Helping to Build a More

PepsiCo Report 2018 SUSTAINABLE September 2019

AGRICULTURE WATER PACKAGING

PRODUCTS CLIMATE PEOPLE Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices People & Managing More Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

INTRODUCTION IMPROVED CHOICES ACROSS OUR PORTFOLIO Welcome Page 01 Improved Choices Across Our 24 Our company connects people through some of Our Role in Helping to Build a 02 Portfolio More Sustainable Food System Improving Choices Across Our 25 the world’s greatest brands and most-loved foods About PepsiCo 04 Portfolio by Reducing Added Sugars and beverages. PepsiCo products are enjoyed Improving Choices Across 26 Our Portfolio by Reducing Sodium HELPING TO BUILD A MORE and Saturated Fat by consumers more than one billion times a SUSTAINABLE FOOD SYSTEM Expanding Our Portfolio Through 27 Our Sustainability Agenda 05 day in more than 200 countries and territories Innovation Our Goals 06 Helping Consumers To Make More 28 around the world. More than 260,000 passionate Using Our Scale for Good 07 Informed Decisions 2018 Sustainability 08 Purposeful Brands 29 associates around the world make this possible. Progress Highlights

We strive to use our global scale for good and CLIMATE CHANGE MITIGATION NEXT GENERATION AGRICULTURE to create our products in a way that benefits our Action on Climate 30 Next Generation Agriculture 09 Reducing 31 consumers, our suppliers, our communities and Setting the Standard 10 Across Our Value Chain Spreading Next Generation Practices 11 our planet—part of our mission to Create More Growing Intelligence 12 PEOPLE & PROSPERITY Smiles with Every Sip and Every Bite. Empowering Women Farmers 13 Around the World People & Prosperity 32 Investing in People 33 Supporting the Communities Where 34 POSITIVE WATER IMPACT We Live and Work ABOUT OUR REPORTING SUITE Positive Water Impact 14 Our 2018 Suite includes multiple resources available Replenishing Our Local Watersheds 15 MANAGING IMPACT online that explain our approach to sustainability and our progress to date: Improving Our Operational 16 Water Use Efficiency GRI Materiality Topics Assessment 35 • This 2018 PepsiCo Sustainability Report outlines our sustainability strategy, Safe Water Access 17 Stakeholder Engagement 36 our priorities, our goals and our progress toward meeting them Sustainability Governance 37 • Our Environmental, Social & Governance (ESG) Topics site outlines detailed information by topic on sustainability programs, progress, governance and CIRCULAR FUTURE FOR PACKAGING management Circular Future for Packaging 18 • Our 2018 Performance Metrics Sheet provides an accessible summary of our Less Plastic, More Alternative 19 Materials sustainability goals, metrics and progress Increasing Use of Recycled Content 20 • Our Global Reporting Initiative (GRI) Index links to PepsiCo online disclosures Boosting Rates 21 aligned to GRI reporting standards Going Beyond the Bottle 22 • For updates on our sustainability journey around the world, visit our Reinventing Packaging Materials 23 Sustainability Stories page

01 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

Our Role in Helping to Build a Since becoming CEO last fall, I’ve workers, we undoubtedly have a role to play spent a lot of time thinking about the in addressing these challenges. responsibilities that come with leading Over the past decade, we have made significant an iconic global company. There’s the progress in changing both the products we responsibility to serve our customers make and how we make them. But while we are MORE SUSTAINABLE and consumers, to support our large extremely proud of our past achievements, I believe the future will require us to be even and diverse workforce, and to deliver more ambitious and purposeful, at both the returns for the shareholders who have brand and corporate level. entrusted us with their investment. That is why PepsiCo is embracing a new FOOD SYSTEM And at a time of such enormous purpose behind our sustainability agenda: challenges—from climate change and to help build a more sustainable food system. resource scarcity, to inequality and One that can meet human needs and malnutrition—I also believe that business continue to drive economic growth and social leadership in the 21st century must development, without exceeding the planet’s natural boundaries. include a responsibility to our planet, our communities and future generations. This ambition is part of our new vision for PepsiCo—to Be the Global Leader in Convenient Foods and Beverages by Winning The way the world produces, distributes with Purpose—as well as our aspirations to be and consumes food is at the heart of many of Faster, Stronger and Better. It is a key part of the challenges we face. To put it simply, the our plan to further integrate purpose into our modern food system is no longer fit for purpose. business strategy and our brands, including Rising demand from a growing has LIFEWTR, Gatorade, Lay’s and Stacy’s (see contributed to the depletion of vital resources page 29 for more on our purposeful brands). and increased pressure on the natural world. And to help make this effort successful, we have Too many farmers and workers still face identified six priority areas where we believe poverty and discrimination. Single-use plastic PepsiCo can make the greatest contribution packaging is disposed of in ways that litter many to building a more sustainable food system. communities and pollute our oceans. And many people still struggle to access healthier diets. I’m proud to say that we’re already making progress in many of these areas, and in the In the past, these were problems exclusively pages that follow, you can read about some of for governments or NGOs. Today, stakeholders our efforts, as well as some of the long-term also expect companies to help lead the way. goals we’ve set, including: That’s a view we at PepsiCo share. As a food and beverage company whose products are Next Generation Agriculture – enjoyed by consumers more than one billion Advancing environmental, social and times a day in more than 200 countries and economic benefits to farmers and communities territories around the world, and operates through more sustainable agriculture. an agricultural supply chain that touches • On farms around the world, we’re working 60 nations and supports over 100,000 farm to raise standards for efficient resource use,

