environmental sustainability report Contents
Strategy and approach 04 CEO Q&A 04 Achievements and pledges 06 Environmental challenges and PepsiCo UK & Ireland 07 - Climate change - Performance with Purpose - Resource depletion - Capability and governance - Water - Stakeholder engagement
Climate change 10 Reducing our energy use and carbon footprint
Sustainable supply chain 14 Carbon footprinting our products, working with farmers and suppliers
Engaging the public 18 Informing and inspiring consumers about the environmental challenges
Waste and packaging 22 Minimising resource depletion; reducing waste, redesigning and recycling our packaging materials
Water 26 Using less water and reducing our water footprint
Scope, boundaries and assurance 30 Basis of reporting 32 Key data table 34 Assurance statement from Deloitte 36 Harvesting of Copella apples, Future challenges / Have your say 38 Boxford, Suffolk, September 2007
2 Our first environmental sustainability report
PepsiCo UK & Ireland (PIUK) employs over 5,500 people across 13 locations, including the largest crisp manufacturing plant in the world located in Leicester, the Quaker Oats factory in Cupar, Scotland, Copella apple juice bottled at Boxford in Suffolk, and a number of other manufacturing, distribution and administration sites. Our core brands are Walkers, Quaker, Tropicana and Pepsi – but our business also includes a wide range of other products, including PJ’s Smoothies, Snack a Jacks and SunBites. This environmental sustainability report is our first, and we hope it clearly lays out our understanding of the key environmental challenges we, and society, face – and our evolving response to those challenges. We would welcome your feedback on our report, and the strategy it outlines.
PIUK is a complex business, making a wide range of products and with supply chains that can stretch as far as South America, the Middle East and Asia. So we know we need to be clear about the scope of this report - what is covered and what is not. Unless otherwise stated any text or graphics relate to the activities of PIUK – not our parent company PepsiCo Inc, or other PepsiCo businesses. PIUK covers Quaker, Tropicana, Walkers and their sub-brands. Pepsi, 7UP and Gatorade are produced, sold and distributed in the UK by Britvic plc. Data reported are based on January-December calendar years, with the majority of data covering 2007. Most of the data cover all of our UK sites and facilities. In some sections, for example on sustainable supply chain, data will cover a wider scope – and this will be clearly stated. Independent assurance was carried out by “Deloitte & Touche LLP (‘Deloitte’)” on our 2007 data on energy use, water use and waste. For a more detailed explanation of the scope, boundaries and assurance of this report see pages 30-37, and our website pepsico.co.uk/environment. We also aim to publish equivalent reports on health and wellbeing, and talent and community. We plan to report on our progress in meeting our environmental targets. 3 Strategy and approach
CEO Q&A
Peter Madden Salman Amin Chief Executive President Forum for the Future PepsiCo UK & Ireland
Quality testing, Quaker Oats farm, 4 Cupar, September 2007 Q Peter Madden: This is your first report. Is environmental sustainability only now becoming more important for PepsiCo UK? And is it really core to your business? A Salman Amin: Our business has always relied on a vibrant society and healthy planet to grow and meet the needs of our consumers, now and in the future. Extreme weather conditions, crop failures and increased commodity prices are already affecting our bottom line – so we know the challenge is real, and here now. The business decisions we take need to address the real challenges of climate change, such as resource depletion and water shortages – and move our business towards replenishing the planet. Q So how does your vision for PIUK fit with the vision for the rest of the business globally? A Our commitments and pledges fit closely with the PepsiCo global vision, that Performance — achieving financial results — should be combined with Purpose — improving people’s lives. By fully understanding our own impact on the environment, we can find better ways to conserve and replenish the planet’s natural resources. We are piloting initiatives, for example our work on supply chain carbon reduction, to share lessons with PepsiCo globally and with our other partners. Q Your targets and progress on climate change and resource depletion are admirable. But how do you intend to tackle the fundamental challenge of growing a business whilst reducing your overall emissions and natural resource demands? A Economic growth has in the past been directly linked to our increasing use of energy and natural resources. To tackle the global environmental challenges we face, that will have to change. We, and others, need to commit to renewable energy, improved agricultural practices, less intensive packaging materials, and identifying other transformational ways of doing business. We need to find a way to separate developing great new products and growing the business from an ever-increasing burden on the natural world. We have already begun the journey, and this report sets out some of the milestones we will achieve on the way. Q For a brand that is so linked to soft drinks, tackling water scarcity issues is critical. Your current focus is on reducing water use in manufacturing, do you think there are bigger water challenges you should be championing? A Reducing the water we use to make our products is important, but our research into several of our supply chains has identified water ‘hot spots’ at different stages. Agriculture seems to be a large water user, so how rainfall and irrigation are used is critical. This is an international challenge, and we are working with PepsiCo’s global agriculture teams to address it. In fact, we are already taking part in a number of pilot schemes to understand how to ‘get more crop for each drop’. In the longer term, reducing our products’ water footprint will be a key focus globally. Q For many the key sustainability impact of a snackfoods business is not environmental but linked to health and well being and the growing obesity crisis. How do you approach that, and why is environment separated? A We know that the growth in obesity rates, and the poor diets of some people in our communities, are real problems, affecting all of society. We know we have an important role to play in finding solutions. We have a clear strategy on health and well being – to transform our portfolio through developing new products and reformulating existing products to make them healthier, to buy new businesses making healthier products, to provide clear information to consumers, and to develop partnerships with community health experts. We will publish a report outlining our understanding of the health and wellbeing challenges, our progress and future goals, as well as any relationship between meeting our health and wellbeing objectives and other sustainability challenges. Q Over the coming year, in what areas will PIUK really lead the agenda and create change across the whole industry? A We hope to continue to lead by example – through engaging our supply chains and developing structured approaches to reducing carbon together, building on our innovative work with the Carbon Trust and Carbon Disclosure Project. We also want to work with suppliers and growers to improve our agricultural practices, including adapting to climate change, and share these lessons far and wide. Lastly, we want to continue to develop and roll out carbon labelling and ensure that we help consumers become more environmentally aware. 5 Achievements and pledges
Key achievements Key pledges
PIUK reduced its carbon intensity (CO2e per kg of All energy used in PIUK manufacturing and production) by 5.9% during 2007 distribution to be from renewable sources within 15 years Climate Walkers Crisps energy use per kg of production Climate change reduced by 32% between 2000 and 2007 change Increase total share of PIUK electricity from renewable sources from 8% to 14% within 3 years Quaker manufacturing is powered by 100% renewable electricity Reduce PIUK energy use by a further 20% per kg of production within 3 years Launching the world’s first Carbon Reduction Label, with the Carbon Trust, on Walkers Crisps packets in Quaker to work towards adopting the Carbon Trust’s March 2007 and holding Supplier Sustainability Carbon Reduction Label Summits to galvanise our supply chain Replace PIUK distribution fleet with the latest Founder partner of Carbon Disclosure Project’s low-emissions vehicles, and reduce harmful Supply Chain Leadership Collaboration, gathering pollutants by 60% within 10 years environmental data from suppliers Use waste frying oil from Walkers as a 5% mix Sourcing 100% British potatoes for Walkers Crisps biofuel in our distribution fleet All our British manufacturing sites to be ISO 14001 Total PIUK waste reduced by 22.6% during 2007 accredited by the end of 2008 Total PIUK waste to landfill reduced by 23.6% during 2007 Reduce PIUK total waste to landfill by a further Resource 18 % less plastic used in Tropicana and Copella bottles depletion 20% during 2008 14% less plastic used in Walkers Crisps multipacks Resource Achieve zero landfill waste across our 16% less cardboard used in Walkers cases depletion total supply chain within 10 years Starch generated from slicing and washing potatoes Commission life-cycle assessments of our major was re-used to make our snack products, reducing packaging materials to identify optimal choices for our raw material footprint greenhouse gas and water reduction All Quaker and Walkers packaging to be renewable, recyclable or biodegradable within 10 years Walkers Crisps water use per kg of production reduced by 42% between 2001 and 2007 Donate surplus Tropicana, Copella and PJ’s Smoothies to breakfast clubs in deprived Water Pepsi Cola water use per kg reduced communities, diverting them from landfill by 39% between 2003 and 2007 Reduce Walkers packaging weight by a further 10% by 2010
Achieve zero water intake at our Walkers Crisps manufacturing sites within 10 years 6 Water Reduce water use at British manufacturing sites Walkers potato sorting, by a further 45% per kg of production within 3 years Lodge Farm, September 2007 Environmental challenges and PepsiCo UK & Ireland
Environment Climate change
Society Resource depletion
Water
Businesses such as ours rely on vibrant societies to grow Only by acting together can businesses, consumers, and succeed, and both rely on a healthy planet to support governments, NGOs and faith groups address the threat. their activities and ways of life. As human activity puts the The influence and creativity of business has a key role to Earth under increasing stress, three major environmental play in finding solutions. challenges pose fundamental questions for society, The effects of global warming pose a direct threat to and for business – climate change, resource depletion, our business. Unpredictable weather events, increased and water shortages. We recognise that other issues, drought, flooding, storms and forced migration pose a including biodiversity and species loss, pollution and threat to our facilities, our employees, our supply chain in toxins are important – but our focus in this report is on the UK and overseas, and our consumers. But there is challenges where we believe we have the greatest also an opportunity to create new climate-change- ability to act and influence. resilient supply chains and products, to drive greater efficiency in our use of natural resources, and to find innovative ways to lower our carbon footprint. Climate change In 2007 the Carbon Trust worked with us to prepare a The Earth’s climate is changing, with an overwhelming detailed risk analysis for key supply chains in our business. scientific consensus that global warming is a grave threat This research found a range of physical, reputational, to the planet, and that human activity is the primary cause.1 market and regulatory risks and opportunities for PIUK 7 (see page 8). 1 Fourth Assessment Report, Intergovernmental Panel on Climate Change PepsiCo Inc PepsiCo global approach – Performance with Purpose — PepsiCo Inc, led by our CEO and Chairman Indra Nooyi, has a global vision – to deliver Performance with Purpose. Globally we want to grow our business and our bottom line by being a recognised sustainability leader. Our global strategy on environmental sustainability is to minimise our use of energy and water, to minimise our packaging and waste, and to reduce our carbon footprint. We believe that our business should be known not just for the financial results it generates, but for the imprint it leaves on society as a whole. We want to embrace ‘purpose’ in everything we do – by transforming our portfolio of products to make it easier for people to make healthier choices; by operating in a way that minimises our impact on the environment, with the goal of reaching a net-neutral impact and replenishing the planet; and by valuing our employees through training and retention programmes, ensuring that PepsiCo is the kind of company that good people want to work for.
