Overview
In a world that continues to
experience unprecedented economic,
environmental and social challenges,
PepsiCo - one of the world’s largest
food and beverage companies recognizes our responsibilities to
help make a difference.
In this overview, we share our progress in addressing
these challenges, identify where we believe we can have
the most impact and acknowledge our opportunities for
continuous improvement.
During this journey, we’re shifting towards developing
and enhancing metrics to more meaningfully reflect PepsiCo’s global performance. While this will take time, we
believe this will bring sharper focus to achieving demonstrable progress and to integrating sustainability goals
more fully into our business operations. The talents and
skills of our global workforce, coupled with our operational capabilities, provide our company with a unique
opportunity to have a positive impact on society. Time
and again, our people demonstrate they are committed
to making a difference and to living PepsiCo’s Sustainability Vision.
Today, we are striving for a balance of achieving continued financial success while bringing purpose to our
performance. We call it “Performance with Purpose” and
we have defined three prime areas of influence: human,
environmental and talent sustainability.
Our vision is to continually improve all aspects of the
world in which we operate - environment, social, economic -creating a better tomorrow than today. We have
communicated this vision to our 185,000 employees
worldwide in 45 different languages as part of our goal to
bring greater good to the world. It’s a responsibility every
associate at PepsiCo takes seriously.
• Human Sustainability refers to our efforts to nourishing consumers with a range of products, from treats to
healthy eats.
This report covers full year 2007 through May 2008.
Our last report covered 2006-2007. We release a report
every year.
• Environmental Sustainability reinforces our commitment to work to protect our natural resources and operate
in a way that minimizes our environmental footprint.
• Talent Sustainability focuses on developing our employees by creating a diverse and inclusive culture and
making sure our company is an attractive destination for
the world’s best people.
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2007-2008 PepsiCo Corporate Sustainability Report
We have followed the G3 Guidelines of the Global
Reporting Initiative. Our report includes PepsiCo operations that we own and operate. In the United States and
in some other countries, independent franchise bottlers
manufacture and distribute beverage products.
Our three largest bottlers are The Pepsi Bottling Group
(PBG), PepsiAmericas, Inc. and Pepsi Bottling
Ventures LLC. Our ownership of each of these bottlers
is less than 50% and because we do not control these
bottlers, we do not consolidate their results or include
their information in this report except as noted in the
text. The report is expected to be read by employees,
customers, consumers, shareholders, analysts and other
non-governmental (NGO) groups interested in PepsiCo
and sustainability.
Awards and Recognitions
2007 Select Regions
• PepsiCo was named to the DJSI World
and North America Indexes.
• Business Ethics magazine named
PepsiCo to the 100 Best Corporate
Citizens list.
• The U.S. Environmental Protection
Agency (EPA) recognized PepsiCo as
Green Power Partner of the Year and
Energy Star Partner of the Year.
• The Human Rights Campaign named
PepsiCo as one of the Best Places to
Work for Gay/Lesbian/ Bisexual/Transgender (GLBT) Equality.
• Catalyst honored PepsiCo with the 2007
Catalyst Award for its Woman of Color
Multicultural Alliance.
• Black Enterprise magazine named PepsiCo as one of the 40 Best Companies
for Diversity.
• The Cause Marketing Forum awarded
Sam’s Club/ Aquafina’s “Return the
Warmth” program with the top environmental honor, the Halo Award.
• Working Mother magazine named PepsiCo to its Best Green Companies for
America’s Children list.
• The AIDS Responsibility Project (ARP)
presented PepsiCo with the International
Corporate Courage Award.
• CRO magazine recognized PepsiCo
among the 2007 100 Best Corporate
Citizens in the United States.
• Seven PepsiCo China bottling plants were
recognized as Best Water-Saving Companies in China’s beverage industry by
the China Beverage Industry Association.
Data is prepared following PepsiCo-established metrics and protocols, which often follow
external methods. For additional information contact the PepsiCo Sustainability
Communications Department at (914) 253-3059
• China Rights Forum and China Business News Group named PepsiCo 2007
Outstanding Employer of China in the
Shanghai Region.
2007-2008 PepsiCo Corporate Sustainability Report 3
Indra Nooyi Q&A
What does sustainability mean at PepsiCo?
We define sustainability as “Performance with Purpose.”
In today’s world, consumers are bringing their principles
to their purchasing. We, in return, are bringing a purpose
to our performance. There are three specific components
to Performance with Purpose. First, we offer foods
and beverages that responsibly provide nourishment
to people and societies. Second, we are intent on
minimizing our impact on the environment in which we
operate. And third, we work hard to create a safe, healthy
and inclusive environment where the best people want
to work.
How does the Performance with Purpose
mission tie in with our business?
Performance with Purpose is at the foundation of every
aspect of our business. Indeed, financial achievement
can and must go hand-in-hand with sustainability. Our
approach to creating superior financial performance is
straightforward - drive shareholder value. We integrate
a commitment to human, environmental and talent
performance into all of our operations. Doing so creates
a blueprint for PepsiCo to develop, manufacture and
sell our products in a sustainable way, and gives us a
competitive advantage in markets all over the world,
which in turn drives long-term growth.
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2007-2008 PepsiCo Corporate Sustainability Report
How is PepsiCo responding to these difficult
economic times?
There’s no question that these are challenging times.
Like many companies, we’re facing headwinds such
as rising costs, an uncertain economic outlook and
shifting currency rates. While we can’t control the
macroeconomic system, we need to adapt to the nearterm challenges to deliver our long-term growth plans.
We’re taking measured steps to continue generating
long-term shareholder value. First, we’re focusing on
consumer value as much as innovation and premium
products. Second, we’re calibrating consumer price
points and packaging options to keep our products in
proportion with the rest of the food basket and to keep
pace with changing consumer preferences and wallet
constraints. And finally, we’re investing where we believe
we have the greatest leverage to maintain and ultimately
accelerate our growth.
What is PepsiCo doing to tackle consumer
health concerns like obesity?
Obesity impacts quality of life and poses a serious health
risk. More than one billion adults are overweight and
300 million are clinically obese - in both developed and
developing countries. We recognize our responsibility to
address diet and nutrition concerns around the globe.
We’re mindful of the way the world is changing and
we’re listening to experts who provide deep insights
and enabling solutions. As a result, we’ve made steady
progress transforming our portfolio, for example, by
introducing new products that offer improved nutrition.
We’re reducing portion sizes and reformulating some
of our existing products to reduce fat, saturated fat, salt
and sugar. We are also adding more whole grains, fiber,
fruits and vegetables and vitamins and minerals to our
products. We agree with the World Health Organization,
the National Institutes of Health and other leading
experts that the ultimate solution to obesity is energy
balance - the balance between calories consumed and
calories burned through activity. We’re committed to
supporting both sides of this energy balance equation.
Water is a key ingredient in many PepsiCo
products. How is the company addressing
water issues?
We’re working hard to reduce the amount of water we
use to make our products. We’re also promoting access
to clean water around the world through alliances with
non-profit groups and working with agricultural suppliers
to assist them with efficiency improvements. Our efforts
are focused where our assets and expertise can make
the biggest impact. One such area is farming. On
average, agriculture accounts for 70 percent of all fresh
water use in the world and as much as 95 percent in
many developing countries - almost all goes to irrigating
crops. Changing the way that farmers use water in some
of the fastest growing economies will help address water
scarcity. In India, for example, PepsiCo is working with
farmers to save approximately 30 percent of the water
they typically use for growing rice. We’ve introduced
a unique form of direct seeding and paddy cultivation.
In China, PepsiCo developed a low water use way
to grow potatoes under desert conditions by using a
pivot irrigation system. In all markets - but especially
those that are growing rapidly - applying innovation and
developing new methods for conserving water is vital to
our business.
How can the food and beverage industry make
the biggest difference in terms of addressing
environmental sustainability?
PepsiCo has focused on three environmental areas that
are critical to the industry: water, energy and packaging.
We’re continually looking for ways to bring to scale the
good ideas being implemented across our business
and we share this experience with our peers. Our goal
is continuous improvement, driven by the ingenuity of
our people, best practices, technology, education, and
innovation. We’ve always been an environmentally
concerned company. In recent years, we’ve stepped up
our initiatives. Now that we have common environmental
metrics across all PepsiCo divisions globally, we can
better track, manage and understand our environmental
footprint. I’m certain this will lead to continuous progress.
2007-2008 PepsiCo Corporate Sustainability Report 5
Our Business
PepsiCo is one of the world’s largest
food and beverage companies, with
2007 annual revenues of more than
$39 billion and total operating profits
of more than $7 billion.
The company employs approximately 185,000 people
worldwide and our products are sold in approximately
200 countries. Our businesses include Frito-Lay
snacks, Pepsi-Cola beverages, Gatorade sports drinks,
Tropicana juices and Quaker foods. We manufacture
and sell more than 500 products that serve the needs of
consumers of all ages.
PepsiCo Americas Beverages (PAB), which includes
PepsiCo Beverages North America and all of our Latin
America beverage businesses; and.
PepsiCo International (PI), which includes all PepsiCo businesses in the United Kingdom, Europe, Asia,
Middle East and Africa.
In 2008, our three business units are comprised of six
reportable segments, as follows:
• Frito-Lay North America
• Quaker Foods North America
• Latin Americas Foods
• PepsiCo Americas Beverages
Our common stock (PEP) is traded principally on the
New York Stock Exchange. PepsiCo is also listed on
Chicago and Swiss Stock Exchanges.
In the fourth quarter of 2007, PepsiCo announced a
strategic realignment of our organizational structure to
position the Company for continued strong growth and
more fully leverage the talents of its senior leaders.
PepsiCo, which previously comprised PepsiCo North
America and PepsiCo International, is now organized in
three business units as follows:
PepsiCo Americas Foods (PAF), which includes FritoLay North America, Quaker Foods North America and all
of our Latin American food and snack businesses (LAF),
including our Sabritas and Gamesa businesses in Mexico.
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2007-2008 PepsiCo Corporate Sustainability Report
• United Kingdom & Europe
• Middle East, Africa & Asia
Our Operations
Outside of the United States, our largest markets are
Mexico, the United Kingdom and Canada. PepsiCo
World Headquarters are located in Purchase, New York,
USA. Pepsi-Cola North America headquarters are also
located in Purchase, New York. Other North America
headquarters include Frito-Lay North America in Plano,
Texas, USA and Quaker Foods, Tropicana and Gatorade headquarters in Chicago, Illinois, USA. PepsiCo
International headquarters are located in Purchase,
New York, USA. There are international business units
headquarters located around the world:
PepsiCo Asia - Hong Kong, PepsiCo Europe - Switzerland, PepsiCo Latin America Region Foods and Beverages - Mexico, PepsiCo Middle East and Africa - United
Arab Emirates, Sabritas - Mexico. In addition to our
various headquarters, our major properties include:
Frito-Lay North America (FLNA) - FLNA’s most significant properties include its headquarters building and
a research facility in Plano, Texas, both of which are
owned. FLNA also owns or leases approximately 40
food manufacturing and processing plants and approximately 1,920 warehouses, distribution centers and
offices. In addition, FLNA also utilizes approximately
40 plants and production processing facilities that are
owned or leased by our contract manufacturers
or co-packers.
PepsiCo Beverages North America (PBNA) - In
addition to its headquarters building in downtown
Chicago, Illinois, which is leased, PBNA’s most significant properties include its Tropicana facility in Bradenton, Florida, its concentrate plant in Ireland and
its research and development facility in Valhalla, New
York, all of which are owned. PBNA also owns or leases
approximately 15 plants and production processing
facilities and approximately 40 warehouses, distribution centers and offices. In addition, authorized bottlers
in which we have an ownership interest own or lease
approximately 65 bottling plants. PBNA also utilizes
approximately 55 plants and production processing
facilities and approximately 45 warehouses and distribution centers that are owned or leased by our contract
manufacturers or co-packers.
Quaker Foods North America (QFNA) - QFNA owns a
plant in Cedar Rapids, Iowa, which is its most significant property. QFNA also owns or leases three plants
and production processing facilities in North America. In
addition, QFNA utilizes approximately 25 manufacturing
plants, production processing facilities and distribution
centers that are owned or leased by our contract manufacturers or co-packers.
PepsiCo International (PI) - PI’s most significant
property, a concentrate plant in Ireland, is owned. PI
also owns or leases approximately 170 plants and approximately 1,700 warehouses, distribution centers and
offices. In addition, authorized bottlers in which we have
an ownership interest own or lease approximately
50 plants and 400 distribution centers. PI also utilizes
approximately 5 plants and production processing
facilities and approximately 30 distribution centers that
are owned or leased by our contract manufacturers or
co-packers.
Shared Properties - QFNA shares approximately 10
production facilities and approximately 5 warehouses
and distribution centers with FLNA, 15 warehouses and
distribution centers with both FLNA and PBNA, and 10
offices with PBNA and FLNA.
2007-2008 PepsiCo Corporate Sustainability Report 7
Our Stakeholders
We touch the lives of many people through our businesses. We welcome honest discussion with individuals, groups and advocates who represent community,
environmental and social interests. Issues of concern
brought to the attention of PepsiCo will be considered
with a view toward our businesses and our sphere of
influence. We interact with many stakeholders.
Our Consumers
Through our human sustainability initiatives, we offer
our consumers a wide range of products that deliver
great taste, nutritional value,convenience and affordability. We are committed to playing a responsible role
in health and wellness by encouraging consumers
to adopt healthy, active lifestyles, beginning with the
products we offer. Each year, we invest in innovation to
better serve consumer wants and needs through new
products and packaging. We continually expand our
distribution network to make our products more widely
available. And we work relentlessly to improve productivity so we can offer affordable products to a broad
range of consumers. We have toll-free telephone
numbers consumers can call with questions or comments. The call numbers are included on our product
packaging. We also provide a number of websites
where consumers can get information about our brands,
including nutritional content and answers to many other
questions about our products.
www.pepsiproductfacts.com
www.pepsiecochallenge.com
Our Communities
We recognize our responsibility to be a contributing
member of our communities, both on a global and local
level. We operate our businesses responsibly and seek
to be a positive force. We support our communities
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2007-2008 PepsiCo Corporate Sustainability Report
through our businesses by contributing to not-for-profit
groups and by working with organizations dedicated to
improving the lives of people. We have advisory groups
that focus on health and wellness, African-American
and Latino/Hispanic issues. We also work to be good
stewards of the environment, with the goal of reaching
a net-neutral impact. In areas of the world where water
scarcity is an issue, we are working to replenish the
resources we’ve used and we are partnering with nonprofit groups to promote clean water access.
Our Employees
Our employees are the greatest factor in our success.
Their hard work, dedication and resourcefulness enables
PepsiCo to compete effectively, serve the needs of customers and deliver the results our investors expect. Our
Talent Sustainability principles reflect our commitment to
providing a work environment that allows our employees
to achieve professional growth and personal fulfillment.
We ask our employees to respond to an “Organizational
Health” survey generally every other year. Topics include
benefits, working conditions, diversity and inclusion initiatives and career development, among others. The results
of the survey are shared with associates and action
plans to address issues are developed and made part of
performance goals.
