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Environmental Sustainability Report Contents 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
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