02 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

environmental consciousness and working to grow SodaStream, which • Women comprise 40 percent of our human rights. Through our Sustainable offers consumers the chance to prepare managers globally, and since 2016, WINNING WITH PURPOSE Farming Program (SFP), in 2018, over customized beverages at home without we’ve invested $27.3 million to support half our farmer-sourced agricultural the need for single-use plastic bottles. initiatives that benefit women in Our vision is to Be the Global raw materials, like potatoes, whole communities where we operate. Improved Choices Across corn, oranges and oats were verified Leader in Convenient Foods and Our Portfolio – Reducing added Let me be clear: these efforts are as sustainably sourced.1 Our aim is to Beverages by Winning with Purpose. sugars, sodium and saturated fats in only the beginning. I recognize that reach 100 percent by the end of 2020. To help us achieve this vision, we’ve many of our products. we still have a lot of work to do. But I Already, 100 percent of potatoes want all our stakeholders to know that defined three aspirations: used throughout our North America • In the U.S. alone, we have nearly 500 advancing sustainability and being a Frito-Lay portfolio, including Lay’s and beverage choices with 100 Calories or more purposeful company will play an Ruffles, have reached this standard. less per 12-ounce serving, and around essential role in PepsiCo’s future. the world zero-sugar Pepsi Black is Positive Water Impact – now available in over 80 countries. In the coming months, we will engage Improving water We’re also offering more snacks with experts from industry, government, FASTER across our business and in regions lower sodium and less saturated fat, nonprofits and communities to gather where we operate. from Lay’s Baked to Kurkure Multigrain. more views on what it will take to • We’re striving to improve water-use And we’re introducing more convenient help build a more sustainable food Winning in the marketplace, being more efficiency and aiming to replenish 100 foods with nutritious ingredients, like system and how best PepsiCo can consumer-centric and accelerating percent of the water we consume for Tropicana Whole Fruit and Sunbites contribute. It’s a long-term challenge investment for topline growth in high water-risk areas Veggie Harvest, to complement that will require a broad coalition. by 2025. Because PepsiCo has long acquisitions like Bare Snacks. But we are committed to meeting our believed that water is a human right, responsibility to our planet and its Climate Change Mitigation – in 2018, we helped provide safe water communities, and we won’t rest until Curbing greenhouse gas (GHG) access to over six million people— we do. emissions across our value chain. boosting the total number to 22 million STRONGER people since 2006. • We have set a goal to reduce absolute GHG emissions across our value chain Circular Future for Packaging – by 20 percent by 2030, from a 2015 Delivering our vision of a world baseline. We will do this by continuing Transforming our capabilities, cost and where plastic packaging need never to drive down emissions throughout culture by operating as one PepsiCo, become waste. our value chain, from our fleet of leveraging technology, winning locally and • We recently unveiled a new target electric vehicles to using 100 percent globally enabled to reduce 35 percent of virgin plastic in our manufacturing RAMON LAGUARTA content across our beverage brands operations in seven European nations. PepsiCo Chairman of the Board of by 2025, driven by increased use Directors and Chief Executive Officer People & Prosperity – of recycled content and alternative Advancing respect for human packaging materials. Beginning next rights, promoting diversity and BETTER year, LIFEWTR will be packaged in inclusion in our workplaces, and 100 percent recycled plastic in the increasing the earnings potential of U.S., and bubly will be packaged women in our communities. exclusively in aluminum. And we’re Integrating purpose into our business strategy continuing to advance our Beyond and our brands, and doing even more for the the Bottle strategy, most notably by planet and for our people

1 “Sustainably sourced” refers to meeting the independently-verified Social, Environmental and Economic principles of PepsiCo’s Sustainable Farming Program, designed to reflect best practices and achieve positive outcomes for farmers, communities and the planet. 03 CUMULATIVE TOTAL SHAREHOLDER RETURN The graph below matches PepsiCo, Inc.’s cumulative •ve-year total shareholder return on common stock with the cumulative total returns of the S&P 500® index and the S&P® Average of Industry Groups index.* The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from 12/31/2013 to 12/31/2018. Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing PepsiCo, Inc. S&P 500 S&P AMorevg. of SustainableInd. Groups* Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System $200

$150 ABOUT PEPSICO Products sold in More than More than $100 PepsiCo has a portfolio that includes

CUMULATIVE TOTAL SHAREHOLDER RETURN The graph below matches PepsiCo, Inc.’s cumulative •ve-year total shareholder return on common stock with the$5 cumulative0 total returns of the S&P 500® index and 200+ the S&P® Average of Industry Groups index.* The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of 260,000 $64 BILLION all dividends) from 12/31/2013 to 12/31/2018. countries and territories associates in net revenue in 2018 $0 BILLION- around the world PepsiCo, Inc. S&P 500 S&P Avg. of Ind. Groups* 12/13 12/14 12/15 12/16 12/17 12/18

$200 *The S&P Average of Industry Groups is derived by weighting the returns of two applicable S&P Industry Groups (Non-Alcoholic Beverages and Food) based on the relative contribution of PepsiCo’s sales in its beverage and food businesses. The returns on PepsiCo common stock, the S&P 500, and the S&P Average of Industry Groups are calculated through 12/31/2018 . DOLLAR CUMULATIVE TOTAL SHAREHOLDER RETURN $150 The graph below matches PepsiCo, Inc.’s cumulative •ve-year total shareholder return on common stock with the cumulative total returns of the S&P 500® index and the S&P® Average of Industry Groups index.* The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of BRANDS all dividends) from 12/31/2013 to 12/31/2018. $100 PepsiCo, Inc. S&P 500 S&P Avg. of Ind. Groups* 22that generated more than $1 billion $200 each in estimated annual retail sales $50 in 2018. $150 $0 12/13 12/14 12/15 12/16 12/17 12/18 2018 DIVISION NET REVENUES