Our Customers
Our retail customers are supermarkets, grocery stores,
mass merchandisers, club stores, drug stores, gas
stations, convenience stores, restaurants, food service
outlets, vending machine operations and others who
carry our products and make them directly available
to consumers. We provide our products as well as
marketing support that contributes to their growth, profit
and positive cash flow. Retail consolidation continues
to increase the importance of major customers. In
2007, worldwide sales to Wal-Mart (including Sam’s)
represented 12% of our net revenue. This percentage
included concentrate sales to our bottlers which are
used in finished goods sold by them to Wal-Mart. We
have dedicated teams for our customers, partners and
suppliers and interact with them on a regular basis. We
have a team dedicated to Supplier Diversity, including working with our women and minority suppliers to
build their capabilities and business with PepsiCo. Our
website includes a dedicated site for information on our
women and minority supplier diversity program. PepsiCola North America has partnered with Sam’s Club over
the last three years in a national, school-based recycling program.
Our Investors
We strive to provide investors a reasonable return on
their investment, based on consistent financial growth
in the marketplace and consistent financial results. We
take a long-term view and make appropriate investments to strengthen our brands, develop our capabilities and pursue new opportunities. We seek healthy
year-over-year growth and report honest, transparent
and timely financial results. We regularly conduct webbased quarterly conference calls to provide updates to
analysts and investors, and we broadcast our annual
shareholder meeting on our website. Knowing the commitment of many investor groups to sustainability, we
apply for admission to the Dow Jones Sustainability
Index (DJSI) each year. PepsiCo has been named as
a member of the North America Index three times and
named a member of the World Index twice. The DJSI
World Index identifies those companies that exemplify leadership in sustainability among the leading 10
percent of the world’s top 2,500 companies. The DJSI
North America Index identifies those companies that
exemplify leadership in sustainability among the largest
600 North American companies.
Our Partners
Our bottlers and other business partners manufacture
many of our products. We provide certain needed ingredients and supplies as well as quality assurance and
technical assistance. We conduct our business to allow
both our partners and PepsiCo to earn a reasonable
return and grow together. Sales to our largest bottler,
The Pepsi Bottling Group (PBG), represented approximately 9% of our total net revenue. We work with our
partners on sustainability initiatives including resource
conservation. Pepsi Beverages North America has a
Bottler Sustainability Team whose mission is to advance
environmental sustainability in Pepsi Cola’s Bottling
operations.
partners for Frito-Lay North America and Quaker Foods
North America to assist them in developing energy
management systems and projects. This program has
been very successful and will be expanded to include
additional contract manufacturers and other key
suppliers in 2009.
Our Suppliers
Our suppliers provide us with the goods and services
needed in our business. We buy goods and services at
competitive prices, allowing both our suppliers and PepsiCo to make a reasonable profit. We seek efficient suppliers with whom we can work and grow as long-term
partners. We especially seek suppliers that are owned
by minorities and women. We extend our commitment
to sustainability to our suppliers through our Supplier
Code of Conduct, Sustainable Packaging Policy and
sustainable agriculture practices.
In 2008, PepsiCo implemented a Resource Conservation Outreach program designed to share resources,
tools, and expertise in the area of energy conservation with key suppliers. The initial phase of this effort
involved reaching out to 12 contract manufacturing
2007-2008 PepsiCo Corporate Sustainability Report 9
Our Economic Impacts
We market hundreds of brands in more
than 200 countries and territories
around the world. The consumers who
eat and drink our products spent an
estimated $98 billion on our brands
in 2007.
A summary of PepisCo’s 2007 Economic Performance can be found in Management’s Discussion
and Analysis and Consolidated Financial Statements
included in PepsiCo’s 2007 report on Form 10-K.
We market hundreds of brands in more than 200
countries and territories around the world. The
consumers who eat and drink our products spent an
estimated $98 billion on our brands in 2007.
PepsiCo has 18 mega-brands that generate $1 billion
or more each in annual retail sales. In addition to
benefiting our own associates, this powerful performance helps support our independent bottler network,
distribution operations and contributes to the sales of
retailers throughout the world. Our economic reach is
broad and deep and sustainable.
10 2007-2008 PepsiCo Corporate Sustainability Report
Our Economic Contributions
Shareholders - We provide shareholders with a strong
return on their investments. In 2007, we paid $2.2
billion in dividends and provided shareholders with a 26
percent return, which is stock appreciation plus dividends
reinvested.
Associates - We directly employ approximately 185,000
people. Our customers and business partners, such
as franchised bottlers and licensees, employ tens of
thousands of additional people as they manufacture and
distribute our brands.
Retailers - We create income and profit for our customers,
which mean jobs and opportunities in millions of retail
establishments around the world. Our brands are among
the most profitable brands that retailers carry.
Suppliers - In 2008, we purchased billions of dollars of
supplies, services and raw materials. These purchases
help to support hundreds of thousands of additional jobs in
many communities.
taxes worldwide. These tax payments make an important
contribution to the countries and communities in which
PepsiCo has a presence.
Public Policy
PepsiCo believes that both as a Company and as
individuals it is important to be engaged in the public
policy and political arena. PepsiCo has always disclosed
information on how we are spending resources for
political purposes as required by law and regulation. In
2005, PepsiCo developed a Political Contributions Policy
that provides shareholders with details on the policies,
procedures and criteria used in connection with all
political contributions. In addition, we are now providing
details of PepsiCo political contributions on our website.
Shareholders were involved in discussions leading to the
development of this policy.
Governments - Our businesses have a positive impact
on the economies of the countries and localities in which
we operate by generating billions of dollars of revenue for
governments through taxes paid directly by PepsiCo and
indirectly by PepsiCo employees, investors, commercial
partners and suppliers.
Technology - We share expertise and technologies that
provide important benefits to communities and countries.
In emerging markets, such as India and China, our
agricultural development programs have significantly
improved crop yields for local farmers.
Taxes
In 2007, PepsiCo paid $1.7 billion in income taxes,
net of refunds, worldwide. In addition to income taxes,
PepsiCo paid hundreds of millions of dollars in payroll,
property, transaction-based and other miscellaneous
2007-2008 PepsiCo Corporate Sustainability Report 1
1
Contributions and Community
As a corporate citizen, PepsiCo, Inc. and its companies
have a long and proud history of supporting communities
in which they do business. We give to nonprofit community
groups and initiatives through the PepsiCo Foundation,
Corporate Contributions, PepsiCo Community Affairs and
our various operating divisions. We encourage employees
to volunteer. Additionally, we provide gifts-in-kind, support
community and nonprofit events, conventions and journals
and sponsor meetings.In-kind donations include food,
beverages, equipment and services and are estimated at
cost to PepsiCo.
PepsiCo Foundation
Since 1960, the PepsiCo Foundation has invested in
leading programs and critical causes that have bolstered
our sustainability priorities and strengthened communities.
The PepsiCo Foundation focuses its grant making in the
following areas:
• Global Health
• Environment
• Global Inclusion
12 2007-2008 PepsiCo Corporate Sustainability Report
The PepsiCo Foundation also provides assistance for
humanitarian aid and recovery efforts following major
disasters.
Community Affairs
PepsiCo’s Community Affairs is an integral part of the way
we do business. We are currently active in these areas:
Health and Wellness
We participate in conferences, events and volunteer activities to increase awareness of PepsiCo’s commitment to
health and wellness in ethnic communities. We also form
partnerships with community-based organizations to
encourage active lifestyles. We have key partnerships
with The National Council of La Raza and the National
Urban League.
Diversity and Inclusion
We create awareness of PepsiCo’s goals of recruiting
diverse associates by representing PepsiCo at national
recruiting conferences, such as the National Black MBA
Associations, Inc. and the National Society of Hispanic
MBAs.We provide leadership and support PepsiCo’s
commitment to increase procurement from minorityowned and women-owned businesses. We participate in
events and conferences where we seek first and second
tier suppliers. We provide support for events and initiatives of the following groups: U.S. Pan Asian American
Chamber of Commerce (USPACC), National Minority
Supplier Development Council (NMSDC); U.S. Hispanic
Chamber of Commerce (USHCC) and Women’s
Business Enterprise National Council (WBENC). The
PepsiCo Foundation continues its seed funding to the
National Council of La Raza for a scalable national
Latino education and workforce model.
Government and Legislative
In partnership with the Black Caucus and the Hispanic
Caucuses, we build community awareness of PepsiCo’s
health and wellness commitment and program initiatives.
We initiate and participate in panels and workshops with
the goal of creating understanding and awareness of our
commitment to health and wellness.
In-Kind Donations
PepsiCo provides in-kind donations for many nonprofit
organizations. The largest program is America’s Second
Harvest and its network of food banks. We also make
in-kind donations of products, premiums, equipment,
meeting space and other services.
Our Commitment, Mission and Values
At PepsiCo, we’re committed to
Performance with Purpose – achieving
business and financial success while
leaving a positive imprint on society.
We want to grow our business by
being – and by being recognized
as – a sustainability leader.
Our approach to superior financial performance is
straightforward drive shareholder value. By addressing
sustainability issues, we deliver on our purpose agenda.
Our performance and our purpose are not separate - it’s
a merger of financial achievement in each of the three
elements that together form our purpose agenda: human,
environmental and talent sustainability.
Human Sustainability - Offering our consumers a broad
range of products, from treats to healthy eats - and
making it easier for them to make healthful choices.
Environmental Sustainability - Protecting our natural
resources and operating in a way that minimizes our
environmental footprint, with the goal of reaching a netneutral impact.
Talent Sustainability - Valuing our employees and
ensuring PepsiCo is an attractive destination for the
world’s best people.
13 2007-2008 PepsiCo Corporate Sustainability Report
This approach encompasses the many challenges
that PepsiCo faces: rising obesity rates and the need
for more physical activity, nutritional deficiencies in
vulnerable populations in developed and developing
countries, water scarcity and quality, climate change,
and the need for responsible packaging. We recognize
the importance of managing risk while overcoming our
challenges.
The people behind PepsiCo’s brands are working hard
to address these economic, environmental and social
challenges. The talents and skills of our global workforce
matched with our operational capabilities of developing,
moving and selling the world’s favorite foods and
beverages can effect real world change. While we have
made significant strides on this journey, there is still a lot
to learn and do. It is our intent to lead the way.
Mission
We aspire to make PepsiCo the world’s premier
consumer products company, focused on convenient
foods and beverages. We seek to produce healthy
financial rewards for investors as we provide
opportunities for growth and enrichment to our
employees, our business partners and the communities
in which we operate. And in everything we do, we strive
to act with honesty, openness, fairness and integrity.
Values
Our commitment is to deliver sustained growth, through
empowered people, acting with responsibility and
building trust.
Here is what this means:
Code of Conduct
Sustained Growth is fundamental to motivating and
measuring our success. Our quest for sustained growth
stimulates innovation, places a value on results, and
helps us understand whether actions today will contribute
to our future. It is about growth of people and company
performance. It prioritizes making a difference and
getting things done.
PepsiCo has provided interactive training in its Values
to associates worldwide. PepsiCo has also provided
interactive training on its Code of Conduct. In 2008, more
than 22,000 associates around the world completed
mandatory Code of Conduct training. The training was
offered in six languages. Of the active employees who
were solicited, we achieved 100% completion.
Empowered People means we have the freedom to
act and think in ways that we feel will get the job done,
while being consistent with the processes that ensure
proper governance and being mindful of the rest of the
company’s needs.
PepsiCo has had a Code of Conduct since 1976. It is
regularly updated and it applies to all employees and to
all divisions and subsidiaries. It is communicated to all
our employees annually and applies to every business
transaction. PepsiCo’s Code of Conduct is available in
30 languages. Our Code of Conduct includes provisions
relating to ethical business dealings, bribery, business
gifts and entertainment, discrimination, harassment,
confidentiality of information, insider trading, accounting
and record-keeping, health and safety, human rights,
environment, political activities, protection of company
assets and whistle blowing.
Responsibility and Trust form the foundation for healthy
growth. It’s about earning the confidence that other
people place in us as individuals and as a company. Our
responsibility means we take personal and corporate
ownership for all we do, to be good stewards of the
resources entrusted to us. We build trust between
ourselves and others by walking the talk and being
committed to succeeding together.
Guiding Principles
We must always strive to:
Care for customers, consumers and the world we live in.
Sell only products we can be proud of.
Speak with truth and candor.
Balance short term and long term.
Win with diversity and inclusion.
Respect others and succeed together
In addition to our Code of Conduct, we have specific
company or internal policies regarding key topics such
as the International Anti-Bribery Compliance Policy,
Anti-Harassment/Discrimination Policy, Customer Trade
Agreement Policy, Disclosure Policy, Equal Employment
Opportunity Policy, Environmental Policy, Human Rights
Workplace Policy, Food Safety Policy, Information
Security Policies, Workplace Health and Safety Policy
and Travel & Entertainment Policy. These policies apply
to all of our employees worldwide.
We regularly communicate and reinforce our Code of
Conduct and our Values through a variety of means,
including in-person training, Town Hall meetings, articles
in our daily in-house e-newsletters, information on our
intranet, management presentations and awards for
ethical behavior. In addition, an annual Code of Conduct
Month campaign is conducted globally to increase
awareness of the Code.
Specific employees, including management and any
individual with access to sensitive information or in a
position to acquire goods and services, are required to
complete mandatory web-based training on our Code of
Conduct and to certify their compliance with the Code.
In 2005, PepsiCo established a compliance and ethics
leadership structure, appointing a Vice President, Deputy
General Counsel, Business Practice and Compliance,
who is focused on business practices, ethics and
compliance.
In the event of a breach of the Code of Conduct,
appropriate disciplinary action is taken, ranging from
counseling to termination, depending on the type
and seriousness of the matter. PepsiCo’s outside
auditor receives reports regarding potentially
significant violations that relate to fraud, accounting,
2007-2008 PepsiCo Corporate Sustainability Report 1
4
auditing and internal control matters. The Audit
Committee also receives regular reports regarding
compliance with the Code of Conduct. In order to
maintain the confidentiality and anonymity of PepsiCo’s
hotline, PepsiCo does not publicly report on breaches of
its Code of Conduct or other policies.
Anti-corruption policies and procedures are included in
our Code of Conduct. In addition, PepsiCo’s International
Anti-Bribery Policy was communicated to all Corporate
and PepsiCo International employees in 2006 and webbased training was provided to approximately 15,000
employees on this policy in 2007.
Any reports of potential corruption are investigated
immediately under the direction of the Law Department.
If employees are found to have engaged in questionable
behavior they will be disciplined accordingly. When
appropriate law enforcement authorities are notified,
PepsiCo cooperates with law enforcement activity to the
fullest extent possible.
Corporate Governance
Our governance includes the following:
• Board of Directors and Standing Committees
• Disclosure Committee
• PepsiCo Executive Committee
• Public Policy Coordinating Group
Board of Directors and Standing Committees
PepsiCo’s business strategy and affairs are overseen by
our Board of Directors. Our Board of Directors has three
standing Committees:
1. Nominating and Corporate Governance
2. Audit
3. Compensation
15 2007-2008 PepsiCo Corporate Sustainability Report
As of March 2008, there are 12 board members,
including ten independent outside directors and
two executive directors. Members of all Board
Committees are independent outside directors.
PepsiCo’s independence director standards are defined
in Section B of the Corporate Governance Guidelines
entitled “Director Qualification Standards.” These
standards conform to the director independence rules of
the New York Stock Exchange.
Disclosure Committee
The purpose of the Disclosure Committee is to ensure
that all disclosures made by PepsiCo to its security
holders or the investment community are accurate and
complete and fairly present the Company’s financial
condition and results of operations in all material
respects, and are made on a timely basis as required by
applicable laws and stock exchange requirements.
