Eric Battino
Supplier Sustainability Manager
Global Operations
Burns & McDonnell Sustainability Summit 2012
Today’s Topics…..
PepsiCo’s Sustainability and
Supplier Outreach Program
What
comes to
mind when
you think
about
PepsiCo?
4
We’re More Than Just Pepsi Cola
PepsiCo’s
Billion Dollar Brands
Global Presence
19 - Billion Dollar Brands
$60+ Billion in Revenue
300,000 Employees
Global Distribution
100,000 Sales Routes
Businesses in Virtually
Every
Country in the World
Largest Markets: USA,
Russia, Mexico
High Visibility
Water
Energy and GHG
Land Fill
ility is good
Why are we here? Sustainable Business
v
Performance of companies with
High and Low cultures of
Sustainability
Harvard, November 2011
More specifically, we pursue environmental
sustainability for reasons closely linked to the business
1
Social license to operate & grow
2
Secure our supply chain
3
Stakeholder expectations
4
Consumer demand
5
Productivity unlocks through efficiency
“Business cannot succeed in a society that fails.”
Bjorn Stigson, President WBCSD
Contributed more than $40
million to people in need
Provided 57,000+ hours of
education to farmers
1
Social License
To Operate &
Grow
Bringing safe water to
3MM people
Improving farmer yield
and fighting malnutrition
8
Our supply chain depends on a healthy environment;
agriculture represents major opportunities for resilience
2
Secure Our
Supply Chain
Water Availability
Stakeholders are raising the bar in terms of what they
expect from companies
Material Risk
Customer Risk
Regulatory/NGO Risk
Environmental risks are increasingly seen as material to businesses
2009: Launched
Sustainability Index and
Sustainability Consortium
3
Stakeholder
Expectations
2009: Released first
Corporate Sustainability
Report
• Environmental risks increasingly included in companies’ 10K filings
• FLNA: 1% point loss at • Increasing costs to WMT equals $32MM
comply with regulation • PEP: 5% point loss at • PepsiCo’s reputation Costco equals $11MM
tarnished in court of public opinion
Consumer opinions are becoming more clear
and consistent
Consumers feel better about our
Brands when we protect
the environment
4
9,000 PepsiCo consumers across nine countries
Consumer
Demand
Our environmental performance gives us credibility to talk about other areas, like nutrition
Environment drives PEP favorability
Environmental sustainability unleashes significant
productivity opportunities across the business
5
Productivity
Recyclable Seasoning Bags
Bio Mass / Gas
Membrane Bioreactors
Heat Recovery
High MPG Fleet
Power Partnerships
Beverage Packaging
Green Coolers
12
Environmental Sustainability Focus
Driving Sustainability from the Top Down
At PepsiCo, Performance with Purpose means delivering sustainable growth
by investing in a healthier future for people and our planet.
“Performance with Purpose is at the foundation of
every aspect of our business. We integrate a
commitment to human, environmental and talent
sustainability into all of our operations. Doing so
creates a blueprint for PepsiCo to develop,
manufacture and sell our products in a sustainable
way, which gives us a competitive advantage in
markets all over the world and drives long-term
growth.”
-Indra Nooyi
13
PepsiCo History of Environmental Sustainability
PepsiCo
formalizes
sustainability
initiative
1999
2001
Environmental
Task Force
formed to
share best
practices
10% PET
recycled
content in
plastic
bottles in
the US
2002
2004
Awarded
LEED Gold
Level
Certification
for
Frito-Lay
distribution
center
2005
2006
Sustainability Admitted to
Dow Jones
Vision
Sustainability
defined
World Index
Walkers was
the first major
food brand in
the world to
display a
carbon
footprint
reduction logo
on its packs
2007
2008
PepsiCo
India
achieves
positive
water
balance
PepsiCo, an
Energy Star
partner since
2007, was
awarded the
Energy Star
Sustained
Excellence
Award
2009
2009
Tropicana Pure Test-marketed
Premium orange our first-ever
100%
juice became
compostable
the first
consumer brand snack bag
in NA to certify for SunChips
its carbon
footprint
PepsiCo issues
first ever Water
Report, “Good
for Business;
Good for
Society” at
World Water
Week in
Stockholm
2009
2010
2011
2009
LEED certification
of five buildings,
including our
first platinum
certification, and
China’s first
gold-certified
food plant
14
PEP displaces
Unilever as
F&B
Supersector
Leader for
DJSI; KO falls
off list
14
As we have throughout our history, we will achieve our future
goals by combining tools, technology, innovation and people
Tools - ReCon
Technology
Innovation
People
Environmental Goals
20% Water Efficiency
Water
+ Water Balance
Access for 3MM People
Land &
Packaging
10% Recycled PET
US Recycling rates > 50%
Avoid 1B Pounds to Landfill
Eliminate all Solid Waste to Landfill
Climate
Change
Electric Efficiency by 20% / Unit
Fuel Efficiency by 25% / Unit
GHG Intensity Goal 25%/Unit
Absolute GHG Reduction Goal
Community
Sustainable Agriculture Practices
Funding / Technical Support Farmers
Environmental Education
Align Health, Ag and Environment
16
FLNA Financial Performance
Fuel
Water
45%
33%
>$80MM
Motor Fuel
15%
Electric
25%
Supplier Sustainability Outreach
PepsiCo’s Supplier Sustainability Outreach Program
Supplier Sustainability Outreach Program
Outreach Program Fundamentals
A balanced approach to resource conservation (teams,
processes and technology) will drive business results with:
1. Senior leadership commitment
2. Long and short term goals tied to:
• AOP – translating energy, water and waste into
business results
• PDR objectives – leader accountability and alignment
3. Integration into established business processes
• Business reviews/scorecards
• Continuous improvement operations driven programs
(CI, LSS, etc.)
• Regular assessments leveraging resource
conservation tools
4. Professional development program for building
and maintaining leader/team capability
Building capability - training, resources and tools