Resource depletion Water The Earth today supports over 6 billion people, and its Fresh water is vital to sustain life, our business operations population is expected to rise to 9 billion by 2050.2 and supply chain, and is critical to the agricultural raw But if our society maintains its current lifestyles and materials that our products are made from – such as business models the planet will not be able to support us. potatoes, oranges, apples, oats and corn. Economic Research suggests that humans use energy from fossil growth, increasing population, and the effects of climate fuels at 10,000 times the rate the Earth is able to produce change are placing a growing strain on water resources it.3 There are finite limits to key natural resources such as now and will in the future. Competition for scarce water coal, oil and gas. In addition forests and agricultural land are increasingly under threat. If everyone in the world
lived as most Europeans do, we would need three planets Regulatory Sales impact from Low carbon to support us, and the average North American lifestyle cost exposure temperature rise products 4 Keys
requires the equivalent of five planets. These effects ty
are already being seen as population growth and Reputation gh Hi increased competition for land, and changing food Physical Probabili Reputational impact on consumption in Asia, impacts on demand for Market dynamics consumer / retailers commodities and raw materials. dium
Regulatory Me Extreme weather – Oranges and potatoes Natural resources are vital for our business as well as the
w Major site
planet. Our products completely depend on agriculture, Lo flood which depends in turn on a certain climate (which forests significantly regulate), water provision, and fertile land to Low Medium High grow crops successfully. In addition almost every single Impact ImpactImpact refers refers to to cumulative cumulative revenue revenue / /cost cost impact imact 202008-2019,08-2009, undiscountedundiscounted stage of our supply chain is currently dependent on HighHigh impact impact >c.£150m, > c.£150MM low, loimpactw impa
Figure 2: Environmental risks, opportunities and impacts (Source: Carbon Trust and PIUK) resources is risking community conflict and disruptions to Stakeholder engagement supply, as it has done throughout history.5 PIUK has a Board of External Advisors to provide scientific, consumer and stakeholder perspectives to inform our decision-making and strategy. We have formed a series Capability and governance of partnerships with stakeholders to provide us with PIUK has Board-level responsibility for the environment, additional insights, expertise and knowledge on multiple with a direct reporting line into our Chief Executive. aspects of sustainability, including the Carbon Trust, We have Sustainability Managers in place at all our Carbon Disclosure Project and Forum for the Future manufacturing sites, a Central Sustainability team, and (see ‘Future challenges’, page 38). We engage with public new Environmental Management Systems. We have policy on climate change and sustainability, and support implemented internal metrics and scorecards, have research in new areas, for example on consumer reaction 100% corporate reporting on energy and water, and all to environmental labelling. We use a range of insight tools British manufacturing sites will be ISO 14001 accredited to gather stakeholder and consumer feedback on both by the end of 2008. We report to PepsiCo Inc quarterly our existing activities and future sustainability priorities on our key environmental metrics. We aim to have all for our business. An early draft of this report was shared 5,500 employees acting as ‘responsible stewards’. with stakeholders and their feedback has been In 2008 we will build our environmental awareness incorporated (see page 30). 9 communication across all sites. 5 A Climate of Conflict, Dan Smith, Janani Vivekananda (International Alert), 2004 Climate change
Our pledges PepsiCo UK & Ireland — All energy used in PIUK manufacturing and distribution to be from renewable sources within 15 years — Increase total share of PIUK electricity from renewable sources from 8% to 14% within 3 years — Reduce PIUK energy use by a further 20% per kg of production within 3 years — Replace PIUK distribution fleet with the latest low-emissions vehicles, and reduce harmful pollutants by 60% within 10 years — Use waste frying oil from Walkers as a 5% mix biofuel in our UK distribution fleet — All our British manufacturing sites to be ISO 14001 accredited by the end of 2008
Climate change and our business vehicles, bio-mass generators and new power sources. We need to work with our suppliers, experts in these The raw materials for our products – including potatoes, fields, retail customers and other PepsiCo markets to corn, wheat, oats and oranges – rely completely on the make this pledge a reality. We will report on the progress environment. As the planet warms, and local climates we make and the challenges we face. Our total carbon change, we are likely to face increased droughts and footprint in 2007 was 209,797 tonnes CO2e. The largest floods – alongside increased costs and fluctuating yields. contribution to our carbon footprint comes from the We know that we need both to mitigate our business energy used at our manufacturing sites. Our direct impact on climate change and to help our business and energy use during 2007, the oil and gas burned at our our supply chain by adapting to its effects. sites, was 501,959,311 kWh. In addition our indirect energy use, the electricity used to power our facilities, Reducing our energy use was 144,848,084 kWh. We are committed to reducing our impact on climate Our energy-reduction strategy reduced the amount of change and to reducing our emissions of green house energy used per kg of Walkers Crisps production gases. Over the next 15 years we will work to radically by 32% between 2000 and 2007 to 3.1 kWh. The energy transform our business model, replacing our existing use used to make all of Walkers Crisps and snacks was 2.69 of oil, gas and fossil fuels in manufacturing and kWh per kg of production 2007. This was achieved by a distribution with energy from renewable sources.This range of investments in new technology, waste reduction objective is challenging and will involve replacing much programmes involving all our employees and improved of our existing manufacturing and distribution start up and shutdown procedures. Our employee infrastructure. It will require significant exploration of air travel is not included within our carbon footprint 10 renewable alternatives such as hydrogen-powered (see page 36), but we estimate it to be 2,637 tonnes CO2e (around 1.3% of our total footprint). Euro Euro Euro Euro Euro Euro Euro Euro 0 1 2 3 4 5 Figure 3: Quaker Oats manufacturing Figure 4: Walkers Crisps energy (Cupar) carbon emissions per kg of use per kg of production production (2000-06) (2000-07)
30 4.6 kg CO 25 2
e/tonnes oats 3.1 20 BB kWh/kg 15 – 32% 10
0 2 20 20 20 20 20 20 000 02 01 03 04 05 06
Gas 48.1% 2000 2007 100,930
Electricity 34.6% 72,675 Walkers Crisps now use 32% less energy 4.7 Distribution 13.9% to make each pack than in 2000 29,168
Gas 48.1% Car travel 1.7% 100,930 3,645 PIUK reduced its carbon intensity PIUK people 3.3 Electricity 34.6% Oil 1.6% (CO2e per kg of production) by making 72,675 3,379 Kw 5.9% during 2007 a difference
AA h/ Distribution 13.9%
Kg 29,168
Car travelOil 1.7% Car33% travel 3,645 “We have an ongoing programme 1.6% 1.7% Oil 1.6% Gas 48.1% Production to reduce our fuel use and eliminate 3,379 100,930 empty journeys. In the last 6 months Distribution Electricity 34.6% +10.3% of 2007 we increased the amount of 72,675
13.9%20 20 product carried by each of our lorries. Distribution 13.9% 00 06 29,168 This saved journeys totalling 157,000
Gas Car travel 1.7% kms, or 41,000 litres of fuel, at this 48.1% 3,645 distribution centre alone. 2008 is Electricity CO e Euro Oil 1.6% 2 looking even better with 90,000kms 34.6% 3,379 0 1 2 3 4 5 +3.8% saved in the first 3 months.” NOx Chris Miller 8 7 5 3.5 2 2006 2007 Northern Distribution team
Total:0.40 209,797 tonnes CO2e Figure 5: PIUK carbon footprint – Figure 6: PIUK total production, and * Includes PepsiCo manufacturing in Rotterdam 0.35 and Zeebrugge for UK market.Excludes Britvic * * 11 2007 breakdown (tonnes CO2e) total carbon footprint (2006-07) production. Excludes third party distribution, 0.30 and employee air travel.