PepsiCo Executive Committee (PEC)
The PepsiCo Executive Committee (PEC) is comprised
of a cross-functional, geographically diverse, senior
management group which identifies, assesses, prioritizes
and addresses strategic and reputational risk and is
chaired by Indra Nooyi, PepsiCo’s CEO and Chairman.
This Committee meets regularly on all areas of the
business.
Public Policy Coordinating Group
In July 2007, PepsiCo established the Public Policy
Coordinating Group to address issues of public policy
and sustainability. The group is under the direction
of PepsiCo’s General Counsel and includes senior
functional heads as well as other Company leaders
who are focused on Human, Environmental and Talent
Sustainability:
• Human Sustainability, encompassing our products,
is led by our chief Health and Wellness Innovation
Officer, working with our R&D functions and divisions.
• Environmental Sustainability is led by the Executive
Sustainability Leadership Team (ESLT) which is
charged with advising and informing the Chairman
and CEO, the PepsiCo Executive Committee, and
the Board of Directors on matters of Environmental
Sustainability. The ESLT is comprised of the heads of
the supply chain at each of our four businesses, as
well as senior leaders from Sales, Human Resources,
Communications, Government Affairs, Legal, R&D,
Purchasing, Finance and Investor Relations. They
are supported by the Environmental and Sustainable
Packaging Councils, which are comprised of subject
matter experts across all divisions and are responsible
for recommending and implementing actions.
• Talent Sustainability resides primarily with our Chief
Personnel Officer, including diversity officers, training
and compensation and benefits groups.
Communications with the Board of Directors
To facilitate communications with our shareholders,
we provide various methods to contact the Board of
Directors. These may be found under “Contact the
Board of Directors/Audit Committee” in the Corporate
Governance section of our website. In addition,
PepsiCo’s Proxy Statement, which is distributed to
all shareholders, details the process for contacting
the Board, a Committee of the Board or an individual
member of the Board.
Shareholder Proposals
Shareholders wishing to submit shareholder proposals
may do so in accordance with the instructions in our
Proxy Statement.
Board and Executive Compensation
Directors receive a straight-forward compensation package that includes a market competitive annual grant of
deferred stock units which pay out one year after director
retirement and an annual cash retainer that can be deferred into PepsiCo stock units. Directors do not receive
any meeting fees, nor do they have a retirement plan or
receive any benefits such as life or medical insurance.
Pay levels for executive officers are designed to be
competitive and, most importantly, align with the
Company’s performance. Pay-for-performance is a
critical policy in designing our executive compensation
and, as a result, our “pay mix,” defined as the amount
of at-risk annual and long-term cash incentive awards
and at-risk equity-based awards relative to total
compensation, places the greatest emphasis on
variable pay incentives. As a result, over 90 percent of
our Chairman and CEO’s target total compensation is
variable and at-risk.
Performance-related annual incentive awards are
earned based on the achievement of Company and
individual performance measures. In particular, Company
performance includes financial performance measures
related to profit, net revenue and market share.
Individual performance includes measures relating to
an individual’s contribution to PepsiCo’s strategic
business imperatives, such as improved operating
efficiencies and driving PepsiCo’s Performance with
Purpose priorities in the areas of human sustainability,
environmental sustainability and talent sustainability.
For more information please see our Proxy Statement.
Governance Guidelines also include director
independence standards to address potential director
conflicts of interest.
Director Nomination Process
The Nominating and Corporate Governance Committee
does not solicit director nominations but will consider
recommendations for director nominees if the individuals
recommended meet certain minimum Board membership
criteria detailed in our Proxy Statement and, if so, if
the candidates expertise and particular set of skills
and background fit the current needs of the Board.
This process is designed to ensure that the Board
includes members with diverse backgrounds, skills and
experience, including appropriate financial and other
expertise relevant to the business of the Corporation.
Annual Performance Evaluation of the Board
The Board and its Committees conduct a self-evaluation
at least once annually to assess Board and
Committee performance.
Memberships and Partnerships
PepsiCo has always prided itself on being a good
corporate citizen and taking action or aligning itself with
leading experts and organizations focused on emerging
social issues. Examples of this include addressing health
and wellness initiatives including diet and nutrition concerns, climate change, water resources and HIV/AIDs.
Through our memberships and partnerships, PepsiCo
endorses a number of initiatives related to our
businesses. In addition to the initiatives noted below,
on a global level, we have endorsed the United Nations
Millennium Development Goals.
Professional Trade Groups
We are also members of many trade and professional
groups and take an active role in these as suitable.
These are sometimes local and specific to the business.
Among these are:
• American Beverage Association (ABA)
• Snack Food Association
Capital Expenditure Filter
All requests for capital expenditures over $5 million must
include a review of sustainability issues and performance
against appropriate benchmarks. Additionally, opportunities for improving the sustainability of the project surrounding the capital request must be highlighted.
The goal is to incorporate more sustainability opportunities in projects right from the start. This is expected to
help drive continued improvement in our sustainable
development.
• International Life Science Institute
• International Society of Beverage Technologists
• National Safety Council
• American Industrial Hygiene Association
• American Society of Safety Engineers
• Con Mexico
• European Association of Industries of Juices & Nectars
• International Council of Beverage Associations
• CEEREAL European Breakfast Cereals Association
• European Food and Drink Federation (CIAA)
Conflicts of Interest
Our Code of Conduct, which applies to all PepsiCo
employees and directors, contains clear guidelines
regarding conflicts of interest. PepsiCo’s Corporate
2007-2008 PepsiCo Corporate Sustainability Report 1
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Memberships and Partnerships
17 2007-2008 PepsiCo Corporate Sustainability Report
2007-2008 PepsiCo Corporate Sustainability Report 1
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Risk Management
PepsiCo is subject to risks in the normal course of
business. These risks include: product demand; our
reputation; information technology; supply chain; retail
consolidation; the loss of major customers and failure to
maintain good relationships with our bottling partners;
global, economic, environmental and political conditions;
the regulatory environment; workforce retention
and outsourcing; raw materials and other supplies;
competition; and market risks.
In 2007, we continued to focus our risk mitigation efforts
to further reduce PepsiCo’s exposure to risks, and
integrated those efforts in our businesses’ operating
plans and budgets, where accountability is assigned and
performance measured.
Risk Management Process
Our risk management process is intended to ensure that
risks are taken knowingly and purposefully. As such,
we leverage an integrated risk management framework
to identify, assess, prioritize, manage, monitor and
communicate risks across the Company.
This framework includes:
• The PepsiCo Executive Council (PEC), comprised
of a cross-functional, geographically diverse, senior
management group which identifies, assesses, prioritizes
and addresses strategic and reputational risks;
• Division Risk Committees (DRCs), comprised of crossfunctional senior management teams which meet regularly
each year to identify, assess, prioritize and address divisionspecific operating risks;
• PepsiCo’s Risk Management Office, which manages
the overall risk management process, provides ongoing
guidance, tools and analytical support to the PEC and
the DRCs, identifies and assesses potential risks, and
19 2007-2008 PepsiCo Corporate Sustainability Report
facilitates ongoing communication between the parties,
as well as to PepsiCo’s Audit Committee and Board of
Directors;
• PepsiCo Corporate Audit, which evaluates the ongoing
effectiveness of our key internal controls through periodic
audit and review procedures; and
• PepsiCo’s Compliance Office, which leads and
coordinates our compliance policies and practices.
Risk Identification
This takes place annually from both a top-down (PEC) and
bottom-up (DRC) viewpoint. Our risk identification efforts seek
to evaluate both external risks (customer trends, consumer
trends, government and public policy risks), as well as risks
associated with internal capabilities.
Risk Assessment
After identifying our most significant inherent risks, each
assessing body (PEC, DRCs, Risk Management Office
RMO) reviews the most significant risks from both a
probability, impact and vulnerability perspective at two
levels inherent and residual. This assessment requires
that we fully understand the existing capabilities, controls,
programs, insurance coverage and other mitigating factors
that enable an accurate assessment of the risk.
Risk Prioritization
After assessment, all risks that exceed a predetermined
threshold are prioritized by both assessment itself as
well as the ability to influence and/or mitigate. In addition,
the RMO aggregates the risk assessment information
to look for risk interdependencies and common
mitigation solutions.
Risk Response
Following our prioritization of risks, the PEC and DRCs
are required to explicitly determine the response to
each significant risk. The responses include accepting,
avoiding, mitigating and transferring (via third party
insurance). The DRCs also identify which risks will be
monitored on an ongoing basis and what measurement
index will be used for such a purpose.
Communication
Each DRC is required to summarize its risk management
efforts by providing meeting minutes, as well as semiannual submissions of risk maps. Risk maps are used
to document specific information about identified risks,
including the likelihood, the impact and risk response.
For PepsiCo’s top risks, PepsiCo has assigned
Executive Risk Owners responsible for understanding
the risk across the Company and providing annual
updates to the PEC as well as the Audit Committee and
Board of Directors, depending upon the risk area. A
semi-annual risk management update is provided to the
PepsiCo Audit Committee, during which our risk profile,
risk mitigation efforts and risk management process
are discussed.
Human Sustainability
Human Sustainability – a key element
in our purpose agenda - means
nourishing consumers not only with
healthy products, but rounding
out the equation by promoting
active lifestyles
Our Goal
Our goal is to offer consumers a range of products that
deliver great taste, nutritional value, convenience and
affordability. We are committed to playing a responsible
role in health and wellness by encouraging people to
adopt healthy, active lifestyles - beginning with the
products we offer.
We have world-class scientists singularly focused on
science-based nutrition standards and guidance when
developing food and beverage products in order to
positively impact health. Our state-of-the-art research
and development facilities ensure that we’re leveraging
our talent and operational capabilities.
We continue to make great strides in transforming our
portfolio of products to meet consumers’ needs by:
• Introducing new food and beverage products that offer
nutrition benefits and reduced portion sizes
• Reformulating some of our existing products to reduce
nutrients of concern including fat, saturated fat,sodium and
added sugars
• Adding whole grains, fiber, fruit, vegetables, key vitamins
and minerals
20 2007-2008 PepsiCo Corporate Sustainability Report
We believe it is our responsibility to understand the
diet and nutrition needs of populations around the
globe, in order to reduce the risk of chronic diseases
associated with poor diets. This includes heart disease,
diabetes and obesity. While there’s a lot of debate about
different solutions to obesity, we believe a key solution
to maintaining a healthy weight is energy balance -- the
balance between calories consumed and calories burned
through activity. We believe the way to make a difference
is through comprehensive, multi-faceted efforts that
involve tapping the expertise of many external partners
and working both sides of the energy balance equation.
In addition, we want to make smart choices easier for
consumers by providing a wide variety of healthful
food and beverage products with easy-to-understand
nutrition labeling.
At PepsiCo, we actively lead and engage in key privatepublic partnerships to increase our understanding of
nutrition and health, deliver real improvement in our
products, encourage responsible marketing practices
and support programs that motivate consumers to adopt
healthier, more active lifestyles.
By doing this, we believe we can help consumers make
the choices they want and live healthy lives.
Our Portfolio
We are proud to offer a wide variety of great-tasting
foods and beverages that deliver enjoyment as well as
nutrition, convenience and affordability.
We are continually transforming our portfolio of products
to keep up with growing demand for healthier choices
through:
• New Products and Approaches
• Reformulation of Existing Products
• Strategic Acquisitions
Expanding PepsiCo’s Global R & D Network
We’re expanding our global research and development
capability under the leadership of one of the world’s
leading endocrinologists and other experts in science,
nutrition and health policy. This move brings a new
level of expertise and focus to our efforts to develop
products that address consumer cultural tastes and food
preferences with the right nutrition and
functional benefits.
With increased research capability and investment, the
global R&D team will establish priorities and standards of
practice for longer term research, nutrition, food safety,
regulatory, and health policy.
Today, there are eight regional research centers
worldwide focused on leveraging nutrition science,
knowledge, and insight to develop convenience foods
and beverages that can improve the overall diet and
positively impact health. The centers are located in
Leicester, U.K.; Monterrey, Mexico; Mexico City, Mexico;
Shanghai, China; New Delhi, India; Valhalla, NY; Plano,
TX and Barrington, IL.
In addition, we’re broadening our innovation efforts
through the formation of a variety of new research
partnerships with leading universities and other
institutions including Yale University, Newcastle
University, Dresden University, Westfalische WilhelmsUniversitat Munster, Monell Chemical Senses Center,
University of Texas and The New York Academy of
Sciences, among others.
Better Choices with Nutrition Labeling
We care about the health of the consumers who enjoy
our products and we want to help them by making the
healthful food choice an easier choice.
Since its 2004 launch, our Smart Spot symbol has made
it easier for consumers to identify PepsiCo products that
contribute to a healthier lifestyle in the U.S. The Smart
Spot symbol – the symbol of Smart Choices Made Easy
– is a simple labeling system that explains why each
product is a smart choice. It is the only industry symbol
that meets nutrition criteria based on authoritative
statements from the U.S. Food and Drug Administration
and the National Academy of Sciences.
Products that carry the Smart Spot label:
• Contain at least 10% of the Daily Value of a target nutrient
(i.e. protein, fiber, calcium, iron, vitamin A, vitamin C) and
meet limits for fat, saturated fat, trans fat, cholesterol,
sodium and added sugar, and/or
Partnering for Change
PepsiCo is among eight leading food and beverage
companies to sign the “Global Commitment to Action on
the Global Strategy on Diet, Physical Activity and Health”, a
commitment addressed to the World Health Organization.
The five key global commitments to action include:
1.
Product availability
Introduce new products/reformulate existing products to
improve diets and reduce obesity; develop guidelines
to reduce excess consumption of key nutrients (i.e.
salts and trans fats); address nutritional deficiencies in
developing countries.
2.
Nutrition information to consumers
Ensure product nutrition information is provided for
key nutrients.
3.
Marketing and advertising to children
Strengthen commitment to responsible advertising in
all forms of marketing communication through adoption
of the International Chamber of Commerce (ICC)
Framework for Responsible Food and Non-Alcoholic
Beverage Advertising.
4.
Promotion of physical activity and healthy lifestyles
Promote greater physical activity and healthier lifestyles
through marketing communications and share best
practices from around the world.
5.
Public-Private partnerships to accomplish strategy
Collaborate with WHO and the public health
community to deliver positive outcomes.
• Are formulated to have specific health or wellness
benefits, and/or
• Are reduced in calories or nutrients such as fat,
sodium or sugar
For more information, visit www.smartspot.com.
Health and Wellness Programs
We believe tackling the problem of obesity requires a
holistic approach, which is why we support programs
that promote active lifestyles, as well as proper diet and
nutrition.
Addressing Malnutrition
In countries where malnutrition is a serious issue, we
offer products directly aimed at addressing chronic
hunger. In addition, we have announced our intent to
launch a pilot program focusing on chronic hunger that
will directly deliver the Millennium Development Goal to
eradicate extreme poverty and hunger by 2015.
We are working toward developing nutritious fortified
products to reduce hunger in select developing countries,
particularly in India, South Africa, and in time, Nigeria.
2007-2008 PepsiCo Corporate Sustainability Report 2
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Environmental Sustainability
In a world that continues to
experience unprecedented economic,
environmental and social challenges,
PepsiCo – one of the world’s largest
food and beverage companies –
recognizes our responsibilities to
help make a difference.
