Eric BattinoSupplier Sustainability Manager

Global OperationsBurns & McDonnell Sustainability Summit 2012

Today’s Topics…..

PepsiCo’s Sustainability and Supplier Outreach Program

What comes to

mind when you think

about PepsiCo?

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We’re More Than Just Pepsi Cola

Global Presence19 - Billion Dollar Brands$60+ Billion in Revenue300,000 Employees

Global Distribution100,000 Sales RoutesBusinesses in Virtually

EveryCountry in the WorldLargest Markets: USA,Russia, Mexico

High VisibilityWaterEnergy and GHGLand Fill

PepsiCo’s Billion Dollar Brands

Sustainable Businessility is good

vHarvard, November 2011

Performance of companies withHigh and Low cultures of Sustainability

Why are we here?

More specifically, we pursue environmental sustainability for reasons closely linked to the business

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3

2

1 Social license to operate & grow

Secure our supply chain

Stakeholder expectations

Consumer demand

5 Productivity unlocks through efficiency

“Business cannot succeed in a society that fails.”Bjorn Stigson, President WBCSD

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Contributed more than $40 million to people in need

Bringing safe water to 3MM people

Provided 57,000+ hours of education to farmers

Improving farmer yield and fighting malnutrition

Social LicenseTo Operate &

Grow

1

Our supply chain depends on a healthy environment; agriculture represents major opportunities for resilience

Secure OurSupply Chain

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Water Availability

Stakeholders are raising the bar in terms of what they expect from companies

• Environmental risks increasingly included in companies’ 10K filings

Material Risk Customer Risk

2009: Released first Corporate Sustainability Report

2009: Launched Sustainability Index and Sustainability Consortium

• FLNA: 1% point loss at  WMT equals $32MM

• PEP: 5% point loss at  Costco equals $11MM

Regulatory/NGO Risk

• Increasing costs to comply with regulation 

• PepsiCo’s reputation tarnished in court of public opinion

Environmental risks are increasingly seen 

as material to businesses

StakeholderExpectations

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Consumer opinions are becoming more clearand consistentConsumers feel better about our

Brands  when we protectthe environment

Environment drives PEP favorabilityOur 

environmental performance 

gives us credibility to talk about 

other areas, like nutrition

9,000 PepsiCo consumers across nine countries

ConsumerDemand

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Environmental sustainability unleashes significant productivity opportunities across the business

Bio Mass / Gas High MPG Fleet Beverage Packaging

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Recyclable Seasoning Bags

Membrane Bioreactors

Heat Recovery Power Partnerships Green Coolers

Productivity

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Environmental Sustainability Focus

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Driving Sustainability from the Top Down

At PepsiCo, Performance with Purpose means delivering sustainable growth by investing in a healthier future for people and our planet.

“Performance with Purpose is at the foundation of every aspect of our business. We integrate a commitment to human, environmental and talent sustainability into all of our operations. Doing so creates a blueprint for PepsiCo to develop, manufacture and sell our products in a sustainable way, which gives us a competitive advantage in markets all over the world and drives long-term growth.”

-Indra Nooyi

PepsiCo History of Environmental Sustainability

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Tropicana Pure Premium orange juice became the first consumer brand in NA to certify its carbon footprint

1999 2002

2004 2006 2001

2005

PepsiCo formalizes sustainabilityinitiative

Environmental Task Force formed to share best practices

10% PET recycled content in plastic bottles in the US

Sustainability Visiondefined

Awarded LEED Gold Level Certification for Frito-Lay distribution center

Admitted to Dow Jones Sustainability World Index

2007

Walkers was the first major food brand in the world to display a carbon footprint reduction logo on its packs

2009

PepsiCo, an Energy Star partner since 2007, was awarded the Energy Star Sustained Excellence Award

2009

2008

PepsiCo India achieves positive water balance

Test-marketed our first-ever 100% compostable snack bagfor SunChips

2009

LEED certificationof five buildings, including our first platinum certification, and China’s firstgold-certifiedfood plant

