Understanding the Impact of Evolving Carbon Pricing Policies on PepsiCo

Compliance-based carbon pricing is expanding across major markets. For multinational consumer goods companies, this raises new questions about where these policies are most relevant, how costs may move through global value chains, and where constructive policy dialogue can add value.

In collaboration with PepsiCo's Global Public Policy team, this Capstone project from Columbia University's School of International and Public Affairs examined how evolving carbon pricing policies may affect PepsiCo's operations and long-term climate strategy. The project provided PepsiCo with an evidence-based framework to identify which mechanisms are most relevant to its business, how costs may flow through its value chain, and where the company can engage constructively in policy dialogue.

The team mapped the global landscape of compliance-based carbon pricing and applied a prioritization framework weighing policy maturity, business relevance, and exposure. The European Union and South Africa were selected for deep-dive analysis. For each market, the team built a cost transmission model that mapped how carbon pricing policies translate into costs across PepsiCo's value chain, from direct compliance and electricity pass-through to supplier exposure and logistics. The model was used to test how exposure shifts under different policy scenarios. The analysis drew on stakeholder interviews across PepsiCo's policy, sustainability, finance, and procurement functions in North America, South Africa, and Europe, and was benchmarked against international policy sources.

The team then recommended a three-track Action Framework, identifying specific markets and mechanisms to monitor, critical data for forward planning, and constructive windows for policy engagement. Supporting recommendations focused on procurement, operational planning, and integration with PepsiCo's broader sustainability strategy.