At PepsiCo, we are committed to minimizing the impact
our business has on the environment with methods
that are socially responsible, scientifically based
and economically sound. Foundationally, we expect
compliance with environmental laws and regulations. In
places where, in our judgment, the requirements are not
stringent enough, we will apply a higher standard to drive
environmental protection.
We will audit our performance against these expectations
to assure we are doing right. After more than a decade
of action, we continue our energy efficiency, water
conservation and responsible packaging innovation
initiatives and take accomplishments that are pioneered
in one part of our business to scale throughout our
global network.
We continuously improve our environmental programs
and explore inventive solutions to the world’s challenges.
We operate in a way that minimizes our environmental
footprint. With the goal of reaching a net-neutral impact.
We’ve focused our environmental sustainability efforts on
water, energy and packaging - areas where we can make
22 2007-2008 PepsiCo Corporate Sustainability Report
the biggest impact. And we’re extending our outreach to
our franchised bottlers and our supply chain, including
our agricultural partners.
Liters for beverages; Kilograms for foods.
PepsiCo established uniform protocols for energy and
water measurement and reporting in 2005 and rolled
them out for use across all divisions for the first time in
2006. Prior to this, Frito-Lay North America (FLNA) had
been collecting data since 1999. Quaker/ Tropicana/
Gatorade began data collection in 2004. PepsiCo
International has now collected one full year of data.
This is the first time year-over-year comparisons are
available for PepsiCo as a whole.
The data collected represents PepsiCo-owned
manufacturing sites with 100 percent of usage at FLNA
and Quaker/Tropicana/Gatorade and 90 percent at
PepsiCo International.
In 2007, PepsiCo agreed on rigorous, corporation-wide
global metrics to help us better track and understand our
environmental footprint.
Our goal is to reduce water consumption by 20 percent,
reduce electricity consumption 20 percent, and reduce
fuel consumption by 25 percent per unit of production by
2015 as compared to our 2006 consumption.
We continue to make positive impact and have
achieved significant results. In 2007, our beverage
businesses reduced water consumption by 9 percent,
electricity consumption by 8 percent and fuels
consumption by 7 percent.
International. These leaders head our Environmental
Sustainability Leadership Team (ESLT), formed in 2007.
The ESLT includes senior executives from all functions to
make sure that environmental impacts are considered in
all areas of the business.
Our foods businesses reduced water consumption by 6
percent, electricity consumption by 3 percent and fuels
consumption by 3 percent.
The ESLT charter includes the following:
We have environmental scientists and technical experts
who are knowledgeable of leading edge scientific
research and discoveries so we can leverage our
operational capabilities to help make a difference.
• Develop, administer and maintain PepsiCo-wide policies
on matters of environmental sustainability.
We have in place a global eco-efficiency strategy for
resource conservation (RECON) within our operations
that helps us optimize our water, energy and electricity
use through improved methods and technologies. We
extend this strategy to our bottlers and co-packers
through workshops around the world.
We have formed a series of partnerships with key
external stakeholders to provide us with additional
insights, expertise and knowledge on multiple aspects
of sustainability. We will continue to actively lead and
engage in key private-public partnerships to spur action
and solutions to address the urgency of the world’s
environmental issues.
Our Management
Environmental performance leadership is the
responsibility of PepsiCo’s four executive supply chain
heads of our operations: Frito-Lay North America,
Quaker/Tropicana/Gatorade, Pepsi-Cola North America
(including working with our bottlers) and PepsiCo
opportunities to create a more climate change resistant
supply chain. In addition, Pepsi-Cola North America has
a Bottler Sustainability Team.
• Create and maintain PepsiCo’s environmental
sustainability strategy.
• Develop goals and time lines for PepsiCo
environmental performance.
• Assess the gaps and strengths of performance relative to
our aspirations and external benchmarks.
• Provide support to divisions in improving PepsiCo’s
long-term environmental sustainability performance.
Advise and inform the Chairman and CEO, the PepsiCo
Executive Committee and the Board of Directors on
matters of environmental sustainability.
The ESLT is supported by the Environmental Council
(EC). The EC is made up of environmental experts
from all areas of our business, including resource
conservation program managers and environmental
compliance managers. The EC’s mission is to provide
subject matter expertise within and across the Divisions
and supports the ESLT to ensure that we have a
strategic environmental sustainability vision for PepsiCo,
uniform system-wide metrics, standards and practices,
sensible environmental goals and accurate reporting to
internal and external stakeholders. In addition to driving
greater efficiencies in our use of natural resources and
identifying ways to address water scarcity issues, the EC
is focused on transforming our business model to seize
2007-2008 PepsiCo Corporate Sustainability Report 2
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Their mission is to advance environmental sustainability
in Pepsi-Cola’s Bottling operations through:
• Defined and consistent measures - Data
collection, benchmarking, and reporting with PepsiCo
The EHSMS framework is built along the lines of
ISO 14001 and OHSAS 18001. Twenty-six PepsiCo
International facilities are ISO 14001 certified, including
ten in the United Kingdom and 4 in China.
• Setting and achieving goals
Capital Expenditure Filter
• Driving continuous improvement
PepsiCo incorporated sustainability criteria into our
Capital Expenditure Filter (CapEx Filter) and we are
using it on all capital expenditure requests over $5
million. Each request must include a review of the
sustainability issues and opportunities surrounding the
request. The goal is to incorporate sustainability aspects
in projects right from the start and track sustainabilityrelated capital spend across PepsiCo. This is expected
to help drive continued improvement.
• Sharing best practices
Each division is held responsible for implementing
environmental programs and for training associates,
tracking, monitoring, correcting and improving
environmental aspects of its business.
Monitoring
In 2005, the PepsiCo Environmental Management
System (EMS) framework was first developed with
the help of an independent third party. Since this time,
we have reviewed our performance and strategy, and
in 2008 we expanded the framework to encompass
environment, health and safety. We call this 12-element
framework the PepsiCo Environment, Health & Safety
Management System framework (EHSMS). [LINK] Read
more about how PepsiCo provides a safe and healthy
work environment.
Key features of the PepsiCo Environmental Health
and Safety Management System (EHSMS) framework
include:
• A risk-based management approach.
• Documented systems that capture and maintain
institutional knowledge.
• Objectives and targets for continuous improvement.
• Integration of environment, health and safety
considerations into core business processes.
• Routine performance monitoring and internal
management reporting.
24 2007-2008 PepsiCo Corporate Sustainability Report
Our Environmental Policy
PepsiCo’s Environmental Policy applies to all our
operations. PepsiCo monitors company-owned
operations and joint ventures where we hold a majority
share. We encourage our suppliers, service providers,
bottlers and other partners to adhere to the policy.
Education and Awareness –
Engaging Employees
We are committed to educating our associates on the
importance of environmental sustainability. In addition to
regular training of environmental personnel, we conduct
special events, such as a Sustainability Summit, in which
new ideas are shared.
In May 2008, PepsiCo introduced the Sustainable
Engineering Guidelines, which are meant to support
overall implementation of our environmental
sustainability concept throughout the engineering
process and to improve efficiency in the use of natural
resources. The Sustainable Engineering Guidelines can
be accessed through a website available to all PepsiCo
employees and key partners worldwide. We
also offer workshops on RECON, our global ecoefficiency strategy for resource conservation within our
operations to our engineers, as well as to bottlers and
co-packers around the world.
In 2008, U.S. employees were offered Chronos,
an e-learning tutorial designed to help associates
understand the landscape of sustainability and the
business case for sustainable development. It was
created through a partnership with the World Business
Council on Sustainable Development (WBCSD) and the
University of Cambridge, UK.
Environmental sustainability is shared with all our
associates through holding special activities to mark
events such as Earth Day and World Water Week.
Environmental information is also included in our daily
e-newsletter. Our Latin America Beverages business has
a bi-monthly employee e-newsletter dedicated to sharing
environmental sustainability initiatives and projects in the
region as well as showcasing best practices.
Green Teams
Green Teams Frito-Lay North America maintains a
dedicated team of experts across our manufacturing
facilities focused on reducing consumption of electricity,
fuels and water. Through “Green Teams,” made up
of groups of volunteer employees, more than 12,000
manufacturing associates have been trained to improve
their environmental awareness and to understand how
they can do their jobs without adversely impacting the
environment.
Quaker, Tropicana, and Gatorade have established
“QTG Green,” an over-arching environmental
sustainability initiative to raise employee awareness
and create actionable tactics to improve the business
and each associate’s personal environmental footprint.
The focus is to raise awareness, incite action and
institutionalize sustainability improvement.
Water
Water is essential for all foods: for growing, washing,
processing and cooking. It is the primary ingredient in
our beverages. Reducing the amount of water we use
is imperative and we’re committed to minimizing our
water footprint through greater efficiency across our
operations. Where we source our water is just as critical
since sourcing from stressed areas causes damage to
local communities and eco-systems. Throughout our
business, we work to reduce our water footprint and
help avoid water conflicts with local communities. At the
same time, we are engaged in improving access to clean
water around the world through alliances with non-profit
groups.
the worst in centuries. Those solutions alone helped the
Atlanta plant conserve nearly 290 million liters of water
in 2007 and have led to system-wide water savings.
Since 2004, Gatorade has reduced water usage by 17
percent across its entire manufacturing system through
implementing best practices across facilities. Gatorade
Conserving Water in Our Operations
In 2007, we saved nearly 5 billion liters of water
across our operations as compared to 2006
through technological improvements in our global
manufacturing operations and resource
conservation programs.
In the United Kingdom, our total water use across
all our operations was 1,564 million liters in 2007.
Between 2001 and 2007, we reduced the water
used to manufacture Walkers Crisps by 42 percent
from 13l/kg of production to 7.6l/kg. This was
achieved through a comprehensive analysis of all
water usage and improved measurement systems.
The Walkers team developed engineering solutions
to reduce equipment water use and increase
opportunities for recycled water use. Training and
communication sessions were held for all employees
to drive awareness of the need to reduce water
use and how they could play a part. Performance
was tracked between lines and shifts, with the best
performing teams being rewarded and recognized.
None of our facilities in the United Kingdom and
Ireland is in a region that the Environment Agency
identifies as under “serious water stress.”
Gatorade Employees as Change Agents
Many water efficiency solutions implemented across
our global operations today were first identified by the
conservation team at our Gatorade facility in Atlanta,
Georgia in response to the August 2007 drought, one of
employees on the manufacturing line have acted as
change agents by helping plants conserve millions of
liters of water. Through employee-led “tag and flag”
programs, water savings efficiencies such as leaks on
production lines are immediately addressed.
2007-2008 PepsiCo Corporate Sustainability Report 2
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Gatorade is continuing to implement innovative
technologies throughout its plants, including:
• Using dry lube, a process that replaces soapy water with
silicone to lubricate bottle lines
• Reclaiming and recycling steam vapor from heating
processes
• Cleaning empty bottles through “air-rinsing,” a process
that uses ionized air instead of water
In Mexico, all of our Sabritas manufacturing facilities
have secondary process water treatment systems, which
will allow us to extend water recycling to more activities
while eliminating the impact of waste water on the
environment.
Frito-Lay, the US snack division of PepsiCo, continued
to improve its water efficiency by conserving more
than 300 million gallons (1 billion liters) of water in
2007 as compared to 2006; through its continued
water conservation efforts known as the “Gallon per
Pound Challenge,” Frito-Lay won recognition from the
Environmental Protection Agency as a Water Efficiency
Leader in 2007. Efficiency methods include recovering
the water used in making potato chips to wash away the
starch that comes from the potato slices. Once the starch
is removed, the water is cleaned and recycled for use in
processing operations.
At Pepsi-Cola North America, concentrate produced by
PepsiCo Concentrate Operations is sold to independent
bottling companies, which finish mixing the product,
bottle it and sell it to retailers. PepsiCo helps guide
and monitor the bottler companies’ environmental
performance. The Pepsi Bottling Group (PBG) has
installed reverse osmosis (RO) recovery systems or
incorporated high recovery designs into their new
installations that cumulatively save more than I billion
liters of water annually as compared to traditional
designs. Pepsi Bottling Ventures (PBV), another anchor
bottler, saved more than 30 million liters of water in 2007
through conservation efforts and more than more than
11 million liters of water in production operations through
water reuse and process improvements since 2005.
Water conservation is especially important in water
stressed areas. In 2003, our India team embarked on an
ambitious journey to achieve positive water balance by
2009 through a comprehensive program to conserve and
26 2007-2008 PepsiCo Corporate Sustainability Report
optimize water usage, both in our own manufacturing
processes and in the communities we serve. We have
carried out a variety of innovative reuse and recycling
initiatives. In the last five years in India, we have reduced
our water use in manufacturing by more than 55 percent.
In just the last three years, we have saved more than
2.5 billion liters of water through water conservation
efforts in manufacturing plants. We have also prevented
depletion of ground water aquifers by constructing
rainwater harvesting systems in most of our plants.
We’ve supplemented this by introducing community
water projects in farms and comprehensive watershed
management programs in diverse and challenging
geographic locations. Similar projects are underway in
China, Thailand and Mexico.
Reducing Water Use in Agriculture
While using water responsibly throughout our business
is a top priority, we also believe in our ability to address
the broader problem of water scarcity. In India, for
example, where reducing Water Use in Agriculture in
India accounts for over 80 percent of total fresh water
consumption, PepsiCo is working with farmers to
reduce water intensity in paddy cultivation by around
30 percent through direct seeding of paddy that avoids
the traditional flood irrigation method currently practiced
by paddy growers across the country. Paddy is India’s
largest grain crop, and consumes the bulk of fresh water
used in Indian agriculture. In 2007, PepsiCo piloted
this program on 100 acres, and this was scaled up to
cover 1,000 acres in 2008. The significant impact of this
change can be gauged from the fact that if only 6,000
acres of paddy cultivation were shifted to direct seeding,
it would offset the entire water used in PepsiCo India’s
beverage plants.
Partnering for Change
PepsiCo Chairman and CEO Indra Nooyi publicly
demonstrated PepsiCo’s commitment to helping address
the global water crisis by joining other partners as a
signatory to the United Nations CEO Water Mandate.
By signing the CEO Water Mandate, PepsiCo has
committed to adhere to a holistic approach to water
management in six areas: direct operations, supply chain
and watershed management, collective action, public
policy, community engagement and transparency.
Ethos Water In 2007, as in previous years, we were active
supporters of World Water Day. Our most visible activity
was with Ethos Water, which is a part of the PepsiCo
water family. In 2006, Starbucks Coffee Company and
PepsiCo, through our North American Coffee Partnership,
signed an agreement to significantly increase distribution
of Ethos Water, including co-packing, distribution and
marketing. Ethos Water has a unique business model,
which includes helping to raise awareness of the severity
of the world water crisis. For each bottle of Ethos Water
sold, Starbucks makes a $0.05 donation to water projects
with the goal of contributing $10 million by the end of 2010
to help children and their communities around the world
get access to clean drinking water.
In India, we have a partnership with The Energy
and Resources Institute (TERI) for research and
implementation to ensure long-term availability of water
resources through interventions aimed at eco restoration
through catchment treatment measures, artificial
groundwater recharge and demand management
measures and improvement in the quality of life of the
community by undertaking interventions in areas of water
supply, sanitation, hygiene, health and education through
community involvement.