*The S&P Average of Industry Groups is derived by weighting the returns of two applicable S&P Industry Groups (Non-Alcoholic Beverages and Food) based on the relative $100 contribution of PepsiCo’s sales in its beverage and food businesses. The returns on PepsiCo common stock, the S&P 500, and the S&P Average of Industry Groups are calculated PepsiCo Beverages North America 33% through 12/31/2018 . Latin America 11% $50 Asia, Middle East and North Africa 9%

Quaker Foods North America 4% $0 12/13 12/14 12/15 12/16 12/1E7urope Sub-Saharan Africa 1812/1%8

*The S&P Average of Industry Groups is derived by weighting the returns of two applicable S&P Industry Groups (Non-Alcoholic Beverages and Food) basedFrito on-La they N orelativerth Ame rica 25% contribution of PepsiCo’s sales in its beverage and food businesses. The returns on PepsiCo common stock, the S&P 500, and the S&P Average of Industry Groups are calculated through 12/31/2018 .

2018 DIVISION NET REVENUES 2018 DIVISION OPERATING PROFIT

PepsiCo Beverages North America 20% PepsiCo Beverages North America 33% Latin America 9% Latin America 11% Asia, Middle East and North Africa 10% Asia, Middle East and North Africa 9% Quaker Foods North America 6% Quaker Foods North America 4% Europe Sub-Saharan Africa 12% Europe Sub-Saharan Africa 18% 2018 DIVISION NET REVENUES Frito-Lay North America 43% Frito-Lay North America 25% PepsiCo Beverages North America 33%

Latin America 11% 04 Asia, Middle East and North Africa 9% 2018 DIVISION OPERATING PROFIT Quaker Foods North America 4%

PepsiCo Beverages North America 20% Europe Sub-Saharan Africa 18%

Latin Amer ica 9% Frito-Lay North America 25%

Asia, Middle East and North Africa 10%

Quaker Foods North Amer ica 6%

Europe Sub-Saharan Af rica 12% 2018 DIVISION OPERATING PROFIT

Frito-Lay North America 43% PepsiCo Beverages North America 20%

Latin Amer ica 9%

Asia, Middle East and North Africa 10%

Quaker Foods North Amer ica 6%

Europe Sub-Saharan Af rica 12%

Frito-Lay North America 43% Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

Our PEPSICO PRIORITIES

NEXT GENERATION IMPROVED CHOICES AGRICULTURE ACROSS OUR PORTFOLIO SUSTAINABILITY AGENDA POSITIVE CLIMATE CHANGE WATER IMPACT MITIGATION

CIRCULAR FUTURE PEOPLE & FOR PACKAGING PROSPERITY

OUR SHARED CHALLENGES produces, distributes, consumes and Today, the global food system brings disposes of foods and beverages in ON order to tackle the shared challenges we ATI nutrition, economic opportunity, IG face. So, as part of our vision to Be the IT convenience, and enjoyment to more E M G Global Leader in Convenient Foods and N people than ever before, but it faces A Beverages by Winning with Purpose, we H pressures that threaten its future ability C E are refocusing our Sustainability Agenda T to meet the needs of a growing global A M on Helping to Build a More Sustainable I population. L Food System; one that can meet human C • 70 percent of the world’s fresh water needs for nutrition and enjoyment and use is in agriculture alone, even as more continue to drive economic growth and communities experience . social development without exceeding NEXT GENERATION POSITIVE WATER the planet’s natural boundaries. • A third of greenhouse gas emissions AGRICULTURE IMPACT originate in the food system. OUR PRIORITIES • More than half of fertile topsoil is classed To do this, we have sharpened PepsiCo’s as degraded. sustainability focus to six overlapping priorities within our food system. These • Only 14 percent of plastic packaging is priorities meet three important criteria: recycled for future use. i. They relate to the most pressing • Over 800 million people are sustainability challenges, risks and IMPROVED undernourished. CHOICES ACROSS CIRCULAR FUTURE opportunities facing PepsiCo and our OUR PORTFOLIO FOR PACKAGING • Almost 40 percent of adults food system. are overweight. ii. They matter most to PepsiCo’s key • 80 percent of the world’s extreme external stakeholders (see our GRI Materiality section beginning on page 35). poor live in rural areas and rely mainly on Y IT agriculture for their livelihood. ER iii. They offer the opportunity for PepsiCo SP RO OUR APPROACH to make a positive difference at a systems & P PLE level—i.e. both within and beyond our own PEO At PepsiCo, we believe that there is an value chain. opportunity to change how the world

05 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

Our PRIORITY OUR GOAL TARGET METRICS Advance environmental, social and economic benefits to  communities around the world ffAchieve 100% sustainably sourced* potato, whole corn, oats, oranges, palm oil and sugar by supporting practices and cane by 2020 NEXT GENERATION technologies that promote ffAchieve sustainably sourced priority raw materials based on business needs by 2025 GOALS AGRICULTURE improved farmer livelihoods and agricultural resiliency.