0.25
0.20
0.15
0
0.05 19 19 19 19 20 20 90 92 95 99 05 08 PepsiCo Inc
Case study — Renewable Energy — PepsiCo in North America has purchased renewable energy certificates equal to the energy used by all our American facilities. The three-year purchase of more than 1 billion kWh helped to support the development of renewable energy capacity, including solar, wind, geothermal, biogas, bio-mass and low-impact hydro. At our snacks plant in Modesto, California, we’re building a solar collection and concentration system to supply nearly three-quarters of the heat needed to produce SunChips, a multigrain snack, from solar thermal energy.
Renewable and local energy Reducing our distribution footprint Climate change and energy As well as reducing the overall amount of energy we Between 2000 and 2006 we improved PIUK’s fleet fuel use we are increasing the proportion of renewable efficiency by 12%. In 2007 we reduced our absolute energy. Currently 8% of our electricity is from distribution footprint by 4.3%, despite shipping 10.3% renewables, and we will increase this to 14% over the more products. This was achieved by vehicle technology next three years. At our Quaker Oats factory in Cupar, investments including lower friction tyres and streamlining Scotland, we plan to invest £6m in a new combined heat to reduce wind resistance, new journey-planning and power biomass boiler, powered by the husks from software, and a comprehensive training programme our oats. The new boiler, which is around five times more combined with an in-cab system that tracks fuel efficiency expensive than a conventional fossil fuel boiler, will on a weekly basis. Over 90% of our drivers perform above generate enough steam and electricity to power the site, our high fuel efficiency standard, every trip. Over the next reducing carbon dioxide emissions by 9m kg a year. In 3 years we will move to the latest “Euro 5” models for all addition, for the first three years of operation, the site will our HGV fleet, reducing nitrous oxides emissions – prevent a further 1.8m kg of carbon dioxide a year being harmful pollutants – by 60%. We will continue to reduce released as it will export over 1,300 megaWatt hours of unnecessary kilometres travelled and are collaborating renewable energy back to the National Grid. The move with our retail customers to minimise empty truck will further reduce carbon emissions by cutting over journeys. We are rolling out biodiesel, containing waste 172,000 road miles, as the oat husks will no longer have frying oil at a 5% mix, to power our fleet. We will continue to be transported from the site, eliminating a further to explore new technology including electric and 600,000 kg of carbon dioxide emissions annually. hydrogen engines. Additionally, since 2005 there has been a 13% improvement in our company car emissions. 12 Refrigerants Figure 7: PIUK total production and total distribution footprint (2006-07) We have joined with other companies and Greenpeace in a global initiative called ‘Refrigerants Naturally!’. Its goal is to Total PIUK distribution footprint Dilemma 2006: 30,489 tonnes CO e address climate change and ozone layer 2 — How do we continue depletion caused by gases in refrigeration Total PIUK distribution footprint equipment. We are working together to to grow our business, 2007: 29,168 tonnes CO2e substitute harmful fluorinated gases but reduce our absolute with natural refrigerants in refrigerated environmental impacts? point-of-sale equipment. Production Sustainability in our +10.3% investment decisions We have incorporated sustainability criteria into our capital expenditure 2006 2007 decision-making and we are using it on all capital expenditure requests over Fuel A large proportion of our carbon footprint £2.5m. In this way we are trying to footprint comes from agriculture incorporate sustainability in projects from -4.3% and our supply chain. the start and track sustainability-related Find out what we are doing to capital investment. We are currently tackle it. exploring how sustainability criteria could be introduced into our new product Excludes third-party distribution. development and innovation processes.
Stakeholder feedback “Everything we do or buy has a carbon impact and it is clear that consumers, and PepsiCo, want to take action to help tackle climate change. We believe the carbon label, with its built-in commitment to reduce the product’s carbon footprint, will act as a powerful bridge connecting carbon-conscious companies and their customers.” Tom Delay Chief Executive, Carbon Trust 13 Sustainable supply chain
Our pledges PepsiCo UK & Ireland — Collaborate with suppliers and farmers to publish joint carbon reduction strategies within 3 years — Quaker to join Walkers in making a carbon reduction commitment across its whole supply chain — Tropicana to identify action plans for carbon reduction across its whole supply chain — Commission research on oat and potato agricultural and storage practices to identify further savings in greenhouse gas emissions and water use for Quaker and Walkers
The carbon footprint of our products Supply chain carbon reduction We have reduced the energy and water used in PIUK’s In 2006 and 2007, working with the Carbon Trust, direct operations, but our work to understand the we analysed the carbon footprint of our Walkers Crisps. lifecycle of our products has shown us that the majority This research told us that a large proportion of the of our footprint lies outside our four walls. We want environmental impacts of our products came from to use our influence through our supply chains, and agriculture and our supply chain. At the end of 2007, collaborate with our suppliers, growers and others to following Walkers’ adoption of the carbon label and its minimise our environmental impact. carbon reduction commitment, we brought together key suppliers of raw materials and packaging at a We have a great opportunity to work closely with our Supplier Sustainability Summit. The summit looked at suppliers to encourage them to understand and reduce common environmental risks and opportunities, where their carbon footprints, and to identify opportunities carbon minimisation approaches could be shared, and where we can work together to reduce our collective any shared barriers to progress. During 2008 we want to impact on the environment. Through collaborative move towards shared carbon goals and targets across investigation and action we hope to develop a more our supply chain. economically-secure supply chain that is able to face the tough climate change challenges that lie ahead, one that we believe will bring long-term future benefits to PIUK, our suppliers and the environment.