Leaving a Positive Footprint on Society
three-year partnership. The program includes a series
of high-impact, community-based activities and practical
solutions across water, agriculture and climate.
Water Partners: The PepsiCo Foundation made a $4.1
million grant to WaterPartners to provide safe drinking
water and sanitation to communities of the greatest need
in India. This grant was the biggest single contribution
to WaterPartner’s WaterCredit Initiative, an innovative
program that uses micro-finance to increase access to
safe water and improve sanitation for local communities
in India.
The PepsiCo Foundation’s mission around the
environment is to advance the knowledge and methods
of water resource management that are sustainable
and positively impact both quantity and quality of water
supply. The Foundation has committed more than $16
million to organizations working to bring safe water to
developing countries.
China Women’s Development Foundation: The
PepsiCo Foundation partnered with the China Women’s
Development Foundation (CWDF) to implement a
research, development and intervention program
designed to expand availability of safe drinking water
for the people of Western and Central China. The grant
is designed to provide safe drinking water using a
watershed management solutions approach to expand
CWDF’s repertoire of rainwater harvesting techniques.
Ultimately, it will help communities obtain water and
teach them to improve the safety of this water
through treatment.
The Earth Institute: In 2008, The Earth Institute
at Columbia University, one of the world’s premier
institutions dedicated to global sustainable development,
and the PepsiCo Foundation, entered into a $6 million
2007-2008 PepsiCo Corporate Sustainability Report 2
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Safe Water Network: Through a three-year partnership
with Safe Water Network, the PepsiCo Foundation has
pledged $3.5 million to implement safe water initiatives for
village water systems in Ghana, India, and Bangladesh as
well as rainwater harvesting systems in India.
Jeffrey Sachs
Director, Earth Institute at
Columbia University
”The availability of fresh water is increasingly
recognized as one of our planet’s greatest
challenges. Around the world, societies
are facing increased water stress, caused
by climate change, population increases,
the melting of glaciers, and depletion of
groundwater. PepsiCo is taking this challenge
very seriously and is providing global
leadership in the search for solutions. The
Earth Institute and the PepsiCo Foundation
are working together to address water
challenges in India, China, Mali and Brazil.
By harnessing good business practices with
cutting-edge science in climate prediction,
remote sensing, hydrology, and agronomy,
our project together will help to develop new
business models for sustainable water use.”
28 2007-2008 PepsiCo Corporate Sustainability Report
Water Quality
Our facilities in the United States are primarily supplied
by municipal water sources. As such, these municipal
water purveyors comply with all applicable water quality
requirements and provide Consumer Confidence Reports
(CCR), which detail the water quality being provided
to the consumer as it compares to compliance with
EPA quality requirements. Our facilities in the United
States are, in essence, consumers of this municipal
drinking water just as are residential customers of the
same supplies. As such, the quality data for the water
that is purchased is available from the municipal water
purveyors, whether the purchaser is PepsiCo, one of our
franchise partners, or a home consumer.
Similarly outside the United States, many of our plants
are supplied by water from municipal sources, and the
same approach would apply - the governing national and
local regulations for water resources and water quality
would, and do, apply. In areas of the world where we
develop our own water sources (for example, extraction
from commercial wells) we do so in full compliance
with applicable regulations concerning use of local
resources. In these cases, we work with the local
authorities to assure that the quantity of water needed to
run our business and thereby to help support the local
community and economy, is consistent with regulations
and safe for the natural resource.
Where we develop our own wells to supply water
from groundwater sources, every source is tested by
an approved, external laboratory which is capable of
reporting drinking water testing results. The test
protocol is based on the most current revision of the
World Health Organization (WHO) Guidelines for
Drinking Water Quality, and also includes testing
required by local authorities.
Every water source used for our beverages must
first be analytically qualified, which includes using
government-accredited/recognized laboratories to
test for a harmonized list of roughly 100 parameters,
covering many classes of raw water chemical/physical
constituents. In addition, the microbial quality of the
source is evaluated to help confirm that our products
will be microbial and chemically safe. We also believe
that protection of water at the source is important;
accordingly, a formal training program is provided to all
of our key beverage plant personnel, which covers areas
such as water source selection, well construction, and
source protection. At every plant, the incoming water
is then further purified, using a variety of treatments
depending on the raw water characterization, to meet
the high standards of quality to be used in our products
- whether these products are bottled water, carbonated
beverages, or non-carbonated drinks.
In addition to source qualification, our plants monitor
the raw, in-process, and treated water for a core list of
parameters, and at frequencies ranging from hourly, to
daily, to weekly (depending on the specific parameter
and application). We have also established internal
laboratories in the United States and Europe which
monitor raw, treated, and bottled water quality worldwide.
Water Sources
For new sites, each of our businesses applies the
elements of an environmental site assessment, similar to
the EPA/ASTM Standard for Phase One Environmental
Site Assessment.
With specific regard to water sources, in the United
States, we utilize a mixture of municipal supplies,
which may be from surface or groundwater sources,
and private wells. The selection and management of
municipal sources fall under the jurisdiction of the United
States Environmental Protection Agency (USEPA) and
any applicable corresponding state authority. These
sources must comply with the EPA National Primary
Drinking Water Regulations and any other applicable
regulations and practices related to water resource
selection and development (for example site selection,
well construction, drought management plans, and many
other elements). Sites are selected to assure ample
water supply and minimal impact to the local watershed.
PepsiCo is involved as a full supporter and Advisory
Board member in the development of a Water Resource
Assessment Tool which has been introduced by the
World Business Council for Sustainable Development
(WBCSD), in conjunction with a world recognized
environmental consulting firm. This tool provides an
assessment of relative water availability (abundance,
stress, scarcity) for any physical location coordinates
entered, in addition to a wealth of other water-related
information. This is the first comprehensive tool of its
kind that was entered into the public domain completely
free of charge- for use by any and all business sectors,
governments, NGOs, and other stakeholders. It was
launched August 2007.
Energy
Climate change may adversely affect the raw materials
and other supplies we use, including water and
agricultural products. In 2007, we successfully reduced
our use of fuels and electricity and continued work to
transform our business model, including identifying
opportunities to reduce energy use in our operations and
use renewable energy, construct green buildings and
work with suppliers to reduce their energy use.
Reducing Our Energy Use
We have set comprehensive electric and thermal energy
reduction goals across our businesses to ensure that
the energy intensity of our operations is continuously
reduced. During 2007, our beverage businesses
reduced electricity consumption by 8 percent and fuels
consumption by 7 percent per unit of product. Our foods
businesses reduced electricity consumption by 3 percent
and fuels consumption by 5 percent.
Per unit of production. Represents 95% of companyowned manufacturing facilities. Non-manufacturing
facilities not included.
In the United Kingdom and Ireland, we reduced the
amount of energy used per pack of Walkers Crisps
production by 32 percent between 2000 and 2007.
We have also focused on the energy efficiency of our
vehicle fleet. In the United Kingdom and Ireland, we
improved our fleet fuel efficiency by 12 percent between
2001 and 2006. In 2007, we reduced our absolute
distribution footprint by 4.3 percent despite shipping
10.3 percent more products. This was achieved by
vehicle technology investments including lower friction
tires and streamlining to reduce wind resistance, new
journey-planning software, and a comprehensive training
program combined with an in-cab system that tracks fuel
efficiency on a weekly basis.
Sabritas, our Mexican snack food business, has
13,000 distribution vehicles, about 6,000 of which were
converted over the past ten years to burn liquid propane
gas. This reduces carbon and nitrogen emissions and
generates fuel savings of between 15 and 22 percent
(depending on geographic conditions and fuel costs).
Frito-Lay operates one of the largest fleets in the
United States and is committed to reducing GHG and
fuel consumption. Frito-Lay has placed over 3000 new
Low Emission Vehicle (LEV)-certified route delivery
trucks on the road since 2006, replacing 1996 and older
pre-emissions diesel models, and has implemented
several additional fuel-saving initiatives. From 20062007, Frito-Lay installed over 4000 auxiliary heaters
and idle shutdown devices in vehicles nationally, which
saved in excess of 200,000 gallons fuel and 2000 metric
tonnes GHG. Frito-Lay is heavily involved in advancing
fuel-efficient fleet technology through partnerships with
2007-2008 PepsiCo Corporate Sustainability Report 2
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industry and government entities to further fuel-saving
and emissions-reducing technology and real-world
experience of hybrids Partners include the Texas
Commission on Environmental Quality(TCEQ), National
Renewable Energy Labs (NREL), The SouthWest
Research Institute (SWRi), the California Air Resources
Board (CARB), Purdue University, and the American
Trucking Association (ATA).
Both Frito-Lay and our bottlers use advanced routing
technologies and have a “no-idle” policy to reduce miles
and cut fuel consumption on delivery routes. Pepsi Bottling
Group (PBG), our largest bottler, has verified the electronic
settings on vehicles with electronic controls to ensure idling
reduction and speed parameters are set efficiently.
PepsiCo and Frito Lay have joined SmartWay, a
voluntary partnership between various freight industry
sectors and the Environmental Protection Agency
(EPA) that establishes incentives for fuel efficiency and
greenhouse gas emissions reductions. By 2012, this
initiative is expected to save up to 25 billion liters of fuel
per year (equivalent to 150 million barrels of oil).
PepsiCo UK will save around one million food transport
miles from British roads each year through an innovative
partnership with retailers and suppliers. By reviewing the
activities of both supplier and retailer fleets and tracking
mutual routes, it has been possible to eliminate empty
running routes for both parties saving around 700,000
miles per year. PepsiCo has also integrated two thirds
of its British potato cargo into its in-house fleet and has
designed a trailer that combines both finished produce
and bulk raw materials, resulting in a highly utilized fleet
that can make customer deliveries en route to the farm,
saving just under 300,000 miles per year.
30 2007-2008 PepsiCo Corporate Sustainability Report
PepsiCo’s commitment to saving energy through green
building worldwide continued in 2007. Our new facilities
constructed in 2007 were designed to meet the U.S.
Green Building Council’s (USGBC) Leadership in Energy
and Environmental Design (LEED) standards - one of
the most rigorous standards for “green building” in the
world. The USGBC awarded the prestigious LEED Gold
certification to two of our facilities: Gatorade’s Wytheville,
Virginia manufacturing facility and Gatorade’s Tolleson,
Arizona distribution center. At the time, the Wytheville
facility was the largest LEED-Gold certified food and
beverage manufacturing site in the world.
In May 2008, PepsiCo introduced the Sustainable
Engineering Guidelines based on LEED standards.The
guidelines support our environmental sustainability
commitments throughout our engineering process,
and apply to all new construction as well as major
remodels of existing buildings globally. The Sustainable
Engineering Guidelines can be accessed through a
website available to all PepsiCo engineers and key
partners worldwide.
The website provides guidelines for:
• Site selection
• Construction activity management
• Water use reduction
• Building materials
• Building systems
• Plant process management
Refrigerants
Marketing Equipment (coolers/vending machines)
affects the environment through the use of electricity
and refrigerants. PepsiCo is committed to reducing the
impact of our marketing equipment through design and
process changes developed to reduce greenhouse gas
(GHG) emissions. Since 2004, energy consumption has
been reduced by 53 percent for coolers worldwide and
55 percent for vendors. In 2006, PepsiCo joined other
companies and Greenpeace in a global initiative called
“Refrigerants, Naturally!” Its goal is to address climate
change and ozone layer depletion caused by HFC gases
in refrigeration equipment. PepsiCo was the first in
the industry to mandate HFC-free insulation, resulting
in a 75 percent reduction in direct GHG emissions
worldwide, 2008 vs. 2006 models. In addition, PepsiCo
has begun field testing of coolers and venders with
different green refrigerants.
Partnering for Change
We continue to develop external partnerships focused
on strategies to reduce greenhouse gas emissions. In
2007, PepsiCo joined the U.S. Environmental Protection
Agency’s Climate Leaders, a voluntary partnership
program that works to develop comprehensive climate
change strategies, including supporting reduction in
greenhouse gases. We are the first consumer products
company to join with other concerned companies and
non-governmental organizations in the U.S. Climate
Action Partnership to encourage the federal government
to enact climate legislation.
• Indoor air quality
Harnessing Renewable Energy
• Site stewardship
Across PepsiCo, we are evolving to the use of more
renewable energy in our operations with several
initiatives at our manufacturing plants.
• Lighting systems
PepsiCo India launched our first remote wind turbine,
harnessing one of the most efficient, clean and
renewable sources of energy. This turbine is connected
to the public electricity grid with sufficient power to
meet more than 75 percent of the electricity needs of
the company’s local Mamandur plant, and it directly
offsets up to 7 percent of our company-owned bottling
operations’ power requirements for 2008. The initiative
is estimated to help reduce carbon emissions by more
than 3,500 tonnes annually, with the potential to offset
70,000 tonnes of carbon emissions over its entire 20year lifecycle. India is also converting company-owned
manufacturing sites to biomass boiler capability. Between
wind and biomass, we expect 18 percent of our energy
needs in the company-owned sites of India to come
from renewable sources for 2009. Sun Chips - we’re
living up to our name Our Frito-Lay plant in Modesto,
California unveiled a solar concentrator field designed
to drive the production of truly solar powered SunChips.
The Modesto plant’s 5-acre solar concentrator field
includes 54,000 square feet of curved mirrors designed
to absorb sunlight. The solar energy captured by the
192 solar collectors produce steam that generates
nearly three quarters of the heat used in the SunChips
manufacturing process.
In 2007, we announced plans for our first-ever “net zero”
plant in Casa Grande, Arizona. With plans to run almost
entirely on renewable fuels and recycled water, retrofits
to this existing Frito-Lay facility are scheduled to be
completed by 2011.
Tropicana’s Ft. Pierce, Florida facility has partnered with
St. Lucie County to burn landfill gas in its boiler. Landfill
gas displaces the use of natural gas and reduces the
amount of carbon dioxide emitted into the atmosphere.
The landfill gas provides the equivalent environmental
benefit of 3,600 acres of pine or fir forest or removing
1,000 cars from the road
per year. These environmental benefits will increase as
availability of landfill gas increases.
Solar concentrators in our Gamesa business in Mexico
have provided lighting equal to conventional fixtures,
saving 30,000 watts in a single distribution center. Many
other plants have also had lighting upgrades, such as
our Concentrate plants in the United States where highefficiency lighting and translucent ceiling panels have
been installed.
We are also proud of our recent purchase of over 1.1
billion kilowatt-hours of Green-e© certified Renewable
Energy Certificates (RECs) annually to equal 100
percent of purchased electricity used by all U.S. facilities.
The U.S. Environmental Protection Agency estimates
the PepsiCo purchase is the same amount of electricity
needed to power nearly 90,000 American homes
annually.
Engaging Consumers: Climate Change
We partnered with the Carbon Trust, a U.K.
government-funded independent organization that works
to accelerate the move to a low-carbon economy, to
measure the carbon footprint of a package of Walkers
Crisps. The value of 75g of CO2e (equivalent carbon
dioxide) per 34.5g bag, calculated using the Carbon
Trust’s rigorous methodology, includes every key step
in the process - from planting the potato seed, to the
package arriving in store, through to disposal of the
empty bag. After assessing the footprint, we, and the
Carbon Trust, wanted to tell consumers about Walkers’
commitment to reduce the product’s carbon footprint.