ffIn high water-risk areas, by 2025: Our refined sustainability ••Improve water-use efficiency by 15% in our agricultural supply chain (focused on corn goals are aligned with Drive water security to assure and potatoes) (2015 baseline) business continuity while ••Improve operational water-use efficiency by 25% (2015 baseline) our priority areas. Each POSITIVE positively contributing to ••Replenish 100% of the water we consume in manufacturing operations of our eight goals has a WATER IMPACT communities. series of target metrics ••Adopt the Alliance for Water Stewardship standard as our vehicle for water advocacy ffDeliver safe water access to 25 million people by 2025 against which our progress Fundamentally change the way can be assessed. ffDesign 100% of packaging to be recyclable, compostable or biodegradable by 2025 the world interacts with our ffIncrease recycled content in our plastics packaging to 25% by 2025 packaging to deliver our vision CIRCULAR FUTURE ffReduce 35% of virgin plastic content across our beverage portfolio by 2025 of a world where plastics need FOR PACKAGING ffInvest to increase recycling rates in key markets by 2025 never become waste.

ffReduce added sugars: ≥ 67% of beverage portfolio will have ≤100 Calories from added sugars per 12-ounce serving by 2025 OUR WORK IS ALIGNED WITH UN SUSTAINABLE Reduce added sugars, sodium ffReduce sodium: ≥ 75% of foods portfolio will not exceed 1.3 milligrams of sodium per IMPROVED and saturated fats. Calorie by 2025 DEVELOPMENT GOALS CHOICES ACROSS ffReduce saturated fat: ≥ 75% of foods portfolio will not exceed 1.1 grams of saturated fat In 2015, the United OUR PORTFOLIO per 100 Calories by 2025 Nations General Assembly announced 17 Sustainable Do our part to curb climate ff Development Goals (SDGs) change by reducing greenhouse Reduce absolute GHG emissions across PepsiCo’s value chain by 20% by 2030 (2015 baseline) to address global challenges CLIMATE CHANGE gas (GHG) emissions across our and set a blueprint for MITIGATION value chain. action to achieve the goals ffDrive fair and safe working conditions throughout our value chain by addressing our most by 2030. Our sustainability Human Rights: Advance respect salient human rights issues (i.e., Freedom of Association, Human Right to Water, Land priorities are aligned with for human rights by using Rights, Vulnerable Worker Groups, Working Hours and Wages, and Workplace Safety) the SDGs so that our actions PepsiCo’s capabilities and scale. ffExtend the principles of our Supplier Code of Conduct to all of our franchisees and joint ventures by 2025 can contribute to a greater collective impact. Diversity: Promote a diverse ffAchieve gender parity by 2025 in management roles PEOPLE & and inclusive workplace. ffSustain our pay equity program PROSPERITY Prosperity: Increase the earnings potential of women ffInvest $100 million by 2025 to provide 12.5 million women with essential resources for workforce readiness and in programs that empower women in the food system and to drive economic growth and farming increase .

*“Sustainably sourced” refers to meeting the independently verified Social, Environmental and Economic principles of PepsiCo’s Sustainable Farming Program, enabling best practices and positive outcomes for farmers, communities and the planet. 06 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

Using Our Across our value chain (depicted PEPSICO PRIORITIES below), we aim to use our scale, NEXT GENERATION IMPROVED CHOICES reach and expertise in each AGRICULTURE ACROSS OUR PORTFOLIO priority area to help build a more POSITIVE CLIMATE CHANGE SCALE FOR GOOD sustainable food system. WATER IMPACT MITIGATION CIRCULAR FUTURE PEOPLE & FOR PACKAGING PROSPERITY SOURCING Each year, PepsiCo sources over $7 INGREDIENTS billion of crops from 60 countries, so the standards we apply and promote can 1. impact the environmental, social and economic impacts of agriculture around the world. 1 2 RESEARCH & With approximately 270 manufacturing DEVELOPMENT, facilities around the world managed by MANUFACTURING PepsiCo and our partners, we bring together 2. AND PACKAGING innovators and operation teams who work to use water, energy and ingredients efficiently to create our foods and beverages. 3

DISTRIBUTION PepsiCo products are distributed in over 200 AND RETAIL countries and territories around the world, including using our carbon-efficient fleets, 3. and sold through retailers ranging from giant supermarket chains to individual street vendors.

CONSUMPTION Around the world, PepsiCo products are enjoyed by consumers more than a billion times a day. We’re improving our foods 4. and beverages by reducing added sugars, 4 sodium and saturated fat and expanding our portfolio to offer consumers more choices.

POST-CONSUMER PepsiCo’s sustainable plastics vision is to help build a world where plastics need 5 never become waste by driving the shift from 5. a linear to a for packaging.

07 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

2018 Sustainability For more information visit the PROGRESS HIGHLIGHTS 2018 Performance Metrics Sheet AGRICULTURE WATER PACKAGING PRODUCTS As of 2018, 51% of our direct farmer- In 2018, we replenished more than In 2018, we set a new target to strive to In 2018, 44% of our beverage portfolio sourced, agricultural raw materials 1.1 billion liters of water through use 25% recycled content in our plastic had ≤100 Calories from added sugars are sustainably sourced through our watershed conservation projects packaging by 2025, another step per 12-ounce serving,** progress Sustainable Farming Program (SFP). locally, in high water-risk areas around toward building a world where plastics toward our target of ≥67% by 2025. the world. need never become waste. 2020 Goal

100% 2017 2018 2017 2025 Goal 40% 44% 2018 BILLION +4 pps* vs 2017 24% 51% 25% +27 pps* vs 2017 >1.1 LITERS

**Our global progress is based on our top 26 beverage markets, which represent 80% of our global beverage volume as of 2018.

