unlock technical, infrastructural and regulatory solutions and improvements in existing and emerging recycling technologies. • We support a science based approach to reuse, facilitating the uptake of reusable models when it makes both environmental and economic sense.

…approach to reuse, facilitating the uptake of reusable models when it makes both environmental and economic sense. • Industry needs one clear definition of recyclability that stays technology-neutral and forward-looking to allow for innovation in packaging design. This note includes supportive facts that explain the answers provided by PepsiCo to the questionnaire. 1. WASTE PREVENTION MEASURES Packaging functionalities include hygiene but also food safety, food preservation, consumer information and regulatory compliance. PepsiCo supports the objective of reducing packaging waste. We appreciate some of the proposed waste prevention measures consider the important function packaging plays for hygiene which indeed is key, particularly for food packaging.

…consider the important function packaging plays for hygiene which indeed is key, particularly for food packaging. However, we believe any measures should also consider food safety, consumer information and the role that packaging plays in ensuring regulatory compliance with any legal requirements, as well as carrying information relating to transparency of nutritional values, mandatory ingredient and allergen declarations. Ref. Ares(2020)7910942 - 23/12/2020 Similarly, any consideration to increase the portion of products sold in bulk should consider the need to constantly ensure health and safety of the product - particularly where the consumer would be encouraged to provide an article to be filled. Furthermore, delivering products of top quality without individual packaging is in some cases impossible (e.g.

…filled. Furthermore, delivering products of top quality without individual packaging is in some cases impossible (e.g. potato chips would be exposed to oxygen and light and become soft, unappealing) as well as challenging for some type of formats to ensure also the hygiene and the recommended portion in line with European dietary recommendations. Finally, another issue that would need addressing is the liability for any potential cross contamination of food products. PepsiCo does agree, however, that when the conditions above are met, sales in bulk should be incentivised. As a matter of fact, our acquisition of Soda Stream was a step in that direction that has allowed us to explore packaging-free solutions where consumers can make their favourite product at home, and a safe and convenient alternative to meet waste prevention objectives.

…can make their favourite product at home, and a safe and convenient alternative to meet waste prevention objectives. Complementary policies to ensure packaging waste reduction PepsiCo believes that packaging is one element of waste, and the overall costs of municipal waste management should not be borne disproportionately by producers. Complementary policies will encourage packaging waste reduction, trigger a stronger market for secondary raw materials, enable EPR and drive greater recovery of packaging materials.

…trigger a stronger market for secondary raw materials, enable EPR and drive greater recovery of packaging materials. These include: • government mandates for (and enforcement of) the separation of recyclable materials from waste; • landfill bans for recyclable materials; • mandatory recycled content targets for different packaging types starting with all those that are mono- materials and less complex, and • targeted measures such as deposit return systems, which can achieve high rates of collection and recycling for specific packaging types.

…such as deposit return systems, which can achieve high rates of collection and recycling for specific packaging types. Favourable market conditions for investments in recycling infrastructures and better collection, sorting and recycling to create a strong market for secondary raw materials Higher availability of food grade recycled content can only result from an efficient collection and recycling system for all types of food packaging and favourable market conditions for investments in recycling infrastructures. PepsiCo believes that waste management should achieve the same, high level of recycling rates across all EU Member States, which will mean making adequate investments in some countries where recycling rates are poor and EPR schemes (intended as both Packaging Recovery Organisations – PRO- and Deposit Return Schemes – DRS) need strengthening.

…schemes (intended as both Packaging Recovery Organisations – PRO- and Deposit Return Schemes – DRS) need strengthening. EPR schemes should be industry-led and comply with harmonized minimum requirements across the EU. Strong minimum requirements will include: • clear demarcation of costs for the obliged industry; • a granular fee structure for fee modulation that allows setting fees based on the actual cost of recycling, without cross-subsidization between materials and polymers; • transparent and accurate reporting, monitoring and independent auditing; • strong government oversight of the transparency of the PRO in particular when in presence of a competing PRO’s environment; • separate household collection that will make unnecessary and disproportionate the treatment of residual waste.

…household collection that will make unnecessary and disproportionate the treatment of residual waste. Avoid duplication of costs through taxation in favour of circularity As a brand owner, PepsiCo recognises the importance of financially supporting a system that effectively recycles our packaging. However, we don’t support a generic tax that would feed into a general budget rather than being earmarked towards better recycling infrastructure, improved collection, increased awareness against littering and better sorting technologies. 2. REUSABLE MODELS Reusable packaging models will need a deep rethinking of supply chains, increased consumer education and will unavoidably be a longer term solution to packaging waste. PepsiCo is exploring a number of ideas to reinvent the ways consumers can enjoy our products, which include reusable packaging.

