Sustainable Palm Oil & Agriculture: Progress and Impact
PepsiCo commits to low-carbon fertilizer through 2030 certificates deal
PepsiCo has signed an agreement with Chinese renewable energy firm Envision Energy to purchase environmental attribute certificates linked to low-carbon ammonia production. The deal runs from 2026 to 2030 and targets fertilizer-related emissions in the company's Asia-Pacific agricultural supply chain. Meanwhile, sustainable palm oil certification continues to gain traction as food manufacturers face pressure to prove traceability and avoid deforestation risk.
Both developments point to a common shift. Large food companies are moving beyond general commitments and starting to address specific upstream emissions through supplier agreements and verified standards. For UK businesses that supply into global food chains, these trends matter. They signal what buyers increasingly expect from their own suppliers.
Five-year deal targets fertilizer emissions in Asia-Pacific supply chain
PepsiCo's Asia-Pacific division has agreed to buy environmental attribute certificates tied to low-carbon ammonia produced at Envision Energy's Chifeng Net Zero Industrial Park in Inner Mongolia. The arrangement covers the period from 2026 through 2030. According to Envision, the first 1,000 tonnes of certificates have already been delivered, representing an estimated reduction of around 5,000 tonnes of CO2 equivalent.
Ashley Brown, chief sustainability officer for PepsiCo APAC, said the deal supports the company's target to reach net-zero emissions by 2050 or sooner. Fertilizer production is a significant source of emissions in food supply chains. Ammonia is a key ingredient in nitrogen fertilizers, and traditional production methods are carbon-intensive. Consequently, reducing emissions from this part of the chain has become a priority for companies with large agricultural footprints.
The deal uses a book-and-claim model. This approach separates the environmental attribute from the physical commodity itself. In practice, it means PepsiCo can claim the decarbonization benefit of verified low-carbon ammonia without requiring a direct physical supply to its contract farmers. Envision has described the model as a way to accelerate decarbonization in sectors where building physical infrastructure takes time. It allows demand signals to reach producers before end-to-end supply chains are fully operational.
For businesses watching this space, the structure is noteworthy. Environmental attribute certificates are becoming more common across energy and industrial sectors. They provide a market mechanism to support cleaner production methods while supply chains transition. However, they also require verification and transparency to avoid greenwashing accusations. PepsiCo has not disclosed full verification details, but the company has referenced the deal as part of its broader Scope 3 emissions reduction strategy.
Palm oil certification remains a priority for food sector buyers
Sustainable palm oil has not generated a single major transaction announcement this week. Nevertheless, the issue remains prominent in food sector sustainability discussions. The Roundtable on Sustainable Palm Oil continues to be the primary certification body for sustainable palm oil globally. Its standards cover environmental and social criteria, including deforestation, biodiversity protection, and labor practices.
Industry scorecards, such as those published by WWF, assess companies on their sustainable palm oil performance. These evaluations focus on traceability, certification rates, and transparency in sourcing. Many large buyers now report their certified sustainable palm oil volumes annually. As a result, the market for certified palm oil has grown steadily over the past decade, despite persistent challenges around smallholder inclusion and regional enforcement.
Price volatility adds complexity. Malaysian crude palm oil prices have fluctuated throughout 2025 and into early 2026. This affects procurement decisions. Companies balancing cost control with sustainability commitments must weigh the premium for certified palm oil against budget constraints. Despite this, demand for traceable and certified supply has continued to increase, driven by regulatory pressure and reputational risk.
For UK businesses that use palm oil derivatives in products, certification is becoming a baseline expectation. Buyers in retail and food service increasingly ask suppliers to demonstrate certified sustainable palm oil sourcing. Furthermore, proposed regulations in the EU and UK targeting deforestation-linked commodities are likely to tighten requirements further. Businesses should therefore consider whether their current suppliers can provide the necessary documentation and traceability.
Book-and-claim models offer flexibility but require careful scrutiny
The PepsiCo deal highlights a procurement approach that more companies are exploring. Book-and-claim systems allow buyers to support cleaner production methods without waiting for dedicated physical supply chains. This can accelerate market development for low-carbon materials. However, it also introduces questions about additionality and transparency.
Additionality refers to whether the environmental benefit would have happened anyway without the buyer's financial support. In energy markets, this concept is well established through renewable energy certificates. In industrial commodities like ammonia, it is newer. Buyers need to ensure that their purchases genuinely support additional low-carbon production rather than simply redistributing existing credits.
Transparency is equally important. Stakeholders expect clear disclosure about how certificates are issued, verified, and retired. Without robust standards, book-and-claim systems risk being perceived as accounting exercises rather than genuine emissions reductions. Therefore, companies using these models should be prepared to explain verification processes and demonstrate third-party oversight.