14 Gr owi ng p ota toe s , and t h e Walkers Crisps’ s u nflower s f o r o u r o i l, toget h er carbon footprint ar e t h e l arge st co nt ri buto r s to Our raw materials: Wal ker s’ f o ot p ri nt . potatoes, sunflowers and sea soning
44% Manufactur e: Di stribution: Di sposal pr oducin g cri sps brin gin g our of the empty fr om potat oes cri sps t o y ou packs
Packagin g 3 0% 9% 2% s upply chain
15%
Methodology: Carbon Trust (2006-7) – Carbon footprint per standard 34.5g bag: 75g
Figure 8 : Walkers Crisps’ c arbon footprint
Ou r s u p pl i er, C it ros u co, Tropicana orange juice’s u s e s 100% ren e w abl e carbon footprint en ergy s o u rce s i n its Packaging j u i c i ng o pera ti o n. s upply chain
6%
Di stribution , Orange Cr oss- atlantic s upermarket gr owing and Bottling shipping r efrigeration juicing and other
37% 42% 7% 8%
Methodolo gy: ISO 14040 – Carbon footprint per 1 litre cart on: appro x 1.1 kg 15 Figure 9: Tropic ana orange juice’s c arbon footprint Case study — Citrosuco — Citrosuco is the sole supplier of not-from-concentrate orange juice to Tropicana UK and Ireland. It is a family-owned company, with a Brazilian orange business founded over 40 years ago. An excess of 20% of its plantation area is set aside as nature reserves. Another equivalent area is populated 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. Citrosuco is rolling out new environmental systems to its orange farms, leading to higher efficiencies in pesticide and fertilizer use, for example by analysing the optimum time of day and weather conditions for applying – and then using less. The company juicing factories are powered by biomass (sugar-cane fibre), and use no fossil fuels. Nutrients like nitrogen are extracted, further processed through composting, and then reused to naturally fertilize nearby farms. Citrosuco’s truck fleet is currently being upgraded environmentally, with new larger tanks being fitted to existing trailers; these can carry 30% more juice, with the same number of trips and 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. Sustainable supply chain Collaborating on carbon management Investing in research – sustainable PIUK is one of 12 founder members of the Carbon farming and agriculture Disclosure Project’s Supply Chain Leadership Collaboration We are investing in a number of research projects by (SCLC). This aims to dramatically increase the number of leading experts on sustainable farming and agriculture. its members’ suppliers (to thousands) reporting on climate We commissioned a Life-Cycle Assessment of potato and change mitigation efforts and adaptation strategies. oat agricultural practices, and an energy audit of potato The project trials data-sharing systems and builds stores for Walkers. The audit will assess different types of participants’ capability to respond to the climate change stores (e.g. box, bulk, old and new) to identify where challenge, whilst making it easier by employing a common CO2e savings can be made. We have commissioned an questionnaire (and reporting standards), to remove assessment of the climate change risks and opportunities suppliers’ need to respond to different customers’ for European oats production, to be carried out by the individual requests. Our membership demonstrates to University of Bath. We are looking at how to reduce soil our suppliers how important we feel climate change is to erosion from potato farming, and what varieties of potato business decision-making, along with our desire to work would consume less water whilst growing. Quaker was a collaboratively. Through our membership we can also founder member of Linking Environment and Farming explore possible links between corporate level disclosure (LEAF), which helps farmers make a positive and product carbon footprinting information provision, to environmental contribution by improving their growing support our Carbon Reduction Label work. PIUK has and harvesting practices, and their use of water and selected 30 suppliers to take part, focusing on those with fertiliser. In 2008 we will work to develop our capacity whom we can collaborate to develop significant supply building with farmers and growers, and improve our 16 chain carbon footprint reduction strategies. training and support for our agricultural supply base. Dilemma — Faced with competitive pressures, how do companies collaborate through their supply chains on carbon management?
Walkers potatoes, Lodge Farm Quaker Oats being harvested, Scotland
Stakeholder feedback “The Supply Chain Leadership Collaboration is a key step towards a unified business approach to climate change. By bringing together the purchasing authority of some of the largest companies in the world, PepsiCo and others can encourage suppliers to measure and manage their greenhouse gas emissions. This will enable large companies to work towards measuring their total carbon footprint, the first step towards managing and reducing it.” Paul Dickinson Chief Executive, Carbon Disclosure Project
Engaging our supply chain is important, but we also have an opportunity to inspire consumers on sustainability. Find out what we are doing to tackle it. 17 Engaging the public
Our pledges PepsiCo UK & Ireland — Quaker to work towards adopting the Carbon Trust Carbon Reduction Label — Walkers to incentivise and engage the public on holidaying in Britain during 2008
Consumers and the environment they buy. In 2006 and 2007 we worked closely with the Carbon Trust to measure the carbon footprint of a Over the last two years the level of consumer concern packet of Walkers Crisps, and understand how we can and interest in environmental issues, but particularly reduce it. The value of 75g of CO2e per 34.5g bag, climate change, has increased dramatically. Many calculated using the Carbon Trust’s rigorous methodology, consumers are challenging retailers and consumer brands includes every key step in the process, from planting to tell them more about the impact of the products the potato seed, to the pack arriving in store, through they buy, are calling for strong action from companies, to disposal of the empty packet. After assessing and asking for positive environmental choices to be the footprint we, and the Carbon Trust, wanted to made easier. With our portfolio of brands, and our communicate the information – and a commitment to packaging, marketing and promotions, we have great reduce the carbon impact of our crisps – to the public. potential to engage with consumers to build their The launch of the Carbon Trust Carbon Reduction Label environmental knowledge and inform their choices. on our crisp packets was the result. The announcement We have three work streams in 2008: raising the carbon of the trial was welcomed in the media as a literacy of the public through carbon labelling; focusing groundbreaking initiative – the first carbon label in the on the provenance of our products; and incentivising world (see page 20). But supportive media coverage is the public to holiday in Britain. Carbon labelling is our not our measure of success. We want to know how primary priority and we believe it will become a key tool consumers are responding. in creating the demand for low carbon products.
Walkers and carbon labelling Research from the UK Government, NGOs and other companies shows that consumers are increasingly concerned about the environment, and want to know 18 more about the environmental impact of the products Figure 11: Consumer reaction Figure 10: Consumer reaction to Carbon Reduction Label to Carbon Reduction Label (research undertaken by Populus) (research undertaken by Populus)
Consumers recalling It makes me more aware It helps me to reduce the a carbon label on of the environmental carbon footprint of my regular
Walkers Crisps impact of the products and shopping items I don’t It allows people to know/care make a modest, services I choose to buy personal contribution to the problem of It is confusing 12% climate change and difficult to 31% 60 understand 10% 40 50 % Agree somewhat It is an effective way of 6% 40 47 47 47 49 % Agree stronglyaddressing the problem 30 of climate change 32 30 20 32 20 21% 17 23 22 20% 10 10 It is purely 15 a gesture It is a positive development 0 0 and more July 2007 February 2008 July 2007 February 2008 July 2007 February 2008 companies 60 should do it
50 % Agree somewhat On-line omnibus study with 1000+ adults 18+, On-line omnibus study with40 1000+47 adults 18+, July47 2007 and February47 2008 49 % Agree strongly February 2008 30 32 20 23 22 10 15 0 consumer awareness of the environmental impact of Consumers andJuly 2007 carbonFebruary 2008labellingJuly 2007 February 2008 the food they buy. 79% of consumers now say that the In July 2007 and February 2008 we commissioned label makes them “more aware of the environmental consumer research from Populus to take an early impact of the products and services they choose to snapshot of how consumers are responding to the new buy”. A minority of consumers (5%) recall seeing the label carbon label. This research sought to understand on products. Of those, 17% recalled seeing the label on a awareness, perception and impact of carbon labelling packet of Walkers Crisps in July 2007. By February 2008 among consumers, and to track perceptions from the this number had risen to 32%. launch in March 2007. At such an early stage we think these results are The research shows that awareness of carbon labelling encouraging, and suggest that consumers are hungry is reasonably high, with 78% of consumers saying they for more robust information on the carbon impact of the have heard of it (rising to 85% for consumers who are products and services they buy and public declarations concerned about the environment). There is a low level of support for our commitment to reduce. In April 2008 of cynicism towards carbon labelling and a belief that it Walkers backed the second phase of the Carbon Trust could, over time, help consumers to make a difference. leadership in this field, by supporting an evolved logo. 31% of consumers say it “allows people to make a modest, The new label design includes four core elements: personal contribution to the problem of climate change” a footprint logo, the carbon footprint number, an and 20% say that “it is a positive development and more endorsement by the Carbon Trust and a written reduction companies should do it”. Only 21% of consumers state commitment. Our research, along with that of the Carbon that it is “purely a gesture”. Carbon labelling shows real Trust and other partners, suggests the new logo will be potential to drive behaviour change by increasing even more easily understood by consumers. 19 Carbon labelling – the journey ahead Sourcing locally – Great British We know that we are at the start of a journey on carbon Potatoes labelling. In 2008 and beyond we will work with DEFRA, In August 2007 Walkers, supporting its role as an iconic the Carbon Trust and the British Standards Institute British brand, announced that it would switch to sourcing to agree an industry-wide common methodology for 100% British potatoes for all its crisps. Following Walkers’ carbon footprinting and labelling. We, and others, will carbon label commitment to reduce its carbon footprint, work to bring other partners to the initiative – and to moving to source only British potatoes would reduce engage with consumers to increase their understanding food miles, and support British farmers. The move meant of what the label shows. With our opportunity to that Walkers would be buying an additional 40,000 engage millions of consumers, we will continue to watch tonnes of potatoes per year from the UK, on top of the the consumer response – and whether information existing 420,000 tonnes. To inspire and engage on carbon can truly help people make better consumers about the move, Walkers refreshed its environmental choices. packaging, ran a TV advertising campaign, and used outdoor, press, radio and online communications.