…is exploring a number of ideas to reinvent the ways consumers can enjoy our products, which include reusable packaging. Reusable models can be an effective model to be prioritised over recyclability of packaging, but they will require a rethinking in the organisation of supply chains, both in business-to- business and in business-to-consumer relations. When products are delivered in reusable packaging, consumers will need to change behaviour in the way they interact with products and packaging, and it may require some time for the adaptation to take place. Moreover, there is a need to create an enabling environment for reuse in the market: supportive and coherent legislation will be crucial (i.e.

…to create an enabling environment for reuse in the market: supportive and coherent legislation will be crucial (i.e. food safety regulations, incentives for local authorities to help create a reuse system) as well as a collaborative approach with the full value chain to work in partnerships that include food manufacturers, retailers, 3rd party washing business and brand owners. Supporting the most environmentally viable packaging format while also allowing for a free choice of packaging formats for producers to select and consumers to choose. While supporting the need for packaging design to move towards more reusable or recyclable options, we strongly believe there has to be a free choice of specific packaging formats and materials for producers to select the most appropriate based on the product, its consumption and its distribution system.

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PEPSICO’S INPUT TO THE EUROPEAN COMMISSION INCEPTION IMPACT ASSESSMENT ON THE REVIEW OF THE REQUIREMENTS FOR PACKAGING AND OTHER MEASURES TO PREVENT PACKAGING WASTE 30 July 2020 PepsiCo strongly supports the strengthening of the Essential Requirements and the work being done to identify measures for waste prevention as part of the revision of the Packaging and Packaging Waste Directive (PPWD). This note includes several elements we hope will be considered as the Commission develops a proposal for the revision of the PPWD.

…several elements we hope will be considered as the Commission develops a proposal for the revision of the PPWD. 1. MAINTAIN PACKAGING FUNCTIONALITY WHILE REDUCING PACKAGING WASTE PepsiCo supports the objective of reducing packaging waste. The work that will be done to identify measures for waste prevention should make a clear distinction between reducing packaging and reducing packaging waste. The former would neglect the importance of packaging functionality and product life cycle in a more holistic way, as well as the need for packaging in the first place. Policy that fails to adequately include product impacts may lead to unintended consequences. Similarly, restricting some packaging materials may neglect the property that makes the material in question appropriate or sometime the only option for the specific product it needs to protect. Packaging functionality is key to maintain the…

…some packaging materials or the complexity of some type of packaging needs to be based on a thorough impact assessment. 2. CRITICAL AREAS FOR PACKAGING PepsiCo believes standard EN13428 - defining the critical areas of packaging - should remain unchanged, particularly in relation to: o Packaging filling processes: packaging specifications are often essential in order to make the filling process fast and efficient with the least amount of food wasted; o Logistics: in diverse and wide-reaching global supply chains, it is important to ensure packaging functionalities facilitate safe transport of packaged goods; o Consumer acceptance: packaging plays a major role in determining consumers’ acceptance, brand recognition and ultimately purchasing decisions. Packaging options that serve consumer acceptance are often the channel for brands to reach and inform their consumers and offer them a…

…to reach and inform their consumers and offer them a choice that could attract them or meet their convenience needs. 3. ONE CLEAR DEFINITION OF OVERPACKAGING PepsiCo believes there is a need to clearly define overpackaging by assessing packaging in a holistic way including the packaged good in question. It is important that any action targeting the reduction of overpackaging does not automatically include multipacks. Multipacks serve a large portion of European consumers. Ref. Ares(2020)4021944 - 30/07/2020 The last decades brought significant changes in societal behaviour with the increase in 1-person and 2- people households. Multipacks of single portions provide important choice for those households and offer a balanced and healthy alternative to family-size portions that may not be in line with dietary requirements and would increase the risk of food waste.