For UK SMEs, the relevance depends on sector and supply chain position. Manufacturers supplying into food, beverage, or consumer goods sectors may face questions about agricultural inputs. If your products contain ingredients with high upstream emissions, buyers may ask about your suppliers' practices. Understanding how book-and-claim models work can help you engage in those conversations more effectively.
What these developments mean for UK businesses
Large multinational companies are tightening their Scope 3 emissions strategies. This affects suppliers at multiple tiers. If you supply directly to major food or beverage companies, you may already be receiving supplier questionnaires about emissions and sustainability practices. If you supply further down the chain, those requirements will eventually reach you as well.
Fertilizer and palm oil are specific examples, but the pattern is broader. Buyers are increasingly looking for suppliers who can demonstrate emissions reductions or certified sourcing. This is partly driven by corporate net-zero commitments and partly by regulatory developments. The EU's Corporate Sustainability Reporting Directive and the proposed deforestation regulation are two examples of rules that will push supply chain transparency requirements further down the chain.
In sectors where environmental attribute certificates or certification schemes exist, buyers may start asking suppliers to participate. This could mean purchasing renewable energy certificates, sourcing certified raw materials, or providing carbon footprint data for specific products. Businesses that prepare for these requests early will be better positioned when they arrive.
Cost is a legitimate concern. Certified materials and low-carbon inputs often carry a premium. However, failing to meet buyer requirements can result in lost contracts or exclusion from tenders. As a result, the commercial risk of inaction may outweigh the cost of compliance. Companies should therefore assess their exposure to these trends and consider whether incremental investments now could protect revenue streams later.
Key facts about the PepsiCo and palm oil developments
- PepsiCo APAC has agreed to purchase environmental attribute certificates for low-carbon ammonia from Envision Energy between 2026 and 2030.
- The first 1,000 tonnes of certificates have been delivered, representing an estimated 5,000 tonnes of CO2 equivalent in emissions reductions.
- The deal uses a book-and-claim model, which separates environmental attributes from physical commodity flows.
- Sustainable palm oil certification continues to be a key requirement for food sector buyers, with the Roundtable on Sustainable Palm Oil as the primary standard.
- Malaysian crude palm oil prices remain volatile, adding cost pressure to sustainability sourcing decisions.
- Proposed regulations in the EU and UK targeting deforestation-linked commodities are likely to increase traceability requirements for palm oil and other high-risk materials.
Practical steps for businesses with agricultural supply chain exposure
If your business uses agricultural inputs or supplies into food and beverage sectors, start by mapping your supply chain. Identify which raw materials have the highest emissions or deforestation risk. Common examples include palm oil derivatives, soy, cocoa, and fertilizer-intensive crops. Once you know where your exposure lies, you can prioritize action.
Check whether certification schemes exist for your key materials. For palm oil, the Roundtable on Sustainable Palm Oil offers the most widely recognized standard. For other commodities, schemes such as Rainforest Alliance, Fairtrade, or the Roundtable on Responsible Soy may be relevant. Certification is not a perfect solution, but it provides a recognized framework that buyers understand.
Ask your suppliers about their sustainability practices. Many SMEs assume they have no influence over upstream suppliers. In reality, even smaller buyers can request information and encourage improvement. If your suppliers cannot provide certification or traceability data, consider whether alternative sources are available. Switching suppliers can be disruptive, but it may be necessary to meet evolving customer requirements.
Monitor regulatory developments closely. The UK government has consulted on regulations to restrict commodities linked to illegal deforestation. Similar rules are progressing in the EU. These regulations will require businesses to conduct due diligence on forest-risk commodities. Companies that sell affected products in the UK or EU will need systems to prove compliance. Therefore, early preparation is sensible.
Consider whether carbon reporting and Scope 3 emissions tracking could help you demonstrate supply chain transparency. Many larger buyers now ask suppliers to report product-level carbon footprints. Having this data available can differentiate your business in competitive tenders. It also helps you identify where emissions reductions are most feasible.
Training can also play a role. Understanding how environmental attribute certificates, certification schemes, and supply chain traceability work will help your team respond to buyer requests more confidently. Resources such as sustainability training programs can build internal capability without requiring expensive external consultants.
Where to find further guidance on agricultural sustainability and supply chain traceability
The Department for Environment, Food and Rural Affairs provides updates on UK policy related to deforestation, sustainable sourcing, and agricultural emissions. The department's consultations and guidance documents are useful for understanding upcoming regulatory requirements.
The Roundtable on Sustainable Palm Oil offers detailed standards, certification guidance, and traceability tools for businesses sourcing palm oil. Their website includes supply chain maps and lists of certified suppliers.
For broader sustainability reporting and supply chain transparency, the CDP (formerly Carbon Disclosure Project) provides frameworks used by many large companies to assess supplier performance. Reviewing CDP questionnaires can give you insight into the types of questions your buyers may ask.
If your business needs support with sustainable procurement strategies or understanding how to respond to buyer sustainability requirements, professional advice can help you navigate these changes efficiently and avoid costly missteps.