Engaging the public Supporting green holidays In 2008 Walkers has moved further, and is incentivising consumers to holiday in Britain rather than flying abroad. Walkers’ Brit Trips campaign which ran for several months, was designed to inspire consumers with all there is to see and do in Britain, telling them “There’s no need to go to the airport. It’s all right on your doorstep – this is just one way you can help reduce your family’s carbon footprint.” Research conducted with the Energy Savings Trust in advance of the campaign, suggests real carbon emissions will be avoided. To help engage consumers Walkers partnered with a wide number of organisations on the campaign, including the National Trust and The Royal Society for the Protection of Birds.
A key consumer concern is whether our packaging is sustainable. Financial Times, 20 March 2007 Find out what we are doing to tackle it. Dilemma — How do we respond to demands from consumers or retailers that might increase our carbon footprint?
Engaging consumers on sustainability
Stakeholder feedback “Walkers’ partnership with the Trust allows us to celebrate the very best that Britain has to offer by encouraging visitors to enjoy some of the country’s most beautiful and precious properties and countryside. This makes for an ideal partnership.” Stephen Swift The National Trust
“Walkers has worked with British growers for many years but this move shows a real commitment to British farming and provides growers with the reassurance they require. I hope that other packers and processors within the UK will follow suit and support British production.” Peter Kendall President, National Farmers’ Union
21 Waste and packaging
Our pledges PepsiCo UK & Ireland — Reduce PIUK total waste to landfill by a further 20% during 2008 — Achieve zero landfill waste across our total supply chain within 10 years — Commission life-cycle assessments of our major packaging materials to identify optimal choices for greenhouse gas and water reduction — All Quaker and Walkers packaging to be renewable, recyclable or biodegradable within 10 years — Quaker and Walkers to roll out Forestry Stewardship Council paper-based packaging, where appropriate, within 3 years — Donate surplus Tropicana, Copella and PJ’s Smoothies to breakfast clubs in deprived communities, diverting them from landfill — Reduce Walkers packaging weight by a further 10% by 2010
Waste, packaging and our business film waste was recycled to make pallets and park benches. In 2008 we aim to reduce our waste to The majority of our packaging comes from non- landfill by a further 20%. renewable sources, such as fossil fuels, and landfill capacity in the UK is finite. As a result, we are Our Quaker business has worked with the charity committed to reducing the energy and non-renewable Fare Share to distribute surplus food to others who raw materials used to manufacture our packaging, would benefit, rather than see it go to landfill. Over the and are using a scientific life-cycle assessment next three years we plan to work with Magic Breakfast approach, along with the waste hierarchy, to deliver to donate surplus Tropicana, Copella and PJ’s change: reducing and recycling our direct waste, and Smoothies to breakfast clubs in schools serving redesigning and minimising our packaging. deprived communities. This will reduce our waste to landfill by several hundred tonnes. Our Green Team at Theale head office reduced Reducing and recycling our waste paper use by 30% over 6 months by educating other During 2007 we reduced the total solid waste staff about printing and paper use, and changing produced in our UK operations by 22.6%, from our default printer settings to black and white, 43,326 tonnes to 33,536 tonnes. We reduced the double-sided printing. amount of solid waste sent to landfill by 23.6% during 2007, to 3,476 tonnes. Overall 90% of our waste was recycled during 2007 amounting to 22 30,060 tonnes. Over 700 tonnes of foil and plastic PIUK people making a difference
“We wanted to drive awareness about waste, so we filmed a refuse truck full of ‘waste’ which was being taken to a landfill site. It vividly showed the production teams what they were throwing away. Following During 2007 we recycled 90% of the waste Walkers Crisps packets are now 4% lighter, the impact of the film we installed from our UK operations avoiding 1,700 tonnes of CO e 2 equipment to recycle more, and it has led a 10-fold decrease in landfill Total UK waste in 2006: Total UK waste sent to landfill in over the last 6 months. Further 43,326 tonnes 2006: 4,547 tonnes action plans are in place to reduce it Total UK waste in 2007: Total UK waste sent to landfill in further with a vision of zero landfill. 33,536 tonnes (22.6% reduction) 2007: 3,476 tonnes (23.6% reduction) Further action plans are in place to reduce it further with a vision of zero waste going to landfill.” Paul Wells Production Production Coventry snacks plant +10.3% +10.3%
2006 2007 2006 2007
Waste to Total waste landfill -22.6% -23.6%
* Solid waste from UK sites, and PepsiCo Figure 12: PIUK total production Figure 13: PIUK total production manufacturing in Rotterdam and Zeebrugge * * for UK market. Excludes Britvic plc 23 and total waste (2006-07) and total waste to landfill (2006-07) production, Skelmersdale, and corporate offices. Using less packaging Investing in packaging research Across our brands we have reduced the raw materials We are using life-cycle assesments and internal metrics used to make our packaging by using light-weight and scorecards to identify optimal packaging choices. materials and by investing in new high-precision We have a number of specific research projects machinery. underway, including: Over the last five years we have reduced the amount of • Exploring the potential use of recycled industrial plastic used to make our Tropicana and Copella bottles waste plastic film in our multi-pack crisp packets. by 18%, and are using 4% less film to make a Walkers This would mean that we are reducing the amount of Crisps packet. Working with the corrugate case supplier, (non-renewable) fossil fuels that we are depleting. SCA Packaging, our Quaker Oats facility at Cupar has We hope to conduct a trial later this year, with potential reduced the amount of corrugate used by 30% over application in 2008/9. 5 years by moving to cases with open tops and reduced • Undertaking a study into a number of new sides rather than traditional fully-enclosing cases. biodegradable packaging films to assess their By 2010 we hope to make our Walkers Crisps and compatibility with existing or future infrastructure. Waste and packaging snacks packaging 10% lighter, using fewer resources • Continuing trials looking at how different forms of crisp and less energy to produce than before. Walkers is packaging degrade when dropped as litter. These are investigating reducing the seal depth of its standard crisp comparing the performance of our current crisp bag, which could save a further 2,800 tonnes of CO e by 2 packaging against a range of bio-degradable films. the end of 2009. We are working with several of our retail customers to measure and reduce our packaging. In 2008 Quaker will move to using recycled cardboard in its boxes.
24 Achievements Reducing raw CO2e over last 5 years materials avoided * Dilemma — Does the consumer Walkers 16% reduction 3,500 tonnes Crisps in cardboard 1,970 tonnes focus on packaging risk of paper saved cases used per case diverting attention from larger environmental goals?