The launch of the world’s first Carbon Trust Carbon
Reduction Label was the result. But we wanted to know
how consumers are responding. We commissioned
consumer research and found that nearly 80 percent of
consumers say that the label makes them “more aware
of the environmental impact of the products and services
they choose to buy.” Carbon labeling shows real potential
to drive behavior change by increasing consumer
awareness of the environmental impact of the food they
buy. Since 2001, Walkers has reduced energy use per
pack by a third and water use by almost half.
Packaging & Solid Waste
We distribute our products in a variety of packages,
each carefully designed to deliver convenience and
appeal to our consumers while protecting the integrity
of our products. Our team of engineers and packaging
suppliers are dedicated to finding preferable designs,
and are working continuously towards improving our
packaging performance while reducing our packaging
environmental footprint.
Our goal is to design and develop packaging systems
that are environmentally responsible throughout their
entire lifecycle and partner with leading organizations to
promote sustainable packaging and recycling practices.
We have launched a global sustainable packaging policy
2007-2008 PepsiCo Corporate Sustainability Report 3
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and formed a Sustainable Packaging Council, led by
our Procurement and Packaging R&D organization, to
develop a roadmap that will guide us toward this goal.
The objectives of this team are to develop sustainable
packaging strategies, goals and targets and alternative
packaging material technologies, as well as to support
responsible disposal practices.
PepsiCo has taken an industry leadership position in
packaging. Significant programs include:
• Sustainable Packaging Coalition: PepsiCo is a
member of the Executive Committee for this industryleading organization that provides lifecycle analysis
and design guidelines for sustainable packaging.
• Grocery Manufacturers Association/Food Products
Association (GMA/FPA): PepsiCo is the GMA/FPA
chair for the Packaging Sustainability Working Group.
This group’s aim is to create an industry-wide public
reporting process for consumers, investors and
other stakeholders to understand packaging and
environmental improvements in a consistent and
transparent manner.
• The European Organization for Packaging and the
Environment (EUROPEN): PepsiCo UK / Europe is a
key member of EUROPEN, a packaging supply chain
body that champions packaging and the environment,
with representation at Board level.
Activating Sustainable Packaging Programs
We follow five principles of sustainable
packaging design:
• Reduce: using less material in our packaging, to
conserve natural resources
• Reuse: increasing use of reusable packaging and increasing
the amount of recycled material in our packaging
32 2007-2008 PepsiCo Corporate Sustainability Report
• Recycle: designing packaging for recycling and developing
biodegradable and compostable
packaging solutions
• Remove: eliminating environmentally sensitive materials and
processes from our packaging
• Renew: increasing use of renewable material resources
Using less material in our packaging
Although beverage containers are the most recycled
consumer packaging in the United States - and they are
designed for recycling - we continue to look for ways to
reduce the amount of packaging used for our products.
And we are achieving success. PepsiCo scientists and
packaging specialists have led the way in reducing
packaging materials through cost-effective changes in
design and production, known in the industry as “lightweighting.” Light-weighting reduces the amount of raw
materials and energy used to make our packages and
generates less waste after our products are enjoyed.
In 2008, we introduced a new, half-liter bottle for
our Aquafina flavored waters, Lipton Iced Teas, and
Tropicana juice drinks. The new bottle contains 20
percent less plastic than the previous bottle and its label
is 10 percent smaller than before. These innovations
are taking nearly 6 million kilograms of packaging out
of the system each year and reducing greenhouse gas
emissions by 18,000 metric tonnes annually. That’s
equivalent to taking 3,350 cars off the road for a year.
We’ve trimmed the amount of plastic used in the bottles,
caps and labels of our most popular Aquafina bottle - the
half-liter (16.9 oz) bottle - by 35 percent since 2002. This
saves more than 27 million kilograms of plastic a year
and reduces greenhouse emissions by 78,000 metric
tonnes annually. That’s equivalent to taking 14 thousand
cars off the road for a year.
Reducing and Recycling Our Waste
PepsiCo is committed to reducing the generation
of all types of waste, reuse or recycle waste whenever
feasible, and only if necessary dispose of waste
in an environmentally responsible manner. PepsiCo
has established global metrics for tracking and
characterizing all types of waste in a uniform manner
across all divisions.
At Frito-Lay, route sales employees return empty
cartons from stores to our plants for reuse or recycling
and delivery boxes are used an average of six to seven
times - this saves nearly 5 million trees a year and keeps
more than 25 million kilograms of cardboard away from
landfills. For Frito-Lay’s North American and International
products, Frito-Lay recycles packaging film waste from our
suppliers’ sites for use in various other products such as
park benches.
Our Quaker Oats facility in Cupar, Scotland has reduced
the amount of corrugate used by 30 percent over
the past 5 years by moving to cases with open tops
and reduced sides. Over the last five years, PepsiCo
U.K. has reduced the amount of plastic used to make
Tropicana and Copella juice bottles by 18 percent.
Our Latin America Beverages business has optimized
beverage packaging projects across Mexico, Peru,
Columbia, Bolivia, Brazil, Argentina, Honduras and
Guatemala, specifically reducing the need for PET
resin for bottles, corrugate boxes, bottle-top closures
and glass.
The average Pepsi bottle contains 10 percent recycled
plastic, more than any other national soft drink brand.
Pepsi-Cola’s bottles and cans are among the most
recycled packages made - since 1990, more than 150
billion Pepsi containers have been recycled.
Across all our U.S. divisions, initiatives conducted in
2007 to reduce packaging have resulted in more than
9 million kilograms of material reduction across PET
bottles, paperboard and corrugated materials.
Engaging Consumers: Recycling
In 2008 Pepsi featured a Keep America Beautiful
design on millions of Pepsi cans to spread the word
about the organization and tell the story of how used
cans gain new life through
recycling. The “Have we
met before?” campaign was
designed to communicate
the benefits of aluminum can
recycling and encourage
Pepsi consumers to make
recycling a part of their
daily routines. The recycling
facts and messages, which were provided by the
National Recycling Coalition, have been featured on
approximately 500 million Pepsi cans and 250 million
Diet Pepsi cans nationwide each month. That’s a total of
seven billion cans by the end of 2008.
Removing Environmentally Sensitive Materials from the Waste Stream
Quaker Standard Oatmeal has eliminated the PVC band
on the 18oz. tube and replaced it with biodegradable
material, eliminating more than 87,000 kilograms of PVC
a year.
animal feed markets and a nearby university that utilizes
oat hulls for the generation of power.
PepsiCo India has established a partnership with
Exnora International, an environmental non-government
organization, to manage domestic solid waste in an
environmentally friendly manner. In 2007, the collaboration
which began in 2005, was selected by UNICEF as a
model project and as a center for international learning.
The project involves reuse and recycling of waste.
Solid Waste
In the United States, Frito-Lay sends close to 9 million
kilograms of potato and corn solids (potato pulp and
peelings, cracked corn and corn husks) to America’s
livestock and dairy farms where it is used for feed. Chips
that do not meet Frito-Lay strict quality control standards
and chips not sold in stores by the Guaranteed Fresh
date, can be used by livestock feeders and pet food
manufacturers as a feed supplement. This process
diverts 7 million kilograms of unusable snacks that
otherwise might have been sent to landfill.
Tropicana minimizes landfill waste by using virtually
every part of the orange, as well as its by-products after
the juice is extracted. The by-products become scent
extracts and animal feed. Quaker optimizes the use of
all oat hull by-products. Quaker delivers oat hulls to local
Partnering for Change
PepsiCo teams with leading organizations to advance
our understanding of environmental issues and to work
together to promote sustainable packaging and
recycling practices.
2007-2008 PepsiCo Corporate Sustainability Report 3
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Keep America Beautiful, Inc. (KAB) is the largest
nonprofit community improvement organization in the
United States. Pepsi is a longtime, national sponsor of
KAB’s annual Great American Cleanup. For the past
three years, Pepsi has brought together Sam’s Club,
KAB and the Aquafina water brand in a national, schoolbased recycling program. The program collected more
than 70 million plastic bottles for recycling and gave
away over 25,000 backpacks made from recycled PET
in 2007.
PepsiCo and the American Beverage Association are
founding members of the National Recycling Partnership,
a national nonprofit organization dedicated to the
advancement and improvement of recycling. Its more
than 4,000 members include consumer product
companies, manufacturers that use recycled content
in their products, recycling processors, government
regulators, and recycling advocates.
Pepsi supports comprehensive curbside programs as
the most effective way to address solid waste in the
United States. Working with our supplier partners - Can
Manufacturers Institute, National Association of PET
Container Resources (NAPCOR), Glass Packaging
Institute and the Association for Post consumer Plastics
Recycling (APR) - we help support such efforts as
the Curbside Value Partnership, stadium and event
recycling, technical support to communities in need, and
efforts to increase public funding for recycling.
Engaging Suppliers: Environmental Sustainability
Citrosuco is a leading supplier of not-from-concentrate
orange juice to Tropicana. It is a family-owned company
with a Brazilian orange business founded more than 40
years ago.
More than 20 percent of its plantation area is set aside
as nature reserves. Another equivalent area is populated
34 2007-2008 PepsiCo Corporate Sustainability Report
with palm trees and other vegetation, retaining rain water
and providing natural wildlife habitats. The reserve areas
exceed the Brazilian environment agencies’ required
legal limit.
efforts and adaptation strategies. Our membership
demonstrates to our suppliers how important we feel
climate change is to business decision-making along with
our desire to work collaboratively.
Citrosuco is rolling out new environmental systems on its
orange farms, leading to higher efficiencies in pesticide
and fertilizer use by, for example, analyzing the optimum
time of day and weather conditions for applying, which
allows them to use less. The company’s juicing facilities
are powered by biomass (sugar cane fiber) and use no
fossil fuels. Nutrients such as nitrogen are extracted,
composted, and reused to naturally fertilize nearby
farms. Citrosuco’s truck fleet is currently being upgraded
with larger trucks fitted to existing trailers, which can
carry 30 percent more juice with the same number of
trips, reducing fuel use. The efficiency of Citrosuco’s
ships has been improved by utilizing deck space to
transport specialty goods, such as large wind-turbine
blades and generators.
We’ve joined other companies and Greenpeace in
a global initiative called “Refrigerants, Naturally!” Its
goal is to address climate change and ozone layer
depletion caused by gases in refrigeration equipment by
working with our suppliers to improve the environmental
performance of our coolers and marketing equipment.
Virtually all of our new purchases of refrigerated pointof-sale equipment in the United States use HFC-free
insulation.
Supply Chain
Extending Resource Conservation
Working with our supplier community on specific
initiatives, PepsiCo is able to grow and extend our
effective resource conservation programs. We’re
also focused on setting quantifiable goals for energy,
greenhouse gases (GHG), water, agriculture and forestry
resource conservation within the extended supply chain.
Some examples of our Supplier Outreach program in
action include:
Our UK and Ireland business is one of 12 charter
members of the Carbon Disclosure Project’s Supply Chain
Leadership Collaboration (SCLC). This group aims to
dramatically increase to the thousands the number of its
member-suppliers reporting on climate change mitigation
In 2008, PepsiCo implemented a Resource Conservation
Outreach program designed to share resources, tools,
and expertise in the area of energy conservation with key
suppliers. The initial phase of this effort involved reaching
out to 12 contract manufacturing partners for Frito-Lay
North America and Quaker Foods North America to assist
them in developing energy management systems and
projects. This program has been very successful and will
be expanded to include additional contract manufacturers
and other key suppliers in 2009.
We also work with suppliers to use more renewable
energy sources in the production of materials. In North
America, PepsiCo has increased the selection of
suppliers certified in credible resource conservation
initiatives. Examples include:
• Energy Star (EPA)
• Climate Leaders (EPA)
• Carbon Disclosure Project (CDP)
• Forest Stewardship Council (FSC)
• Sustainable Forestry Initiative (SFI)
• Refrigerants Naturally!
• Rainforest Alliance
Sustainable Agriculture Instituting Our Global We’re
currently formalizing our Global Sustainable Agriculture
Policy, which demonstrates our thoughtful approach
to working across the agricultural supply chain. We
continuously benchmark against our industry peers to
understand best practices and approaches to sustainable
agriculture, including water saving techniques, waste
reuse, soil protection and chemical use.
• Continuously develops new growing areas closer to
FLNA manufacturing plants reducing the diesel fuel
used to transport inbound potatoes.
PepsiCo has initiated a Sustainable Water and Nutrition
Management program. This program enables sustainable,
environmentally responsible water management of our
potato crops by monitoring irrigation methods. Countries
involved in the project include the United Kingdom,
United States, Mexico, Australia, Egypt, China, Portugal,
Republic of South Africa, Pakistan and Turkey.
• Includes terms in its contracts with all corn and potato
growers that require chemical application practices,
quantities and timing to be in full compliance with the
label instructions.
Working with Our Growers
PepsiCo works with our growers to encourage
sustainable agricultural practices.
Frito-Lay North America (FLNA)
• Has developed protocols to wash potatoes at the farm
to reduce or eliminate the residual soil shipped to our
plants, thereby allowing this soil to be redistributed at the
farm rather than disposed of through the plants waste
water discharge and reducing diesel fuel requirements.
• Practices low or no till soil preparation which results in
lower irrigation requirements. Pivot irrigation practices are
used (versus flood irrigation) which are more efficient in
the use of water.
• Has developed potato varieties that store longer and are
resistant to disease. This allows FLNA to grow its potatoes
in the most efficient agronomic areas across the United
States and results in higher production per acre. Higher
production per acre minimizes the use of all farm inputs
including, water, fertilizer, pesticides and herbicides.
• Practices the use of cover crops to reduce soil erosion
at our suppliers’ farms.
• Requires an independent chemical use and
agricultural practice audit of all our potato and corn
growers in North America.
• Shares agricultural best practices with all its corn and
potato growers.
Tropicana
• Uses virtually every part of the orange, including the
peels which are sold as cattle feed. Before the peel is
dried into cattle feed, Tropicana extracts valuable oils,
essences and biodegradable solvents. These products
are then sold or used by the company.
• Encourages its growers to follow various Best
Management Practices (BMPs) published by the
University of Florida, as well as several regional
Grower Trade Associations, which include guidelines
for water conservation.
Quaker and Convenience Foods - North America
• Has been a leader for decades in the oat industry,
developing new oat varieties that deliver increased
field yields and improved disease resistance.
Improving field performance through new oat varieties
reduces fertilizers, fungicide and herbicide use. Improved
oat varieties generate more oats per acre - reducing the
time, energy and resources required per crop.
• Supplies over 200 million pounds of oat hulls as raw
2007-2008 PepsiCo Corporate Sustainability Report 3
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material ingredients and as a renewable source of fuel
for the generation of steam. One hundred percent of
the oat hulls are utilized as either a raw material or
fuel source, reducing dependence on less renewable
sources of fuel.
• Sources corn locally, reducing the environmental
impact of transportation and works with major
suppliers and railroads to optimize oat rail freight
throughout the year via the use of multi-car, unit trains.
• Encourages the use of established, low till practices on
oats that conserve both water and fuel.
PepsiCo International
PepsiCo International agro-programs encourage
the application of environmentally sound agricultural
practices with our suppliers. We provide assistance to
farmers and raw material suppliers where appropriate
and assess their compliance against both regulations
and PepsiCo agro-standards.
In China, through various collaborations, our foods team
there is successfully growing potatoes under desert
conditions by utilizing in-plant conservation approaches,
coupled with the installation of pivot irrigation systems.