…to family-size portions that may not be in line with dietary requirements and would increase the risk of food waste. Furthermore, multipacks also serve an important functional purpose in facilitating consumer and retail transport, retail delivery and consumer purchasing options. Similarly, when looking at potential packaging ratios, any approach that would define the maximum ratio a packaging could be compared to the packaged good may lead to favouring bigger sizes for packaged food such as savoury snacks. Finally, as discussions on overpackaging have been tackled by a number of governmental and non- governmental stakeholders in the last years, we recommend that the Commission looks at the work that has been done so far, such as the Ellen MacArthur’s Foundation’s New Plastics Economy and assesses whether it could be leveraged for this policy proposal.

MacArthur’s Foundation’s New Plastics Economy and assesses whether it could be leveraged for this policy proposal. We very much encourage an aligned approach on definitions in the EU and beyond to ensure harmonised implementation, reporting and execution of our packaging sustainability objectives. 4. DEFINITION OF RECYCLABLE PACKAGING PepsiCo strongly supports the need to define ‘recyclable packaging’. One clear, prescriptive and harmonised definition will be key for the successful revision of the essential requirements and implementation of the PPWD, together with a strong incentive to increase Europe’s recycling capabilities and technological uptake in the space of recycling of packaging waste.

…to increase Europe’s recycling capabilities and technological uptake in the space of recycling of packaging waste. However, any attempt to define prescriptive lists of negative and positive packaging properties as the criteria for definition of the recyclability of packaging will hamper innovation in this space. Lists of packaging properties that could pose a barrier to recycling would be based on existing available technologies that allow for certain materials to be recyclable, thereby hampering further improvement in product design based on new recycling technologies. PepsiCo feels the door should be left open for innovation in this space. Harmonisation of the way recyclable packaging is defined will allow for a coordinated approach to packaging design and packaging waste collection and recycling across EU Member States, and potentially even beyond EU borders.

…design and packaging waste collection and recycling across EU Member States, and potentially even beyond EU borders. The definition of recyclable should also include a definition of ‘at scale,’ whereby innovation in recycling technologies is incentivised, tested and included in scope once in place at a sufficient scale. In this respect, PepsiCo is a signatory of the Ellen Macarthur Foundation’s New Plastics Economy and supports their definition of ‘recyclable’ and ‘at scale’1.

…of the Ellen Macarthur Foundation’s New Plastics Economy and supports their definition of ‘recyclable’ and ‘at scale’1. 5. RECYCLED CONTENT The revision of the Essential Requirements for Packaging also presents a good opportunity to propose a harmonised and prescriptive definition of recycled content that would stay technology-neutral while 1 https://www.newplasticseconomy.org/assets/doc/Global-Commitment_Definitions_2020-1.pdf accounting for latest innovation in recycling technologies and that would be intended the same way uniformly across Member States.

…for latest innovation in recycling technologies and that would be intended the same way uniformly across Member States. 6. BIODEGRADABLE AND COMPOSTABLE PepsiCo fully supports the need to clearly define ‘biodegradability’ and ‘compostability’ of packaging. In order to achieve a functional and operational circular economy, consumer information will need to be spelt out clearly and in a harmonised way, as will the difference between in-home composting versus industrial composting. 7. REUSABLE NATURE OF PACKAGING PepsiCo is exploring a number of ideas to reinvent the ways consumers can enjoy our products, which include reusable packaging. Reuse can be an effective model to complement recyclability of packaging, offering solutions that can appeal to consumers in terms of convenience (e.g.

…to complement recyclability of packaging, offering solutions that can appeal to consumers in terms of convenience (e.g. improved experience, adaptation to individual needs) and reducing the impact of packaging waste on the environment. Reuse models will require a rethinking in the organisation of supply chains both when reusable packaging is used in business-to-business and in business-to-consumer relations. When products are delivered in reusable packaging, consumers will need to change behaviour in the way they interact with products and packaging, and this may require some time for the adaptation to take place. Moreover, there is a need to create an enabling environment for reuse in the market: supportive and coherent legislation will be crucial (i.e.

…to create an enabling environment for reuse in the market: supportive and coherent legislation will be crucial (i.e. food safety regulations, incentives for local authorities to help create a reuse system) as well as a collaborative approach with the full value chain to work in partnerships that include food manufacturers, retailers, 3rd party washing business and brand owners. Alongside packaging waste, another environmental aspect to consider is the overall carbon footprint of reusable models, which may require heavier packaging and longer trips for returning the reusable packaging. PepsiCo is already investigating these aspects through the acquisition of SodaStream, for example. While reuse is set to have a promising role in the future of packaging, these models should be encouraged but not mandated and especially not at the cost of overall carbon footprint of the packaging model.

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