4% reduction Walkers 360 tonnes in film used 1,710 tonnes Crisps of OPP film packets per pack
PIUK people 14% reduction making Walkers 450 tonnes in film used 1,260 tonnes multi-pack of OPP film a difference film per pack
“We are reusing starch generated from slicing and washing potatoes to make our snack products. This has Tropicana 500 tonnes 18% reduction reduced the need to import starch and of PET 2,340 tonnes in plastic used from Europe, reduced the associated Copella plastic bottles transport carbon emissions and has saved the PIUK business over £1m this year. In 2008 we will increase our usage and hope to be 100% self sufficient by next year.” 9% reduction Doritos 1,000 tonnes in cardboard 563 tonnes Pete Flanaghan and snack of paper saved cases used per case EMS and project team
* Since change 25 Water
Our pledges PepsiCo UK & Ireland — Achieve zero water intake at our Walkers Crisps manufacturing sites within 10 years — Reduce water use at British manufacturing sites by a further 45% per kg of production within 3 years — Invest in research to identify the most environmentally sensitive ways of irrigating our agricultural raw materials — Carry out research to identify operations that risk contributing to water shortages
Water and our business 6.67 l/kg to 6.52 l/kg. This reduction was achieved by a comprehensive analysis of all water usage and improved Water is essential for all foods: for growing, washing, measurement through the installation of water meters to processing and cooking them. How much water we use cover the major usage areas. The Walkers team is important, and we are committed to minimising our developed engineering solutions to reduce equipment water footprint through greater efficiency in our water use and created sources for recycled water. operations. But we know that where we source our water Training and communication sessions were held for all from is just as critical, with stressed sources causing employees to drive awareness of the need to reduce great damage to local communities and eco-systems. water use and how they could play a part. Performance We are committed to helping suppliers reduce their was tracked between lines and shifts, with the best water footprint and avoiding water conflict with performing teams being rewarded and recognised for local communities. their efforts. Projects are underway to capture water extracted from potatoes during slicing and frying, to treat it and reuse it. As a result we will move to zero water Using less water in our operations intake at all of our Walkers Crisps manufacturing sites Our total water use across all our operations was within 10 years, starting with our Leicester plant, 1,564m litres in 2007. Between 2001 and 2007 we eliminating the need to bring mains water onto our sites. reduced the water used to manufacture Walkers Crisps Where we source our water from is crucial. None of our by 42% from 13 l/kg of production to 7.6 l/kg. At our factories or offices in the UK and Ireland is in a region Leicester factory alone, this amounts to 700 million litres that the Environment Agency identifies as under of water saved. During 2007 we reduced the water used 26 “serious water stress”. to produce all our crisps and snacks by 2.3%, from Figure 14: Walkers Crisps water use per kg of production (2001-07)
13 Major water users (over 20 million litres per annum) Litres/kg production None currently operating in areas defined by 7.6 Environment Agency as seriously water? stressed Other PIUK sites – 42% 2001 2007
Cupar Figure 15: PIUK total production and total water use (2006-07)
Total PIUK water use 2006: 1,505m litres Peterlee Total PIUK water use 2007: 1,564m litres Drogheda Skelmersdale Lincoln The water used Production Dublin Warrington to bottle 1 litre Thurmaston of Tropicana +10.3% Leicester reduced by 17% Coventry during 2007 Boxford
Richmond Water use Theale +3.9%
2006 2007
Includes PepsiCo manufacturing in Rotterdam Figure 16: PIUK locations, and major water users and Zeebrugge for UK market. Excludes Britvic plc production and Thurmaston. 27 PepsiCo Inc
Case study — water access in developing countries — The Earth Institute at Columbia University will receive £3 million from the PepsiCo Foundation during the next 3 years directed at projects in India, Brazil, China and Africa. These will identify a series of high-impact, community-based activities and practical solutions to improve water access and recommend innovative methods to improve water productivity. PepsiCo Inc has also formed a £1.25 million partnership with H2O Africa, the charitable organisation founded by Matt Damon, to deliver on-the-ground clean water projects in Niger, Mali, Senegal and other countries in Africa. Both initiatives will drive sustainable water practices as part of PepsiCo’s ongoing commitment to support the Millennium Development Goals (MDGs). Water Using less water in our supply chain Our orange juice supplier uses waste water to irrigate a sustainable palm tree plantation of four million trees next PepsiCo provides guidelines to suppliers and growers to their orange-juicing factory. When making Copella on environmental management, including their water apple juice, we estimate 47% of the water footprint is management practices. The majority of our oats and used to irrigate the apple orchards. potato growers are in regions of the UK that have historically suffered only limited water stress. During 2008 we will extend our relationships with our supply Investing in water research base, especially within the agricultural sector. We have partnered with the Scottish Crop Research We will continue to develop practical indicators and Institute to investigate new potato varieties that would guidelines for minimising agricultural use of water, require less water. We are investing in new research into and for reducing the impact of agricultural inputs irrigation optimisation. The project aims to compare on water quality. the effectiveness of various agricultural irrigation For Tropicana we estimate that the vast majority of our systems aimed at managing and conserving water water footprint, 99.74%, occurs in the growing of the resources from surface and borehole sources. oranges in Brazil. 98.5% of the water used to grow our oranges comes from rainfall, with only 1.5% from irrigation diverted from rivers. Around 0.21% of the total water use occurs during the production of Our supply chain is also a large part of our the packaging and less than 0.05% during bottling. carbon footprint. 28 Find out what we are doing to tackle it. Figure 17: Tropicana water footprint
99.74% Dilemma 0.21% Orange growing — Should sourcing be Packaging (98.5% rainfall, supply chain 1.5% irrigation) shifted away from water-stressed regions or countries, or should 0.05% suppliers be engaged Bottling to reduce their water footprint?
Water footprint of 1 litre of Tropicana: 1,100 litres (inc rainfall) 20 litres (exc rainfall) Walkers potato harvest 2007
Stakeholder feedback “Water, or the lack of it, is a growing global challenge. The stark reality is that by 2025 an estimated 1.8 billion people will be living without enough water to survive. To produce the world’s food right now takes some 86% of the world’s fresh water – a staggering 200 million litres every second. We simply cannot sustain our current water habits. Food businesses need to consider their “water footprint” and actively support improved stewardship of water as a vital resource with enormous value to society. To do this, they need to engage with the communities that supply and consume their products and use their influence with their supply chains.” Jim Haywood Environment Director, Business in the Community
29 Scope, boundaries and assurance
Performance against previous targets material for other PIUK products. Improved waste performance at key facilities was also driven by staff PIUK 2007 Operations target (excludes non-UK sites) engagement and initiatives. 2007 % target % actual reduction reduction Stakeholder engagement on energy use, 3 5.2 this report kWh per kg In March 2008 we shared an early draft of this report production with 18 senior representatives from NGOs, academia, water use, 5 2.1 retail customers and suppliers at two stakeholder litres per kg workshops, facilitated by Forum for the Future. These production stakeholders provided a series of recommendations both for our reporting in this, our first report, and for our landfill waste 10 21 future reporting and strategy. We responded to many of their recommendations for this report, including: We exceded our 2007 targets on energy and waste • Reporting on trends in absolute environmental and under-achieved on water. impacts (e.g. total carbon, waste and water year-on-year); On energy, we saw significant gas burner technology improvements, combined with improved yields on raw • Showing performance against existing targets; material use (e.g. potatoes). In addition, downtime and • Featuring ordinary PIUK employees and the projects wastage control programmes delivered better running they have initiated; efficiencies. • Showing more historical data (e.g. pre-2006 and 7); To be more responsive to customer needs, we decreased and average product run lengths, which led to more frequent cleaning, which is a major water user. Additionally, we • Outlining key agricultural research programmes. experienced a higher than forecast production volume Stakeholder feedback was critical in strengthening our of more water-intensive products. report. We sincerely thank all those who generously gave The installation of the Leicester starch production plant us their time, and look forward to continued dialogue to made a major contribution to the reduction in total waste. use external perspectives to shape our approach Waste from the Walkers Crisps production process, at (see page 39). both Leicester and Peterlee, that was previously sent off 30 site for recycling, was reprocessed to become a raw GRI index We have reported on a number of the GRI Key Performance Indicators, either in whole or in part. In the Key Data Table (pages 34-35) we note which of the GRI indicators we have received assurance for, and where they can be found in the report. In addition to these there are other GRI indicators and areas we have sought to cover.
GRI reporting framework In our report
Strategy and Analysis Strategy and approach
Organisational profile Strategy and approach / Scope, boundaries and assurance
Report parameters Strategy and approach / Scope, boundaries and assurance
Governance, commitments and engagement Strategy and approach
GRI Indicator In our report
Initiatives to reduce greenhouse gas emissions Climate change EN18 and reductions achieved Sustainable supply chain Initiatives to mitigate environmental impacts of products All chapters EN26 and services, and extent of impact mitigation.