In Brazil, a soil conservation initiative for potatoes has
been ongoing and involves minimal soil preparation to
reduce soil degradation along with a fuel consumption
analysis in order to decrease the use of fuel by reducing
the use of the tractors and also by purchasing smaller
machinery.
In Mexico, our Sabritas Agro Team has activated “Campo
Limpio,” an outreach initiative to educate farmers
about sustainable agricultural practices in production
fields. The goal is to help farmers reduce chemical and
microbiological agents in fields and in raw materials. We
aim to further increase the commitment of our growers to
36 2007-2008 PepsiCo Corporate Sustainability Report
the safe handling of our raw materials, in particular corn
and potatoes, through a training and certificate program
that focuses on good agricultural practices.
Investing in Research
In the United Kingdom, we are investing in a number
of research projects by leading experts on sustainable
farming and agriculture. We commissioned a Life-Cycle
Assessment of potato and oat agricultural practices,
and an energy audit of potato stores for our Walkers
business. The audit will assess different types of
stores (e.g. box, bulk, old and new) to identify where
CO2e savings can be made. We have commissioned
an assessment of the climate change risks and
opportunities for European oats production to be carried
out by the University of Bath. We are looking at how
to reduce soil erosion from potato farming, and what
varieties of potato would consume less water while
growing. Quaker was a charter member of Linking
Environment and Farming (LEAF), which helps farmers
make a positive environmental contribution by improving
their growing and harvesting practices, and their use of
water and fertilizer.
We have partnered with the Scottish Crop Research
Institute to investigate new potato varieties that
would require less water and we are investing in new
research into irrigation optimization. The project aims
to compare the effectiveness of various agricultural
irrigation systems aimed at managing and conserving
water resources from surface and borehole sources.
In China we share knowledge about potato farming with
the Chinese Ministry of Agriculture and have established
an advanced potato research laboratory.
Talent Sustainability
Talent Sustainability – Our commitment
to Talent Sustainability means we’re
continually working to develop and
retain exceptional people. Learn more
about our efforts to attract
the world’s best talent.
Our Goal
Our people are our greatest strength. Without a broad
base of talented people, we can’t continue to deliver
exceptional results. Our goals are to attract, hire,
develop and retain the most talented people. By valuing
our employees, supporting their ability to work effectively
together and providing them with the tools they need to
succeed, we are ensuring that PepsiCo is the kind of
company where talented people of all backgrounds want
to work.
We will continue to foster an inclusive environment,
by increasing female and minority representation in
management ranks, engaging employees in health
and wellness programs and creating rewarding job
opportunities for people with disabilities.
We will leverage the reach of our employee base and
continue to encourage our employees around the
world to participate in community service and inclusion
activities, which are designed not only to positively
impact the communities we serve, but to drive our
employees to be leaders in social responsibility.
Gamesa-Quaker: Embracing Employees with Disabilities
Our Gamesa-Quaker facility in Monterrey, Mexico was
one of the first in the country to introduce a program for
integrating people with disabilities into the workforce.
The program was designed to provide meaningful
opportunities and better quality of life for these
employees, and to attract an alternative source of highly
committed talent.
37 2007-2008 PepsiCo Corporate Sustainability Report
This program’s success is the result of an ongoing
commitment to changing culture, attitude and education
throughout Gamesa-Quaker’s facilities.
To date, 3 percent of Gamesa-Quaker’s manufacturing
operation is made up of employees with different
abilities. These employees are also being integrated into
other areas of the business such as sales.
in 2003 to 21 in 2007. Representation of women in many
Muslim countries in PepsiCo’s Middle East/Africa region
improved from 5 percent in 2004 to 18 percent in 2007.
The Female Talent Development program was launched
to focus on work environment changes and recruitment
of women in 2008. PepsiCo International increased the
percentage of female executives from 13 in 2003 to 21.9
in 2007.
This initiative has been extended across Latin America,
where PepsiCo is the largest employer of people with
different abilities; nearly 800 associates currently. The
program has also been implemented at our Sabritas
business in the Caribbean and Brazil. The high level
of commitment demonstrated by these employees has
boosted productivity and created a differentiated and
inclusive work environment.
Although PepsiCo is a global corporation, the way it
operates is more local in character. In markets outside
the United States, PepsiCo business rely primarily on
hiring local managers and employees
Our Management
PepsiCo’s Talent Sustainability strategy is overseen by
the Senior Vice President of Human Resources, who
is a member of the PepsiCo Executive Committee.
An extensive bi-annual survey process, supplemented
by shorter and targeted surveys, provides feedback
and input on how associates view the business and
drives action plans and improvements throughout
the corporation.
Expanding Opportunities Through Diversity and Inclusion
PepsiCo approaches diversity and inclusion as a
fundamental business priority. Our continued innovation
and growth requires employees who can understand the
needs of international and diverse markets. We intend
to continually evolve our culture so that our associates
are recognized for their contributions and valued for the
unique differences they bring to the workplace.
In the United States, our Diversity and Inclusion
Networks promote a culture where everyone feels
they have an equal opportunity to contribute and
succeed. The groups include African Americans,
Latinos/Hispanics, Asians, Native Americans, Women,
Gay/Lesbian/Bisexual/Transgender and EnAble, for
individuals with disabilities. In addition to our core
employee resource groups, we have the Women of
Color Multicultural Alliance and the White Male
Inclusion Group.
PepsiCo has a Global Diversity and Inclusion
Governance Council that is composed of internal and
external thought leaders and is co-chaired by our
Chairman and Chief Diversity Officer. The Council is
focused on raising the bar on diversity and inclusion
capabilities and creating a sustainable and differentiated
competitive advantage for PepsiCo. Diversity and
Inclusion Councils have been successfully established in
all four continents of our PepsiCo International business
-- focusing on locally relevant diversity and inclusion
strategies and plans, with a particular focus on women.
Increasing support oufor women in the workforce is
crucial, especially in developing countries. Our longterm progress depends on recruiting and retaining
women in these geographies. PepsiCo International
increased the percentage of female executives from 13
All employees participate in inclusion training sessions.
Our Diversity and Inclusion Governance Council, formed
in 2005, is a cross-divisional, cross-functional group
composed of internal and external thought leaders. Our
Ethnic Advisory Boards provide counsel and advice on
a broad range of social, cultural and business needs,
including marketing, hiring, supplier development and
diversity. In the United States we have African-American
and Latino/Hispanic Ethnic Advisory Boards. In Canada,
we have an Asian Advisory Council. [LINK] Read more
about our Ethnic Advisory Boards
Providing a Safe and Healthy
Work Environment
The safety, health and well-being of our employees
around the world are of utmost importance. PepsiCo is
proud to live by our Sustainability Vision and we believe
that protecting the health and safety of our people is a
core value.
2007-2008 PepsiCo Corporate Sustainability Report 3
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Occupational Health and Safety PepsiCo believes that a safe and healthy workplace is a
basic human right, and protecting the health and safety
of our people are among our core values. We have
communicated our beliefs and commitment to them in
our company’s Occupational Health and Safety policy,
and have adopted an integrated framework for managing
environment, health and safety risks (the PepsiCo
EHSMS framework).
Occupational injuries and illnesses are preventable and
we aspire to an incident-free environment
The PepsiCo EHSMS framework combines our
environment, health and safety expectations for all of
our business units and aligns with the international
Occupational Health and Safety Assessment
Series management standard OHSAS 18001:2007
and international specification for Environmental
Management Systems ISO14001:2007.
Many of our facilities have been externally accredited
for their health and safety management systems and
performance. In the United States, 28 Frito-Lay North
America plants, one Quaker Foods North America
and four North American Beverage plants have been
recognized under the Occupational Safety and Health
Administration (OSHA) Voluntary Protection Programs
(VPP) Star program. Additionally, our Quaker, Tropicana
and Gatorade plants in North America have been
invited by OSHA to participate in Phase 2 of the VPP
Corporate Pilot. Globally, five of our international
plants have achieved OHSAS 18001 certification. Our
remaining plants continue to implement the PepsiCo
EHSMS framework.
39 2007-2008 PepsiCo Corporate Sustainability Report
Our OHS policy, which was released in 2008, describes
our obligations under eight areas:
1. Regulatory Compliance
We track our OHS legal and regulatory requirements
in each business unit and country where we operate.
Some countries where we operate have minimal health
and safety legislation, which is why we manage risks by
setting minimum requirements across our divisions. This
includes standards for our high risk areas such as fleet
safety and ergonomics. Each PepsiCo business unit has
developed an internal audit tool to verify conformance
with our internal standards.
Our UK snacks business, Walkers, has addressed risks
associated with logistics and our trucking workforce.
2. Resource Allocation
We allocate responsibility and accountability for
health and safety at each of our facilities and across
PepsiCo divisions. Each division has corporate staff
that strategically leads our health and safety efforts,
and we share health and safety best practices across
the company using a web-based information sharing
environment.
3. Business Integration
We incorporate health and safety into our annual
planning process and consider health and safety in our
decision making processes. Our Quaker, Tropicana and
Gatorade businesses conduct regular audits of our site
health and safety programs, resulting in Corrective Action
Plans (CAPs) where necessary. Audit CAP execution
is tracked and reported on a quarterly basis. We also
ensure injuries, illnesses, and other significant incidents
are fully investigated, with prompt implementation and
reapplication of preventive countermeasures.
4. Continuous Improvement
Consistent with our commitment to the environment
and many other areas of the business, we also adopt
a philosophy of continuous improvement for health
and safety. This expectation is embedded in our
EHSMS framework.
5. Performance Measurement
We use lost time injury rate (LTIR) as one of our global
metrics for health and safety performance. Collecting
health and safety data continues to be an opportunity for
us globally due to increased growth of our international
business and range of employees across the field. We
have implemented procedures to improve the reliability
of our data and aim to expand our metrics collection
beyond our manufacturing sites in 2009 for all
PepsiCo divisions.
We recognize health and safety performance within
the PepsiCo business units. PepsiCo International
awarded our first annual health and safety award for
(1) implementing systems, (2) identifying a solution
to a health and safety problem, and (3) engaging
and empowering our people. We recognized our
Indian Snacks business unit, our concentrate plant
in Puerto Rico and a snacks plant in Turkey. In FritoLay North America, safety is a core responsibility and
is evaluated during annual performance reviews. We
have integrated health and safety into numerous region
and site reward and recognition programs. Frito-Lay
Transportation has received several outside awards for
fleet safety excellence. In our Quaker, Tropicana and
Gatorade businesses, our annual Founders’ Award for
outstanding plant performance includes Health, Safety,
Environmental (HSE) performance as part of the criteria.
Furthermore, each site vies for the Annual HSE Award.
HSE metrics factored into both the Founders’ Award
and the HSE Award include both in-process metrics and
outcome measures.
6. Ownership Culture
We believe that health and safety can be best managed
by adopting a proactive culture and driving ownership
at the individual, managerial and organizational levels.
For example, within Quaker, Tropicana and Gatorade,
we expect 100% of our site salaried workforce and 33%
of our Associates to be directly engaged in one or more
aspects of our formal HSE programs. This engagement
expectation goes well beyond basic HSE participation
activities such as inspections, incident investigations,
and behavior observations. We have used innovative
approaches to engage our people, beyond traditional
training. A snacks plant in Suadiye, Turkey, performed a
health and safety theatre production involving short plays
that were written, produced and acted by our front line
employees. In a Gamesa plant in Mexico, the children
of our employees participated in a poster campaign to
engage their parents in working safely both at work and
home. Frito-Lay’s safety culture is based on a strong
ownership from front line technicians engaged in multiple
safety teams at each facility.
Our plants use safety committees to solve health and
safety problems and consult with our employees about
occupational health and safety matters. During the
development of the PepsiCo Occupational Health and
Safety Policy, we directly consulted with more than
500 employees and incorporated their feedback into
the policy. We use our confidential Speak Up line for
employees to identify and report any concerns about
health and safety conditions, which are then followed
up for action.
7. Stakeholder Collaboration
As a signatory to the United Nations Global Compact,
PepsiCo is visibly committed to all of its ten principles,
including those for Human Rights and Labor Standards.
We collaborate with our contractors, licensed bottlers,
suppliers, customers and local communities to reduce
the health and safety impacts of our daily operations and
technology, as it applies to them.
8. Annual Review
We have set up a governance team, led by the
PepsiCo Chief Personnel Officer, with accountability
to our Chairman and CEO, to monitor and review
our performance and progress for health and safety
(the PepsiCo Health & Safety Leadership Council).
The Council meets bimonthly and provides strategic
direction and reviews, among other things, our progress
in implementing the PepsiCo EHSMS framework.
The Health & Safety Leadership Council has led
the development of an orientation training video to
communicate the PepsiCo vision for health and safety.
Human Rights
PepsiCo Values include a commitment to respect others,
inside and outside the Company, which is consistent
with our value of treating people with dignity. PepsiCo’s
Human Rights Workplace Policy ensures a work
environment that is free from all forms of discrimination
where people feel comfortable and respected. In 2008,
we translated this policy into 30 languages and broadly
communicated it as part of our Code of Conduct Training,
a leading edge process that ensures our businesses are
operating in the most ethical way possible.
Training is provided throughout PepsiCo on our Code
of Conduct and Speak Up hotline. We encourage
employees to report issues such as discrimination,
harassment and mistreatment of employees. In addition,
in the United States, PepsiCo is providing inclusion
training to associates, including all managers. During the
training, we explore the human rights intrinsic to all and
the importance of sustaining an inclusive culture.
PepsiCo’s Code of Conduct requires all employees to
follow local employment laws and regulations, including
child labor laws and treatment of employees. We
have set 15 as the minimum age anyone can work for
PepsiCo.
PepsiCo Human Rights Workplace Policy
• PepsiCo respects the dignity of our workers in the
workplace and we work to ensure our associates’
rights to personal security, a safe, clean and healthful
workplace, and freedom from harassment or abuse of
any kind.
• We deal fairly and honestly with our associates
regarding wages, benefits and other conditions of
employment, and recognize our associates’ right to
freedom of association. We do not use compulsory or
child labor.
2007-2008 PepsiCo Corporate Sustainability Report 4
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• We do not tolerate discrimination and work to ensure
equal opportunity for all associates.
• We comply with all applicable laws, regulations, and
other employment standards, wherever we operate or
work.
• We encourage our partners, suppliers, contractors
and vendors to support these policies and we place
substantial value on working with others who share our
commitment to human rights.
Speak Up
To promote high ethical standards and open
communication across a global organization, we ensure
that employees have clear lines of communication to
report potential issues. We have a telephone hotline
called “Speak Up” for this purpose. It is accessible
from around the world at no charge to employees.
To further ensure an environment that fosters open
communications, employees may remain anonymous.
All associates can use Speak Up as a method to raise
any issue. Speak Up is a 24-hour, toll-free hotline
available to report any suspected violation of the Code
of Conduct, PepsiCo’s Values or the law. Speak Up calls
are received by a third-party vendor -- not a PepsiCo
employee -- to ensure anonymity. Explanations of Speak
Up are provided on the PepsiCo intranet, on posters and
in PepsiCo’s Worldwide Code of Conduct.
