The debate over sustainability and cost needs a fundamental shift in perspective, according to Ramon Laguarta, Chairman and Chief Executive Officer of PepsiCo. Speaking during a panel at the World Economic Forum annual meeting in Davos, Laguarta argued that sustainability should not be framed as a trade-off against profitability, but as a question of managing short-term costs versus long-term risks.

Addressing an audience of business leaders and policymakers, Laguarta said companies risk oversimplifying the issue when they treat sustainability as a cost premium rather than a strategic investment. For PepsiCo, he explained, growth remains central to the company’s business model. However, sustaining that growth over decades requires protecting the natural and social resources that underpin future performance.

From Cost Debate to Risk Management

Laguarta described the sustainability discussion as one that must be owned at the highest levels of corporate leadership. Boards, chief executives, and management teams, he said, need to translate this reframing into practical strategies that can be operationalised across the organisation.

In his view, the core question is not whether sustainability is compatible with profitability, but whether companies are willing to accept higher short-term costs to reduce long-term exposure to resource scarcity, climate impacts, and supply chain disruption. Without that shift in thinking, sustainability initiatives risk remaining peripheral rather than becoming embedded in business strategy.

Read more: Deutsche Bank Positions Sustainability as a Core Driver of Supply Chain Resilience

Embedding Sustainability Into Corporate Strategy

Laguarta pointed to PepsiCo’s PepsiCo Positive programme as an example of how sustainability can be structured as an integrated business framework rather than a standalone initiative. Launched in 2021, the programme sets out defined pillars, governance mechanisms, and measurable objectives that are incorporated into the company’s operating plans.

In 2025, PepsiCo reset elements of its sustainability strategy after internal assessments showed the company was unlikely to meet certain near-term targets. The update included revising its net-zero ambition from 2040 to 2050 and shifting its baseline emissions year from 2015 to 2022. The company also introduced updated packaging targets and new 2030 emissions reduction goals.

As part of the reset, PepsiCo refined how it tracks Scope 3 emissions by separating them into two distinct categories. One covers energy and industry-related emissions, while the other focuses on forest, land, and agriculture-related emissions. The revised targets were aligned with a 1.5 degrees Celsius warming pathway, reflecting tighter alignment with evolving climate science.

Learning From Experience and Changing Conditions

PepsiCo’s Chief Sustainability Officer, Jim Andrew, has previously said the reset reflected both internal learning and changes in external conditions since the programme’s launch. The company has acknowledged that scaling sustainability across a global food and beverage business involves uncertainty, experimentation, and trade-offs.

Laguarta echoed this view at Davos, describing PepsiCo as a company willing to act as an early mover in materials innovation. He noted that the firm’s scale and profit margins allow it to absorb some of the costs associated with testing new technologies and approaches, even when returns are not immediate.

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Agriculture as the Next Scaling Challenge

While progress has been made in areas such as packaging materials and infrastructure, Laguarta said sustainable agriculture remains a critical area where more coordinated action is needed. He highlighted the opportunity for stronger collaboration between the public and private sectors to support farmers in transitioning to practices that improve soil health, water efficiency, and input use.

According to Laguarta, meaningful progress will not come from incremental actions taken in isolation. Instead, it requires collective effort, leadership, accountability, and sustained investment to drive change at scale across complex agricultural systems.

In closing, Laguarta emphasized that sustainability is not a question of isolated initiatives, but of long-term stewardship. Managing nature and profitability together, he said, is becoming a core leadership challenge for global companies. While the path involves difficult choices and internal trade-offs, he argued that reframing the debate is essential if businesses are to remain resilient and competitive in a rapidly changing world.

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