Glossary of terms
NGO CDP A non-governmental organisation is a legally constituted organisation The Carbon Disclosure Project (CDP) is an independent not-for-profit created by private persons or organisations with no participation or organisation aiming to create a lasting relationship between shareholders representation of any government. and corporations on the implications for shareholder value and commercial operations presented by climate change. Its goal is to facilitate ISO 14001 a dialogue, supported by quality information, from which a rational This is is the recognised international specification for an Environmental response to climate change will emerge Management System (EMS). An EMS certified to ISO14001 standards means that an organisation can demonstrate that it has robust GRI environmental management practices, and is committed to improving The Global Reporting Initiative has pioneered the development of the upon them. world’s most widely used sustainability-reporting framework and is committed to its continuous improvement and application worldwide. CO2e CO2equivalents – the amount of CO2 which would have to be released in UOM order to have an equal impact on the atmosphere as the specific amount The unit of meassurmentsused in our indicators, for example litres, of another greenhouse gas released. kilogrammes and kiloWatt-hours 31 Basis of reporting
Reporting period and entities covered provided to the Central Sustainability team once a year. PIUK has been collecting certain of these data The PIUK Environmental Sustainability Report (e.g. energy) since 1999. (“the Report”) provides data and information for the period January-December 2007, except where In 2007, all our 7 current UK manufacturing sites (see specifically noted. Data within the Report, unless www.pepsico.co.uk/about) reported environmental otherwise stated, covers all of our UK sites and facilities. performance data and this is represented in the report. In some sections, for example on sustainable supply In figures 5, 6, 12, 13 and 15 – showing the PIUK carbon chain, data will cover a wider scope – and this will be footprint, energy use, water use and waste – we have also clearly stated. Unless otherwise stated, any text or included the share of the footprint or impact of PepsiCo graphics throughout the report relate to the activities manufacturing in Rotterdam and Zeebrugge, produced of PIUK – not our parent company PepsiCo Inc, or other for the UK market (e.g. for each facility we have included PepsiCo businesses. PIUK includes Quaker, Tropicana, the energy, water or waste use or generation associated Copella, PJ’s, Walkers and their sub-brands. Pepsi, 7UP with their production destined for the UK market). Data and Gatorade are produced, sold and distributed by in some sections, for example on product-level carbon Britvic plc. footprints, cover a wider scope – and this is clearly stated. Following stakeholder feedback, we have included a small number of case studies on PepsiCo Inc activities on water We were not able to verify or include in this report and energy saving. These are delineated from the main energy, water and waste data from several overseas report text in blue coloured boxes. Following stakeholder PepsiCo production sites that supplied small volumes to feedback we have also included a selection of data and the UK market during 2007: case-studies on Pepsi Cola production by Britvic plc. - Because of a fire in 2007, production of Walkers Lights was temporarily transferred to Veurne in Belgium Scope of data (equivalent to 0.24% of PepsiCo production for the UK). This site also supplied further Walkers Data are collected twelve times a year, by the Central products during the year (equivalent to 0.03% of Sustainability team, directly from the team of seven Site PepsiCo production for the UK); Sustainability Managers and three Facilities Managers. The Central team collate and review these data in - Hermes in France provides overflow capacity for our spreadsheets, which are then published for the Vice juice production site in Zeebrugge (equivalent to President of Operations and his team to review and drive 1.41% of PepsiCo production for the UK); performance against. The data for Rotterdam and - Borgloon in Belgium also produces small quantities Zeebrugge are collected in a similar way by our PepsiCo of ambient juice (equivalent to 0.07% of PepsiCo European counterparts, with the data being then 32 production for the UK); - Naked smoothies, introduced to the UK in late 2007, We have also included energy, water and waste data for are produced in the United States (equivalent to products that we have manufactured in the UK for export 0.004% of PepsiCo production for the UK); to other markets. The most significant of these is at Cupar, our sole UK production site for Quaker, where - Nobby’s Nuts are produced in Zandaam in the 48% of the volume produced is exported. In addition Netherlands (equivalent to 0.44% of PepsiCo other PIUK sites exported 2,680 tonnes of finished production for the UK); products, equivalent to 0.58% of PIUK production - PJ Kick was produced in Hamburg, Germany volume. Our Lincoln site also exported 7,140 tonnes of (equivalent to 0.08% of PepsiCo production for the Quavers pellets to other PepsiCo companies – equivalent UK) before production ceased; to 1.54% of PIUK production volume in 2007. When other PepsiCo business units choose to report in future, we will - A PepsiCo facility in Canada provided overflow work with them to agree a common approach, and avoid capacity on Snack a Jacks for one month in 2007 double-counting. (equivalent to 0.01% of PepsiCo production for the UK); - Silea in Italy manufactured Gatorade for the UK market Quality of data (equivalent to 0.17% of PepsiCo production for the UK); We have Site Sustainability Managers in place at all our - Because of changes in PIUK, our production site in manufacturing sites, a Central Sustainability Team, and Newark closed and did not submit any data through are developing an Environmental Management System. our corporate reporting. During the time Newark We have implemented internal metrics and scorecards, operated it produced 1.68% of PepsiCo production have 100% corporate reporting on energy and water, and for the UK; all plants will be ISO 14001 accredited by the end of - In addition, we have not included data from two sales 2008. Comparability of data from year to year may be offices in Ireland (Dublin and Drogheda), our satellite affected by changes in the number and attributes of PIUK depot at Bellshill, or our various trans-shipment points facilities, changes in the methodology for determining around the UK. It was not possible to collect data from certain data and continual improvements in our these locations, but we will endeavour to include them performance measurement systems. Although we are in our data next year. confident in the overall reliability we recognise that some site level variations in data collection methodologies may We did not systematically collect data from third-party exist. This is minimised through providing training to sites companies that manufacture or pack our products, as well as through communications with the sites and for example Britvic plc. Based on stakeholder feedback, business units. we have separately listed a small amount of data on Pepsi Cola, bottled in the UK by Britvic. These data are For a detailed explanation of our data definitions, not included in our corporate totals or key performance collection methods, and basis of calculation please see graphs. For further information on the environmental the Key Data Table on pages 34-35. performance of Britvic, and the products they manufacture, go to: www.britvic.co.uk/CorpEnvironment.aspx We did not collect data from third-party companies that distribute our products. 33 Key data table
Indicator title Definition UOM 2007 Value Geographical How collected Basis of calculation GRI (measure) Scope Indicator 1 Direct energy Our direct energy use kWh 501,959,311 PIUK sites, Each site inputs values Fuel oil (l) converted to kWh using DEFRA EN3 use† arises as a consequence Rotterdam, for gas (kWh) and fuel oil conversion factor. of the activities of Zeebrugge. (litres), from supplier bills PepsiCo production in into site spreadsheet. All sites’ gas (kWh) and litres of fuel oil (kWh) and for the UK market, then aggregated in central spreadsheet. from sources that are 12 times p.a. owned or directly controlled by PepsiCo. In this report these are our on-site gas and oil burners. 2 Indirect Our indirect energy use kWh 144,848,084 PIUK sites, Each site inputs values for All sites’ electricity (kWh) then aggregated in EN4 energy use† arises as a consequence Rotterdam, electricity (kWh), from central spreadsheet. of the activities of Zeebrugge. supplier bills into site PepsiCo production spreadsheet. in and for the UK market, but occurs 12 times p.a. from sources controlled by other companies. In this report indirect energy use covers the electricity procured from the national electricity grids of the UK, the Netherlands and Belgium. 3 Total carbon Our total carbon tonnes 209,797 PIUK sites, Outputs from the indirect Data on greenhouse gas (GHG) emissions from EN16, † footprint footprint includes the CO2e Rotterdam, & direct energy use energy use are reported as carbon dioxide EN17 CO2e arising from our Zeebrugge. measures, in addition to: equivalents (CO2e) and calculated in line with direct and indirect The Greenhouse Gas Protocol Corporate energy use, the fuel - Distribution fleet Accounting and Reporting Standard (World used by our distribution – aggregation of fuel Resources Institute & World Business Council fleet and employee (litres) purchased. forSustainable Development, 2004). GHG car travel. It does not - Car travel is an emissions from electricity consumption use UK include employee air aggregation of fuel conversion factors were provided by DEFRA. A travel. purchased on company five-year average (2002-07) has been used for fuel cards, and mileage 2006 and 2007 data.DEFRA conversion factors claimed by employees used for converting car litres / mileage into CO e. using their own cars for 2 business use.
4 Energy use per Total (indirect and direct) kWh 2.69 PIUK Walkers Indirect / direct energy Production volumes converted automatically EN5, kg production energy use used to make per kg Crisps and data collected as above. from cases to kg in financial system, and verified EN6 (Walkers Crisps 1 kg of Walkers product snacks Production volumes by Central Finance team. Volumes and energy and snacks)† manufacturing collected by Central use then aggregated in Central Sustainability sites Finance team via spreadsheet and value calculated automatically to automatic, end of line (bar achieve stated values. code readers), production recording system.
5 Energy use per Total (indirect and direct) kWh 3.11 PIUK Walkers As per number 4 As per number 4 EN5, kg production energy use used to make per kg Crisps (see above) (see above) EN6 (Walkers Crisps) 1 kg of Walkers potato manufacturing crisps sites 34 Indicator title Definition UOM 2007 Value Geographical How collected Basis of calculation GRI (measure) Scope Indicator 6 Total waste Total amount of solid tonnes 30,060 PIUK sites, All streams weighed as All site data are aggregated in central EN22 recycled† waste recycled Rotterdam, they are despatched spreadsheet. Zeebrugge. from site. Weights Excluding recorded, cross-checked Skelmersdale. with invoices raised for receiving company, and entered in spreadsheet. The aggregation is then is reported 12 times p.a. 7 Total waste to Total amount of solid tonnes 3,476 PIUK sites, Weight assumption for All site data are aggregated in central EN22 landfill† waste sent to landfill Rotterdam, each load leaving site spreadsheet. Zeebrugge. made by visible inspection. Excluding Recorded in spreadsheet, Skelmersdale. aggregated 12 times p.a. 8 Total water Total amount of litres 1,564,001,980 PIUK sites, Site water meter readings All site data are aggregated in central use† water used Rotterdam, taken at least weekly, spreadsheet. Zeebrugge. recorded and aggregated Excluding in spreadsheets. Thurmaston.
