New rules let PepsiCo integrate emissions certificates into its carbon accounts

When the Science Based Targets initiative (SBTi) said in June that it would give companies more flexibility in tackling supply-chain emissions, the decision won applause from businesses that have been struggling to shrink that part of their footprint. 

Now the first impacts of that flexibility are emerging. In its most recent sustainability report, released earlier this month, PepsiCo detailed how it used environmental attribute certificates (EACs) and other market-based mechanisms to reduce its Scope 3 emissions.

What does PepsiCo’s trajectory look like?

After downgrading its emission goals last year, citing a lack of policy support and technology options, the food and beverage giant is roughly on track to hit two of its three core targets for 2030:

• PepsiCo’s combined Scope 1 (operational emissions) and Scope 2 (purchased electricity) footprint has shrunk 24 percent since 2022, pacing well toward its goal of a 50 percent cut.
• Agriculture and other land-related emissions are 18 percent lower, putting the company ahead of schedule in its bid to cut this category by 30 percent.
• Electricity and industry-related emissions from the company’s value chain, its largest source at 24 million metric tons of carbon dioxide equivalent (tCO2e), dropped 12 percent, leaving PepsiCo off track on its goal of a 42 percent drop.

Year-on-year progress in the land category — officially known as forest, land and agriculture, or FLAG — was particularly notable, with total emissions falling 8 percent to close to 12 million tCO2e.

How did PepsiCo use market mechanisms?

One method involved EACs, which allow companies to fund and take credit for projects that help suppliers reduce emissions. 

PepsiCo had previously advocated for greater flexibility in using such mechanisms to hit its Scope 3 targets, Anna Palazij, the company’s vice president for sustainability, told Trellis. So when the SBTi announced changes to its Corporate Net-Zero Standard, PepsiCo was ready to integrate the approach into its emissions accounting.

According to the company’s 2025 Climate Accounting Statement, it appears to have used EACs and other market instruments to lower its Scope 3 totals for FLAG and energy by almost 150,000 tCO2e and 690,000 tCO2e, respectively. (PepsiCo declined to confirm these numbers, but described them as “directionally correct.”)

The instruments accounted for emissions savings from regenerative agriculture projects that the company helped support within its “activity pool,” which the SBTi defines as containing suppliers in a region the company sources from but that it cannot necessarily demonstrate a direct connection to. PepsiCo also helped its packaging suppliers to source renewable energy.

What about carbon removals?

The SBTi was not the only standard-setter to make a notable update this year. In January, the Greenhouse Gas Protocol unveiled new rules for accounting for FLAG emissions, which included much-needed clarification of how carbon removals can be used. PepsiCo followed these guidelines to record just over 320,000 tCO2e of removals on its 2025 balance sheet. These are also calculated at the activity pool level.

What does PepsiCo plan next?

The company declined to go into detail about how it might expand its use of market-based instruments, but it has already announced new projects that will make use of this mechanism.

PepsiCo said in May, for example, that it planned to purchase EACs covering 30,000 metric tons of low-carbon ammonia, a key ingredient in fertilizer, from a plant in Iowa operated by TalusAg. Management of the certificates, including issuance, tracking and retirement, will be handled by S3 Markets, a startup that has developed a blockchain-based platform for the purpose.