CLIMATE MILLION PEOPLE In 2018, we reduced Scope 3 GHG As of 2018, 40% of our global 2025 Goal emissions by approximately 2.2 million METRIC manager positions were held 2018 metric tonnes (2015 baseline). This TONNES by women, progress toward our 50% represents approximately 7% progress 2.2 target of 50% by 2025. 40% toward our 2030 target to reduce absolute GHG emissions in our value chain.

*pp(s) = percentage point(s) 08 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

OUR GOAL

Advance environmental, social and economic benefits to communities around the world by supporting practices and Next Generation technologies that promote improved farmer livelihoods and agricultural resiliency. To learn more about how we’re tracking progress toward our goal, review target AGRICULTURE metrics on page 6.

Over the next 30 years, global demand for agricultural products will grow by as much as 50 percent. Yet, already, agriculture accounts for around 70 percent of the world’s fresh water consumption and about a quarter of global greenhouse gas emissions. It also contributes to , loss and land and water pollution. While farming drives rural development, some agricultural regions are also impacted by poverty, inequality and human rights abuses. Agriculture is the foundation of the food system and the root of PepsiCo’s business. To make our foods and beverages, we use more than 25 crops sourced across 60 countries, and support over 100,000 jobs in and throughout our agricultural supply chain. This scale and reach means the standards and practices that we employ and promote can influence the environmental, social and economic impacts of agriculture around the world. Our Next Generation Agriculture strategy aims to drive progress in making agriculture more resilient, intelligent and inclusive.

To learn more about our progress toward our Next Generation Agriculture goals, visit our Agriculture ESG Topics page.

Our work is aligned with Goals (SDGs)

PepsiCo agronomist, Christian Cereo, and PepsiCo potato supplier, Manuel Aries, reviewing insights from our i-Crop 2.0 technology in the potato fields in Salamanca, Spain.

09 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

Setting THE STANDARD

Through our flagship Almost all (99 percent) of the Sustainable Farming producers of PepsiCo’s farmer- Program (SFP), PepsiCo sourced agricultural raw materials are now engaged through the advances positive social, 51% SFP, and we are striving for all environmental and to meet the SFP compliance economic outcomes in our standards by the end of 2020. direct agricultural supply As of 2018, 51% of our direct farmer- This will not be an end point. sourced, agricultural raw materials The SFP is about continuous chain. Implemented across are sustainably sourced through improvement in the agricultural Eric Halverson, CEO, Black Gold Farms 38 countries, the SFP has our SFP. This is progress toward our target of 100% by 2020. system, and leading up to and provided over 40,000 beyond 2020, PepsiCo will work SUSTAINABLY “With new practices and farmers around the world with suppliers and farmers to SOURCED POTATOES constant testing and with training and resources deliver sustainable outcomes Consumers can already taste data collection, we can to help them on the path that address salient risks and the progress we are making. make smart decisions to greater productivity, opportunities in our supply chain. In 2018, 100 percent of the for our business and the chips in our North American environment. PepsiCo resiliency and sustainability. with PepsiCo’s Supplier Code By the end of 2018, more than Frito-Lay portfolio, including has been a vital partner in of Conduct and commitment to half the palm oil (52 percent) Lay’s and Ruffles, were made helping us to become more zero deforestation, up-to-date Already, 51 percent of our direct and cane sugar (58 percent) that from sustainably sourced North sustainable. We’re proud employment and health and safety that consumers in the U.S. farmer-sourced agricultural raw we use were also sustainably American potatoes, produced by practices, optimization of nutrient and Canada can enjoy their materials—potatoes, whole corn, sourced. We use recognized third- farmers independently verified and water use and enhancement chips made from potatoes oats and oranges—are sustainably party sustainability standards, as meeting the SFP standards. of soil health and biodiversity. that were grown the right sourced through our SFP. This the Roundtable for Sustainable Black Gold Farms—a U.S. PepsiCo way.” means they are sourced from The SFP also promotes Integrated Palm Oil (RSPO) and Bonsucro, potato supplier for over 30 farms that are independently Pest Management (IPM), which for these supplier-sourced crops. Eric Halverson, CEO, Black Gold years—has worked with our SFP Farms, Live Oak, Florida verified as meeting the 114 Social, addresses agrochemical and Our target is for both to be 100 team to identify improvements Environmental and Economic pesticide use among other percent sustainably sourced by in sustainability performance. principles of PepsiCo’s Sustainable crop protection measures. the end of 2020. Together, we selected optimal Farming Program. These promote At the end of 2018, 66 percent Learn more about how seed varieties and refined potatoes used in Frito-Lay and enable best practices and of farmers engaged through For more information on the Social, Environmental and water and nutrient application products are sustainably positive outcomes for farmers, the SFP complied with our IPM farmed by the Halverson Economic indicators of the techniques to yield the best crops communities and the environment. requirement, including nearly 100 SFP, review the program’s family. in the most sustainable way. Indicators include compliance percent compliance in the U.S. Fundamental Principles.