9 Water use per Water used to litres 6.52 PIUK Walkers Site water meter readings Production volumes converted automatically from kg production create 1 kg of per kg Crisps and taken weekly, recorded cases to kg in financial system, and verified by (Walkers Crisps Walkers product snacks and aggregated in Central Finance team. and snacks)† manufacturing spreadsheets. sites Volumes and water use then aggregated in Production volumes Central Sustainability spreadsheet and value collected by Central calculated automatically to achieve stated values. Finance team via automatic, end of line (bar code readers), production recording system.
10 Water use per Water used to create 1 kg litres 7.61 PIUK Walkers As per number 9 As per number 9 kg production of Walkers potato crisps per kg Crisps (see above) (see above) (Walkers manufacturing Crisps) sites
† Indicates performance data reviewed by Deloitte as part of their environmental sustainability assurance work. See page 36-37 for the assurance statement from Deloitte.
Our key products and brands Manufactured by PepsiCo: Manufactured by Britvic:
35 Assurance statement from Deloitte
Independent assurance report Considering the risk of material error, a multi-disciplinary to PepsiCo International Limited team of corporate responsibility and assurance specialists planned and performed our work to obtain all the on the PepsiCo UK and Ireland information and explanations we considered necessary Environmental Sustainability Report to provide sufficient evidence to support our assurance 2007 (the report). conclusion. Our work was planned to mirror PepsiCo’s own Group level compilation processes, tracing how data for each indicator within our assurance scope was Scope of assurance work collected, collated and validated by Group head office and included in the report. We have been engaged by the Board of Directors of PepsiCo International Limited to perform limited Our work was based at PepsiCo Group level only and assurance* procedures on PepsiCo UK and Ireland’s did not include visiting and reviewing data collection, (“PepsiCo”) Group level compilation of its 2007 collation and validation of other PepsiCo operations. environmental performance indicators on pages 34- 35 marked with a “†”. Our assurance conclusion Based on the assurance work performed, nothing has Basis of our assurance work and our assurance come to our attention causing us to believe that the 2007 procedures environmental performance indicators on pages 34-35 We carried out limited assurance in accordance with the are not in all material respects compiled at Group level as International Standards on Assurance Engagements 3000 described on pages 32-35 and the website regarding (ISAE 3000). To achieve limited assurance the ISAE 3000 PepsiCo’s definitions and basis of reporting of the requires that we review the processes and systems used indicators. to compile the areas on which we provide assurance. It does not include detailed testing of source data or the operating effectiveness of processes and internal controls. This provides less assurance and is substantially less in scope than a reasonable assurance* engagement. The evaluation criteria used for our assurance are PepsiCo’s definitions and basis of reporting of the indicators as described on pages 32-35 of the report and on the website. * The levels of assurance engagement are defined in ISAE 3000. A reasonable level of assurance is similar to the audit of financial statements; a limited level 36 of assurance is similar to the review of a six-monthly interim financial report. Responsibilities of Directors and independent This report is made solely to PepsiCo International Limited assurance provider in accordance with our letter of engagement for the purpose of the Directors’ governance and stewardship. The Directors are responsible for the preparation of Our work has been undertaken so that we might state to the Environmental Sustainability Report and the Company those matters we are required to state to statement contained within it. They are responsible them in this report and for no other purpose. To the fullest for determining PepsiCo’s objectives in respect of extent permitted by law, we do not accept or assume environmental performance and for establishing and responsibility to anyone other than PepsiCo International maintaining appropriate performance management Limited for our work, for this report, or for the conclusions and internal control systems from which the reported we have formed. information is derived. Our responsibility is to independently express conclusions on reliability of management’s assertions on Deloitte & Touche LLP the selected subject matters as defined within the scope London, DATE of work above. We performed the engagement in accordance with Deloitte’s independence policies, which cover all of the requirements of the International Federation of Accountants (IFAC) Code of Ethics and in some areas are more restrictive. We confirm to PepsiCo International Limited that we have maintained our independence and objectivity throughout the year, including the fact that there were no events or prohibited services provided which could impair that independence and objectivity in the provision of this engagement.
37 Future challenges
Some of our stakeholders
Their priorities for action
National Farmers’ Carbon Trust Forum for the Future Carbon Disclosure Union Project “For every link in the “With its Walkers brand, “The global food market is “CDP challenges PepsiCo PepsiCo supply chain to PepsiCo has led the way in currently in turmoil. The to include environmental build economic and the development of product impacts of climate change disclosure in its vendor environmental sustainability carbon footprinting and and increasing stress on rating for its entire supply concurrently, the best labelling with the Carbon resources will only make the chain to further encourage research and development Trust. Two key challenges challenges far less predictable learning and behaviour will be vital. PepsiCo will remain. Firstly, to build and far more pressing. The change. CDP hopes PepsiCo need to work hard with its stronger collaborations with key challenge for the food will extend understanding grower base to develop suppliers to drive down industry will be to develop a of climate change risks and appropriate research which emissions across the value business model that is far opportunities within the finds better ways to use chain. Secondly, to use more resilient to an supply chain to accelerate water, reduces waste, the Carbon Reduction Label increasingly uncertain innovation. CDP would like increases yield and reduces to help consumers make world. This will require to see PepsiCo sharing the environmental footprint better informed purchasing nothing short of stories of radical product of its dedicated agricultural decisions to reduce their transformation to an industry and service developments production within a own carbon footprint. The driven by sustainable that go beyond profitable framework. This Carbon Trust is excited to be consumption of the world’s incrementalism.” will deliver a rare three way a key partner in these resources.” win for its farmers, its important efforts.” consumers and the environment.”
38 Have your say
Stakeholder feedback shaped and strengthened this report (see page 30), and the strategy it outlines. The report, however, is only a starting point for the dialogue we need to have with each other, our partners and our stakeholders. A true dialogue requires an exchange of ideas from all sides, and we’re determined to keep up our side of the conversation by providing more frequent updates about our activities. We hope that you have read our report, or at least the sections that are relevant to you. We would appreciate it if you would let us know what you think – about this report, the pledges we make, and the activities it describes – by filling out this survey. It will only take a few minutes, but your feedback will have a lasting impact.
1. What was your overall impression 3. What should PepsiCo UK & Ireland do next on of this report? Environmental Sustainability? Not at all useful Very Useful This could be a proposed solution to an existing environmental problem, an organisational model you admire, or a challenge to � � �P�� �P�� �P�� �P�� �P our current way of doing business. 1 2 3 4 5 ______Poor Excellent Completeness P�� P��P� �P� �P 4. How would you like to hear from us in future? Substance P�� P��P� �P� �P P��One unified PIUK CSR report Readability P�� P��P� �P� �P (covering all social, economic and environmental issues) Transparency P�� P��P� �P� �P Appearance P�� P��P� �P� �P P��Dedicated PIUK reports on Environment, Health and 1 2 3 4 5 Talent/People 2. What is your overall impression P��Quarterly/Half-yearly PIUK CSR updates of PepsiCo UK & Ireland? P��Face to face meetings or workshops Before reading report P��Web/email updates Not responsible company Environmental Leader P��From PIUK as part of a PepsiCo Inc communication � � �P�� �P�� �P�� �P�� �P 1 2 3 4 5 For our privacy policy please see After reading report www.pepsico.co.uk/privacypolicy Not responsible company Environmental Leader � � �P�� �P�� �P�� �P�� �P 1 2 3 4 5 www.pepsico.co.uk/environment www.pepsico.com PublishedJune2008 in
Title Name
Organisation
Please tell us what you do P�Academic / researcher P PepsiCo employee P�PepsiCo supplier P�Retailer P Government / public official P�NGO / civil society Future Challenges – have your say P Journalist P�Investor PIUK Environmental Sustainability Report Team P�Consultant / auditor P�I’m just me! Freepost LE4918 Leicester LE4 5ZY