41 2007-2008 PepsiCo Corporate Sustainability Report
The availability of the Speak Up line is communicated
across PepsiCo. Types of incidents that may be reported
through the Speak Up line include, but are not limited to:
• Employee mistreatment
• Discrimination, including sexual harassment
• Product tampering
• Substance abuse
• Falsifying Company records
• Accounting irregularities
• Questionable business practices
• Fraud or theft
• Criminal conduct
• Impermissible gifts
• Safety hazards
Workplace Wellness
PepsiCo serves as chief partner in the global program
of the World Health Organization/World Economic
Forum “Workplace Wellness Unit” and is working with
both organizations to develop better workplace wellness
solutions.
PepsiCo extends its commitment to health and
wellness internally through employee programs such
as HealthRoads, PepsiCo’s employee wellness benefit.
HealthRoads promotes healthier lifestyles through
a combination of health assessments, personalized
coaching, fitness and nutrition programs, online tools
and worksite wellness initiatives. HealthRoads assists
employees in navigating through the health care system
and addresses increasing health care costs for both
employees and the company, by helping employees
maintain good health or improve their health status. In
the United States, more than 82,000 employees and
spouses are eligible for the program. Last year in the
United States, 68 percent of all members registered
in the program, 61 percent took a Personal Health
Assessment (PHA) and 60 percent of those who took a
PHA are participating in wellness coaching programs.
In 2007, HealthRoads was launched in Asia and
PepsiCo UK initiated “Fit for Life,” a program designed to
encourage healthier lifestyles as well as better work/life
balance for all employees. Vive Saludable (Live Healthy)
is a similar program in Mexico that promotes healthy
lifestyles among employees and consumers.
HIV/AIDS
Across PepsiCo we recognize HIV/AIDS as a uniquely
challenging global health issue which poses a significant
threat to the sustainability of our business operations
worldwide. We are committed to making a significant
contribution to the fight against this devastating
pandemic and to assisting employees and family
members affected by it. PepsiCo has established an
internal task force on HIV/AIDS to address the issue
in our businesses. In addition to the United States and
South Africa, the task force identified priority countries
where there is a high or rising prevalence and we have
major businesses: India, China and Russia.
We made have made great progress in developing and
implementing workplace programs in South Africa, India,
Russia and China. Thailand and Mexico have recently
joined in the effort.
In 2005, we announced our global HIV/AIDS policy and
communicated it across all PepsiCo. In South Africa,
we launched a direct AIDS intervention program which
included full treatment coverage for all employees and
spouses. We are continuing the program, providing
community outreach through peer education and
providing assistance to affected families.
The Thailand business has been a part of a number of
activities, including a National Children’s Day’s activity
book on AIDS prevention for children and how to live with
AIDS-infected children. The business has a certificate
of gold level from the AIDS Response Standard
Organization (ASO Thailand) for outstanding HIV/
AIDS work. In the United States, PepsiCo has an active
program that includes information on our HealthRoads
website and review of benefit plans to ensure coverage
of HIV/AIDS. In addition, associates participated in HIV/
AIDS awareness marches across the United States,
raising funds to fight this disease.
Partnering for Change
Fighting HIV/AIDS
Since 2002 PepsiCo has been a member of the Global
Business Coalition on HIV/AIDS, Tuberculosis and
Malaria (GBC), a not-for-profit group dedicated to fighting
HIV/AIDS and related diseases.
In India, we have provided education, treatment and
community outreach programs, including peer education.
In China, we have provided education, engaged in
programs with outside groups and have a dedicated
wellness doctor who visits our business unit facilities
to provide information on health and wellness issues,
with an emphasis on HIV/AIDS. An information hotline
was established to answer questions about HIV/AIDS
and other health issues, as well as to provide referrals
to treatment facilities and case management where
appropriate. In Russia, in addition to employee education
and awareness, PepsiCo is participating in community
educational programs.
Developing Future Leaders
PepsiCo provides support to programs that offer
opportunities for individuals to gain thought leadership
skills and experience. In 2007, PepsiCo made a one
million dollar commitment to help United Negro College
Fund (UNCF) advance its mission and its work with
historically black colleges and universities. This gift
symbolized PepsiCo’s continued commitment to UNCF,
to close the gap in providing equal education and in
promoting diversity and inclusion in the workplace.
PepsiCo also participated in Fair and Independent
Courts: A conference on the State of the Judiciary, at the
request of Supreme Court Justice Sandra Day O’Connor.
The conference goal was to advance the independence
and fairness of the judiciary, which is important to
the business environment. Separately, the PepsiCo
Foundation made a $100,000 grant to the Georgetown
University Law Center. Our contribution will help to
implement projects like the production of an online tool for
high school students to learn about the independent courts.
Pandemic Preparation
PepsiCo recognizes the dangers pandemics could pose
to our employees and business and has established a
task force that is addressing potential pandemics. In the
United States, this includes education, awareness and
steps to take regarding work related issues.
Leaving a Positive Imprint on Society
The PepsiCo Foundation has a long history of funding
diversity programs in education and workforce
development with community-based organizations in the
United States. The Foundation’s objective is to foster
economic achievement and mobility for the underserved
and minority populations. Currently, the strategic areas
of focus include access to education and training and,
women’s empowerment programs.
National Council of La Raza: Together with the
National Council of La Raza (NCLR) in 2001, the
PepsiCo Foundation created the NCLR Escalera project
“Taking Steps to Success” to close the gap of Latino high
school drop outs. The program encourages at-risk Latino
high school students to graduate from high school,
prepare for college, and explore career opportunities
through internships. The Foundation’s intent is to codevelop a best practice education program model that
can be expanded to include all of the organization’s 300
affiliates. This program continues to be expanded and
replicated across the nation.
Ascent: Since 2006, The PepsiCo Foundation has
been working in partnership with Ascent to prepare and
train multicultural women to build careers in corporate
2007-2008 PepsiCo Corporate Sustainability Report 4
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America. Ascent collaborates with corporate partners
to identify, attract, and advance women of color. The
partnership is designed to assist Ascent in firming its
business strategy, training, portfolio and governance
structure, and to enable Ascent to launch and develop
program curricula.
Employee Benefit Program
Community Engagement
PepsiCo encourages and supports its employees in
their efforts to volunteer with community organizations
and projects. We sponsor and participate in a wide
variety of local and national activities through employee
involvement. During PepsiCo’s 2008 Global Week of
Community Service, more than 1,800 employees around
the world spent time serving their local communities and
service organizations.
In the United States, we offer a full range of health care,
savings and retirement benefits. Our health and welfare
benefits include medical, dental, vision, prescription drugs,
mental health, life and accident insurance, disability and
flexible spending accounts. We also offer commuter
reimbursements, adoption assistance, Employee
Assistance Program, child and elder care referral and
resources, smoking cessation programs, care and lifestyle
management programs and family and medical leaves.
Domestic partners who meet certain eligibility requirements
may be covered under PepsiCo benefits. Eligible part time
employees receive medical, dental, vision, life insurance
and disability benefits.
Janet Murguia
CEO, National Council of
La Raza
”Growing opportunities for, and meeting
the challenges of, under-served communities requires the involvement of all facets of
American society, most especially the corporate sector. This means going beyond simple
philanthropy to a sustained engagement in
finding the right solutions to the critical issues
of our day. Whether it’s promoting healthier
lifestyles or helping to close the education
achievement gap, PepsiCo has set the standard for other companies to follow.”
43 2007-2008 PepsiCo Corporate Sustainability Report
We are continually looking for ways to make PepsiCo a
great place to work. One way we do this is by offering
comprehensive benefits packages designed to address the
health care and financial needs of our employees, both now
and into retirement.
Financial benefits in the United States include companyfunded pension plans, a 401(k) Plan with a Company
match, the PepsiCo Stock Purchase Program and
SharePower, a broad-based stock option program.
SharePower was introduced in 1989 and is a global
program that offers eligible employees stock options
that may be exercised after a vesting period. We believe
SharePower clearly reflects a culture that places a high
priority on ownership. Currently, over 90,000 PepsiCo
employees receive the grant annually.
Employee Learning and Development
PepsiCo University is a worldwide system of continuous
education that supports our learning culture. PepsiCo
University has launched a new online portal for employees
worldwide that offers blended learning solutions, combining
classroom style learning with electronic tools, focused
on building people skills, managerial skills and cultural
awareness.
PepsiCo also has a very robust program for helping
associates manage their careers. Elements include a guide
for career growth tailored to PepsiCo, as well as guides
focused on specific functions. Our year-long proprietary
career process includes objective setting, performance
and development reviews, development action plans, midyear reviews and 360-degree evaluations, all supported
by training and materials. Executive leadership training
focuses on helping high potential managers learn to be
more effective leaders and to gain a broader perspective
of our business.
As a guide for associates in all functions and at all levels of
our organization, we introduced the PepsiCo Leadership
and Individual Effectiveness Model in 2007. The model
details the key competencies and associated behaviors
that are required -- individually and collectively -- to assure
we reach our performance goals. Regardless of current
role, level or career aspiration, every associate can use the
model to understand which behaviors they should strive
for today and what will contribute to their own personal
success, as well as success for PepsiCo.
Beginning in 2008, we aligned our 360-degree feedback
process with the PepsiCo Leadership and Individual
Effectiveness Model to make it more robust and ensure that
leaders know and understand what is expected of them.
As a new and significantly valuable addition, we will
combine the 360-degree process with other feedback tools
to further build self-awareness and provide participants with
rich, one-on-one developmental feedback from trained and
certified facilitators.
In 2007, we introduced a concept called “One Simple
Thing,” which strives to help associates better balance work
and home by agreeing with their manager to make one
change. All employees receive regular performance and
career development reviews annually.
We also ask associates to respond to an “Organizational
Health” survey, generally every other year. Topics include
benefits, working conditions, compensation, career
development, diversity and inclusion initiatives, community
activities and many others. The results of the survey are
shared with associates and action plans to address issues
are developed and made a part of performance goals.
Awards Programs
PepsiCo offers a variety of Award Programs to recognize
associates. Common to all businesses are gift awards for
length of service. All associates are also eligible to receive
stock option grants as recipients of The Chairman’s Award,
a program which recognizes outstanding accomplishments
above and beyond an individual’s basic job accountabilities
and which deliver a sustainable business impact in support
of the company’s Performance with Purpose vision. The
Chairman’s Award is the highest honor at PepsiCo.
To honor those who have helped PepsiCo advance our
commitment to world-class performance in diversity and
inclusion, we have created a unique Chairman’s Award
called the Harvey C. Russell Inclusion Award. Harvey C.
Russell was chosen as the namesake for this prestigious
award, because his leadership, perseverance, and
commitment to “raising the bar” are the foundation upon
which PepsiCo’s diversity initiative is built.
The Steve Reinemund Diversity & Inclusion Leadership
Legacy Award is a PepsiCo leadership award given to
senior leaders who champion diversity and inclusion over
time and move PepsiCo to new levels of diversity and
inclusion accomplishments and behaviors through their
words and actions. Front line associates are those who
make, sell and distribute our brands. These associates,
as well as the front line employees of our bottlers, are
eligible for the President’s Ring of Honor. This annual
award inducts high achievers into a permanent role of
honor. We have a variety of other award programs within
our divisions.
Extending Talent Sustainability Principles to our
Supplier Community
Supplier CSR Assurance Program
We communicate, educate and work with our suppliers
to improve corporate social responsibility performance
across the Supply Chain.
In 2007, PepsiCo developed a Supplier Code of Conduct
to clarify our global expectations in the areas of labor
practices, employee health and safety, environmental
management and business integrity. It has been translated
into 18 additional languages, has been proactively
communicated and is mandatory in all procurement
contracts. Our Supplier Code is based on the ILO, UNGC
and other benchmark standards.
To further demonstrate our commitment to sustainability
within our supply chain, PepsiCo joined the Supplier
Ethical Data Exchange (Sedex). Sedex is a web-based
system that allows companies to maintain and share data
on labor and environmental standards at their production
sites. Sedex members are committed to continuous
improvement of the ethical performance of their
supply chains.
Tara Norton,
General Manager, Sedex
”PepsiCo’s involvement with Sedex enables
its supply chain partners to share in its vision
of Performance with Purpose. By actively
encouraging the sharing of information, PepsiCo
will gain transparency within its supply chain
and improve performance. As Supply chains
are increasingly global and interlinked, PepsiCo
recognizes that its supply chain is complex,
with many tiers of participants, who may also
be supplying peer companies. PepsiCo is
committed to working collaboratively with likeminded peer companies to send a consistent
message to suppliers, and to collectively
understand and improve supplier performance
in the areas of employee labor conditions,
health and safety, environmental management
and business integrity. This is a way forward
for businesses that want to have a real and
sustainable impact.”
We have also joined in an industry-wide initiative called
AIM-PROGRESS along with other manufacturers to
work towards improving working conditions within our
supply chain communities. PepsiCo is the Vice-Chair of
this initiative and continues to lead expansion of AIMPROGRESS across the CPG industry.
Engaging Suppliers: Supplier Diversity
PepsiCo extends its commitment to diversity and inclusion
by providing opportunities for our business partners and the
communities in which we operate. PepsiCo and its bottler
community achieved 2007 spending of approximately
$1.13 billion with U.S. minority-owned and women-owned
suppliers, marking the fifth consecutive year of double-digit
growth in supplier diversity spending. In the United Kingdom,
PepsiCo is a founding member of the National Minority
Supplier Development Council (NMSDC) international pilot
program to inspire supplier diversity. PepsiCo has taken
a leadership position in the group, which is called Minority
Supplier Development United Kingdom (MSDUK).
2007-2008 PepsiCo Corporate Sustainability Report 4
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World Headquarters
Purchase, New York, USA
business unit headquarters
PepsiCo Americas Foods (PAF)
Frito-Lay North America (FLNA) — Plano, Texas, USA
Quaker Foods North America (QFNA) — Chicago, Illinois, USA
South America Foods (SAF) — São Paulo, Brazil
Sabritas — Mexico City, Mexico
Gamesa — Monterrey, Mexico
PepsiCo Americas Beverage (PAB)
Pepsi-Cola North America Beverages (PCNAB) — Purchase, New York, USA
Gatorade — Chicago, Illinois, USA
Tropicana — Chicago, Illinois, USA
PepsiCo International (PI)
Europe — Geneva, Switzerland
Asia, Middle East and Africa (AMEA) — Dubai, United Arab Emirates
About PepsiCo
PepsiCo offers the world’s largest portfolio of billion-dollar food
and beverage brands, including 18 different product lines that
each generate more than $1 billion in annual retail sales. Our
main businesses — Frito-Lay, Quaker, Pepsi-Cola, Tropicana and
Gatorade — also make hundreds of other nourishing, tasty foods
and drinks that bring joy to our consumers in over 200 countries.
With more than $43 billion in 2008 revenues, PepsiCo employs
198,000 people who are united by our unique commitment to
sustainable growth, called Performance with Purpose. By dedicating ourselves to offering a broad array of choices for healthy,
convenient and fun nourishment, reducing our environmental
impact, and fostering a diverse and inclusive workplace culture, PepsiCo balances strong financial returns with giving back
to our communities worldwide.
Global Reporting Initiative (GRI) Index
Strategy and Analysis
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2007-2008 PepsiCo Corporate Sustainability Report
Organizational Profile
Report Parameters
Governance
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Governance (Cont.)
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2007-2008 PepsiCo Corporate Sustainability Report
Economic Performance Indicators
Environmental Performance Indicators
Social Performance Indicators
2007-2008 PepsiCo Corporate Sustainability Report 4
Human Rights Performance Indicators
Product Responsibility Performance Indicators
Society Performance Indicators
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