10 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

Spreading Next Generation The Demonstration Farm program began in 2017 in India. Today, the program includes 32 farms in the country, and they are PRACTICES producing outstanding results. On Demonstration Farms Agriculture is among the On each Demonstration Farm, we work with growing potatoes in India world’s most widespread innovative local farmers to find and implement (excluding West Bengal) in While most potato farmers in Thailand use and diverse economic the solutions that work best for them, from new 2018–2019: flood irrigation, which can damage yields irrigation and soil health management practices to and soil health and be wasteful with water • The average net yield rose sectors. To help us apply measures to enhance worker safety. We measure resources, as part of the Demonstration Farm by 8.2 percent the SFP effectively in the impact of our actions based on environmental program, we worked with Ms. Boonkerd diverse growing regions, and social criteria, and core business metrics like • Average income for farmers to install an efficient, solar-powered, drip we have built a global yield and quality. Each Demonstration Farm is then increased by $107 per acre irrigation system. network of over 100 opened to other local farmers to enable peer-to- peer learning and promote the wider adoption of • Average greenhouse gas In a single year, the yield on Ms. Boonkerd’s Demonstration Farms. sustainable farming practices. emissions per ton of potatoes farm increased by 45 percent while water use was reduced by 15 percent was reduced by 28 percent. Potato quality rose, and disease vulnerability eased. Earnings per acre grew by over U.S. $1,500 and she Read more from Nishchint was freed from many hours of strenuous and OUR GLOBAL DEMONSTRATION Bhatia, VP Agricultural repetitive physical work every week. Ms. FARMS FOOTPRINT Operations for PepsiCo in Asia, Middle East and North Africa, Boonkerd now helps other farmers in the region about the Demonstration Farms program’s success in India. to understand the benefits of drip irrigation for Number of demonstration farms currently in progress in the country their business, their land and their quality of life.

PAKISTAN U.S. 4 59 INDIA 32 MEXICO THAILAND

VIETNAM 1 9 PROGRAM REACH: 3 110 farms ~15,000 acres

BRAZIL ~4,500 farmers 2

11 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

Growing INTELLIGENCE Data plays a major role REGENERATING SOIL AND in the transition to more PROTECTING OUR CLIMATE sustainable and resilient Healthy soil is an asset that can agriculture. Insights deliver income for farmers and their communities for generations. gathered through mobile, It also makes farms more resilient drone and in-field equipment to extreme weather and stores can help farmers make carbon from the atmosphere that more precise decisions about could otherwise contribute to how they grow their crops. climate change. Introducing cover crops and In Europe, PepsiCo developed a composting, managing crop new agriculture software i-crop rotations and using conservation 2.0, with Cambridge University. tillage are among the practices i-crop 2.0 produces data about that can enhance soil quality. how crops like potatoes, are We are currently rolling out growing. This helps our farmers the use of tools like FieldPrint better understand how to Calculator and the Cool Farm optimize yields and inputs like Tool, which enable PepsiCo to water and —reducing work with our farmers around resource usage and greenhouse the world to quantify on-farm gas impacts. In Spain, by greenhouse gas emissions and combining i-crop with irrigation soil carbon sequestration. This scheduling, we applied the right data enables farmers to make amount of water where it was informed decisions about the needed to optimize growth actions that can improve the * 93 percent of the time, up from climate impact of their farm and, at 45pps 48 percent in the prior year. the same time, increase soil fertility and support local biodiversity. Technology like this helps us In Spain, by combining i-crop with better understand agricultural Over a quarter (26 percent) irrigation scheduling, we applied the right of PepsiCo’s greenhouse gas amount of water where it was needed water use. By 2025, we aim to to optimize growth 93% of the time, up improve water-use efficiency in emissions originate in our from 48% in the prior year—an increase our direct agricultural supply agricultural supply chains, so of 45 percentage points. chain in high water-risk regions actions like these are a vital by 15 percent. contributor to achieving our *pp(s) = percentage point(s) target to reduce absolute greenhouse gas emissions by 20 percent by 2030. 12 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

Empowering Women Farmers AROUND THE WORLD

Transforming agriculture to support the growth of a more sustainable food system will require the talent 5 MILLION and energy of all farmers. Our grant to CARE’s She Feeds In developing countries, the World initiative will provide women represent 43 percent approximately five million women farmers and their families with of agricultural labor. Yet education and economic support. they largely work without training, land rights or equal pay. To begin addressing this, PepsiCo has committed to examine ways to boost women’s engagement Through this program, approxi- mately five million women farmers with our Sustainable and their families around the Farming Program. world will receive education and economic support to help them Supporting this goal, we kicked increase crop yields, income and off a partnership with USAID access to nutrition. In Egypt, focused on empowering women CLOSING THE CROP GAP we’re also partnering with USAID To watch the five films about extraordinary women potato farmers starting in West to expand microfinance lending PepsiCo and CARE also launched the Closing farmers, visit our Closing the Crop Gap page. Bengal, India. for women farmers. the Crop Gap campaign, which empowered five In March 2019, The PepsiCo women filmmakers from around the world to Foundation announced an To learn more about the capture the experiences of local women farmers. challenges facing women $18.2 million investment with the farmers, read the thoughts leading humanitarian organization, of The PepsiCo Foundation CARE, as part of their She Feeds President Jon Banner and CARE U.S. President and the World initiative. CEO Michelle Nunn.

13 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

OUR GOAL

Drive water security to ensure business continuity, while positively contributing Positive to communities. To learn more about how we’re tracking progress toward our goal, review target WATER IMPACT metrics on page 6.

Water is fundamental to our food system and to PepsiCo’s business. It nourishes the crops used to make our products, is the main ingredient in many of our beverages and an integral component of our manufacturing operations. But in some regions, water is scarce, and climate change is worsening pressures on water resources around the globe. Estimates indicate that by 2025, two-thirds of the world’s population will live in water-stressed regions. PepsiCo’s positive water impact strategy focuses on improving water stewardship across our business and in regions where we operate. Our ultimate goal is to support long-term, sustainable water security for all users, especially in high water-risk areas. As well as taking action in our own value chain, we aim to use our expertise and influence to advocate for the local policies and practices that can protect and replenish watersheds.