Single point of contact with dedicated
RC expert

Access to PepsiCo expertise

Access to proven partners

Training and opportunity assessment
tools

On-site support

Invitation to PepsiCo Global
Sustainability Summits

Energy Star Partnership and
Resources
“It amazes me that, in such a short time
and by a group of people who haven’t
been in our plant before, you were able
to provide such detailed and
comprehensive savings ideas.”
-Bob Shearer, After ReCon Report-Out
Shearer’s Brewster Plant
21
Program Performance
•
Grew from 12 contract manufacturing locations to almost 50
companies with over a hundred impacted sites.
•
2008-2011
– Energy: ~10% reduction (use/unit of production)
– Water: ~15% reduction (use/unit of production)
•
2010-2011
– Waste: ~40% reduction waste-to-landfill (absolute)
•
2008 – 2011
– Building Capability
• 23 Training Events: over 500 suppliers trained in
the US
• 30 Technical 1 Hour Webcasts: over 1,500
attendees (suppliers and PepsiCo RC Champions)
• ~130 site visits – presenting the program to
leadership teams, working with site leaders and
their teams to establish sustainability programs,
sharing best practices
22
Leadership in Sustainability
Partner Leadership in sustainability
throughout our supply chain
– Shearer’s Foods
• Only LEED Platinum Food Mfg. site in
the world
– John B. Sanfilippo and Son
• 2010 ENERGY STAR Partner of the
Year
Broader Impact
•
EPA ENERGY STAR
– The outreach program on boarded over 100 new ENERGY
STAR Partners which helped PepsiCo secure the national
Partner of the Year Sustained Excellence award in 2008, 2009,
2010, 2011 and 2012.
– Oak State and Schulze and Burch were key leaders in the
development of a baking industry energy use benchmarking
tool by the EPA
– Kroger and Land O Lakes have been key leaders in the
development of the EPA ENERGY STAR Dairy focus group and
energy bench marking tool.
•
Outreach program recognition by industry includes:
– July 2011 article in Baking and Snack magazine
– PepsiCo keynote speaker at the first sustainability conferences
• B&CMA (Biscuit and Cracker Manufacturer’s Association)
• Peanut and Tree Nut Processors Association.
– American Association of Candy Technicians presented the
outreach program and the business value of resource
conservation programs in industry.
Lessons Learned
“Embracers seize the advantage”
– “Embracers” understand the business
benefits of operating sustainably within
the context of local/global communities
and aggressively execute an effective
program that addresses:
 Energy Conservation
 Water Conservation
 Eliminating Waste-to-landfill