2009

2010

2011

PEP displaces Unilever as F&B Supersector Leader for DJSI; KO falls off list

PepsiCo issues first ever Water Report, “Good for Business; Good for Society” at World Water Week in Stockholm

As we have throughout our history, we will achieve our future goals by combining tools, technology, innovation and people

People

TechnologyTools - ReCon

Innovation

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Environmental Goals

Land &Packaging

10% Recycled PETUS Recycling rates > 50% Avoid 1B Pounds to LandfillEliminate all Solid Waste to Landfill

ClimateChange

Electric Efficiency by 20% / UnitFuel Efficiency by 25% / UnitGHG Intensity Goal 25%/UnitAbsolute GHG Reduction Goal

CommunitySustainable Agriculture PracticesFunding / Technical Support FarmersEnvironmental EducationAlign Health, Ag and Environment

Water20% Water Efficiency+ Water BalanceAccess for 3MM People

FLNA Financial Performance

Water

Electric

Fuel

25%

33%45%

Motor Fuel

>$80MM>$80MM

15%

PepsiCo’s Supplier Sustainability Outreach Program

Supplier Sustainability Outreach

Supplier Sustainability Outreach Program

Outreach Program Fundamentals

A balanced approach to resource conservation (teams, processes and technology) will drive business results with:

1. Senior leadership commitment

2. Long and short term goals tied to:• AOP – translating energy, water and waste into

business results • PDR objectives – leader accountability and alignment

3. Integration into established business processes• Business reviews/scorecards• Continuous improvement operations driven programs

(CI, LSS, etc.)

• Regular assessments leveraging resource conservation tools

4. Professional development program for building and maintaining leader/team capability

Building capability - training, resources and tools

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Single point of contact with dedicated RC expert

Access to PepsiCo expertise

Access to proven partners

Training and opportunity assessment tools

On-site support

Invitation to PepsiCo Global Sustainability Summits

Energy Star Partnership and Resources

“It amazes me that, in such a short time and by a group of people who haven’t been in our plant before, you were able to provide such detailed and comprehensive savings ideas.”-Bob Shearer, After ReCon Report-Out Shearer’s Brewster Plant

Program Performance

• Grew from 12 contract manufacturing locations to almost 50 companies with over a hundred impacted sites.

• 2008-2011– Energy: ~10% reduction (use/unit of production)– Water: ~15% reduction (use/unit of production)

• 2010-2011– Waste: ~40% reduction waste-to-landfill (absolute)

• 2008 – 2011 – Building Capability

• 23 Training Events: over 500 suppliers trained in the US

• 30 Technical 1 Hour Webcasts: over 1,500 attendees (suppliers and PepsiCo RC Champions)

• ~130 site visits – presenting the program to leadership teams, working with site leaders and their teams to establish sustainability programs, sharing best practices

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Leadership in Sustainability

Partner Leadership in sustainability throughout our supply chain

– Shearer’s Foods• Only LEED Platinum Food Mfg. site in

the world

– John B. Sanfilippo and Son• 2010 ENERGY STAR Partner of the

Year

Broader Impact

• EPA ENERGY STAR– The outreach program on boarded over 100 new ENERGY

STAR Partners which helped PepsiCo secure the national Partner of the Year Sustained Excellence award in 2008, 2009, 2010, 2011 and 2012.

– Oak State and Schulze and Burch were key leaders in the development of a baking industry energy use benchmarking tool by the EPA

– Kroger and Land O Lakes have been key leaders in the development of the EPA ENERGY STAR Dairy focus group and energy bench marking tool.

• Outreach program recognition by industry includes:– July 2011 article in Baking and Snack magazine – PepsiCo keynote speaker at the first sustainability conferences

• B&CMA (Biscuit and Cracker Manufacturer’s Association) • Peanut and Tree Nut Processors Association.

– American Association of Candy Technicians presented the outreach program and the business value of resource conservation programs in industry.

Lessons Learned

“Embracers seize the advantage”

– “Embracers” understand the business benefits of operating sustainably within the context of local/global communities and aggressively execute an effective program that addresses:

Energy Conservation

Water Conservation

Eliminating Waste-to-landfill