To learn more about our progress toward our Positive Water Impact goals, visit our Water ESG Topics page.

Our work is aligned with Sustainable Development Goals (SDGs)

We have set a goal to reach 15% improvement in water-use efficiency in high water risk areas where we source our potatoes and corn directly from our farmers by 2025. Pivot irrigation systems, like the one being used on this potato farm in Spain, help the farm to use water more efficiently while growing potatoes.

14 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

Replenishing Our >1.1 BILLION LOCAL WATERSHEDS In 2018, we replenished more than 1.1 billion liters of water through watershed conservation projects in high water-risk areas around the world.

We’ve set an ambitious These sustainable, nature-based target: to replenish solutions introduce a wealth ALLIANCE FOR WATER STEWARDSHIP 100 percent of the of benefits in addition to water security, including notable water we consume for In 2018, PepsiCo joined improvements in agriculture, job the Alliance for Water manufacturing in high creation and climate resilience. Stewardship (AWS). We aim water-risk areas by GREATER CAPE TOWN to adopt the AWS Standard 2025. We are focusing our WATER FUND at our high water-risk facilities by 2025 to ensure efforts locally, replenishing In 2018, Cape Town, South our sites conform to globally the watersheds and Africa, faced the prospect of recognized best practice in water reserves going dry. In catchments we draw from water stewardship. to make sure the local response, we became a founding communities where we member of the Greater Cape We are piloting our Town Water Fund and made the implementation of the operate can benefit. This organization’s largest financial AWS Standard at four of is key to minimizing our commitment at that time. Our our manufacturing locations impact and supporting a investment supports tailored in high water-risk regions water-secure future. actions led by TNC, like the around the world: South removal of water-thirsty invasive Africa, Pakistan, Mexico

plant species; these actions are and the United States. COLLABORATION FOR CONSERVATION expected to add two months Through these pilot of water supply to seven sub- programs, we’re training We’ve partnered with The Nature catchments that supply 73 our Operations, Public Conservancy (TNC) for several percent of Greater Cape Town’s Policy and Government replenishment programs across water. Affairs, Environmental the United States, Latin America Health & Safety and Through this partnership, we are and South Africa. Supply Chain associates also supporting the development on the local-level watershed PepsiCo supports TNC’s of a women-led team with concerns and health work directly with farmers, specialized high-altitude training. implications impacting In partnership with TNC, we launched “Water for the Planet” to implement landowners, businesses, As well as providing skilled their communities. and support conservation projects, such as local reforestation programs, in governments and communities employment opportunities, this Latin America. In 2018, the program’s conservation efforts replenished over to restore degraded watersheds 220 million liters of water to the high water-risk watersheds in Guatemala will enable the clearing of rugged, City, São Paulo, Mexico City and Monterrey. and replenish the water we use. remote parts of the watersheds.

15 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

Improving Our 5% In 2018, we improved our water-use OPERATIONAL efficiency rate per unit of production across all of our company-owned manufacturing locations by 5% WATER-USE EFFICIENCY compared to 2015. We aim to create a positive A SLICE OF GENIUS LEANER CLEANING water impact within our Across our manufacturing Potatoes that ultimately become manufacturing operations operations, we are developing Lay’s potato chips in India are by rethinking how we new solutions to improve our first washed in our Channo plant. use water every step of operational water-use efficiency. To maximize water-use efficiency the way. As part of our Aiming to reduce the amount for this process, PepsiCo of water used for potato slicing, engineers developed a robust continued efforts to be our Research & Development water treatment system. better stewards of water, and manufacturing teams took The system captures and treats we strive to improve matters into their own hands. water from different parts of the They designed, prototyped, water-use efficiency in potato manufacturing process, tested and successfully validated our direct operations in such as cleaning, peeling and a new patented component slicing, at each stage separately. high water-risk locations for our slicing lines. The new The new design treats water more by 25 percent by 2025 technology effectively distributes efficiently. This innovation has (2015 baseline). water around our potato slicers, not only supported expansion of making each drop go further, capacity within the plant, but has and enables us to use 64 percent also helped to lower the plant’s less water throughout our potato total water use by about 30 slicing process. percent over a one-year period. Deploying this innovation globally has the potential to save a massive 640 million liters of water per year.

To learn more about how this new technology will create water-use efficiency in our operations, watch our Splash Cone video.

16 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

Safe Water ACCESS Right now, around the REFRESHING CHANGES IN world, one in nine people SOUTHERN INDIA do not have access to safe We’ve partnered with WaterAid in southern India and clean drinking water. to bring clean water to over 200,000 people in communities facing extreme water shortages. Shortages have ripple effects threatening the health With a $4.2 million investment, our partnership has and safety of communities yielded several solutions already, including restoring wells, harvesting rainwater in schools and building Beneficiaries of AquaFund program collect and profoundly impacting piped water supply systems. To date, WaterAid has water in Piura, Peru. Photo Credit: Inter-American Development Bank hygiene, waterborne built 200 new water supply schemes and restored diseases, famine, migration more than 130 pieces of existing infrastructure. and violence. That’s why Increasing access to clean water improves the The PepsiCo Foundation health and security of residents, particularly EMPOWERING IMPROVEMENTS teams with nonprofit women. Often, women must walk long distances IN LATIN AMERICA groups and non-government for water, which is physically challenging and can We’re supporting the Inter-American Development organizations (NGOs) to hinder opportunities for education and employment. Bank’s (IDB) AquaFund to make water and sanitation support conservation, services universal, leaving no one behind, by distribution and purification advancing programs in hard to reach communities in Colombia, Honduras, Mexico and Peru, helping programs worldwide. people living in dispersed and distant areas have access to basic water and sanitation services. “With an emphasis on As the first private sector donor to contribute to capacity development and an IDB trust fund in 2011, The PepsiCo Foundation’s replicable models—coupled $7 million investment to the AquaFund, made with rigorous metrics and between 2011 and 2016, helped catalyze accountability—PepsiCo helps ensure its community 22 MILLION $547 million in total funding through April 2019 investments create the greatest and provided new or improved access to safe water good for the greatest number We brought safe water access to of people.” over six million people in 2018— and sanitation services to over 765,000 people. boosting the total number of Farron Levy, beneficiaries of The PepsiCo In addition, PepsiCo and the IDB teamed up to CEO of True Impact Foundation’s Safe Water Access address the mismatch between water supply and Program since 2006 to 22 million. demand with the Hydro-BID Technical support center, a groundbreaking water resource center where local water managers in cities across Latin America can A woman collects water from a new tap in Andhra Pradesh, India. seek help in managing their water resources. Photo Credit: WaterAid/Ashima Narain 17 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

OUR GOAL

Fundamentally change the way the world interacts with our packaging to deliver our vision of a world where plastics need never Circular Future for become waste. To learn more about how we’re tracking progress toward our goal, review target PACKAGING metrics on page 6.

In an efficient food system, packaging helps make safe, high-quality products accessible to all, extending shelf life and helping to limit food waste. But, for it to have a role in a more sustainable food system, we must eliminate packaging waste. In 2018, plastic represented just under half of the total packaging material PepsiCo used, with aluminum, glass and fiber making up most of the balance. In that year, we used 2.2 million metric tonnes of virgin plastic to package products throughout our food and beverage portfolio. While plastic offers a highly effective, lightweight packaging material, producing petroleum-based plastic is a carbon-intensive process and, globally, only 14 percent of what is used is collected for recycling. The rest becomes waste. Where it is disposed of irresponsibly or where is ineffective, it litters our communities and pollutes our oceans. We have set an ambitious target to reduce 35 percent of virgin plastic content across our beverage brands by 2025. Progress will be driven by the increased use of recycled content and alternative packaging materials. Across PepsiCo’s business and our brands, we’ve made it a business imperative to help build a circular future for packaging and a world where plastics need never become waste. In 2018, we launched a new sustainable plastics vision Simon Lowden, President, PepsiCo Global Foods, and Roberta Barbieri, Vice President, o i a or based on three inter-

PepsiCo Global Sustainability, discuss our new sustainable plastics vision. ere pastics

ee ever

connected strategies:

ecome aste 1. Reduce the plastic To learn more about our progress toward our Circular Future for Packaging goals, visit our Packaging ESG Topics page. that we use I 2. Recycle more Our work is aligned with plastic to support a circular economy Sustainable Development Goals (SDGs) 3. Reinvent the packaging and plastic we use

18 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

REDUCE RECYCLE REINVENT Less Plastic,

COLLABORATING FOR MORE ALTERNATIVE MATERIALS SYSTEMIC CHANGE The global plastics challenge requires We strive to design all packaging with systemic change. This can only be achieved the most efficient use of materials. Over with many organizations and individuals acting the last decade, we have been leaders in concert. We aim to help bring business, in significantly reducing the amount of government, civil society and consumers together to create a world where plastics need polyethylene terephthalate (PET) in many never become waste. of our beverage bottles, like those used for Gatorade. We continue to innovate For example, PepsiCo is a signatory to the New Plastics Economy Global Commitment, to find ways to reduce the volume of which unites businesses, governments and plastics required in our bottles, and their other organizations behind a common vision total carbon impact, without sacrificing to address waste and pollution. Additional packaging performance. partnerships are referenced throughout this section and further information can also be found on our Packaging Partnerships page. Where it is environmentally efficient and practical to do so, we also consider alternative packaging materials to plastic. In India, we use refillable glass bottles for carbonated soft drinks which, in that market, results in less waste and a lower average than single-use PET bottles. Beginning in 2020, our bubly sparkling water will no longer be packaged in plastic. In addition, we will offer Aquafina in aluminum can packaging in U.S. foodservice outlets. “The New Plastics Economy Global Commitment Throughout our snacks portfolio, we continuously unites businesses, governments and others seek opportunities to “right-size” packages, which behind a clear vision of a circular economy for can reduce the volume of plastic used by up to plastic. We are pleased PepsiCo is joining us 10 percent. We are also beginning to roll out an by setting concrete 2025 targets. It will be a innovative new process called “charge compaction” challenging journey, but by coming together that further reduces the plastic required for bags we can eliminate the plastics we don’t need and innovate, so the plastics we do need can be while delivering the same volume of snacks. safely and easily circulated—keeping them in the This also enables us to transport more bags in economy and out of the environment.” each truck. These activities contribute toward Sander Defruyt, Lead of the New Plastics Economy carbon emission reductions from our snacks initiative at the Ellen MacArthur Foundation packaging portfolio.

19 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

REDUCE RECYCLE REINVENT Increasing Use of RECYCLED CONTENT Creating a world where in our packaging by 2025 plastics need never become and 50 percent rPET content waste requires a shift in the by 2030. As a step toward this from a linear to a circular goal, we recently announced 100% 100% economy approach. This that, beginning in 2020, our means recycling and reusing LIFEWTR water brand will use Beginning in 2020, our Naked juices and packaging material rather 100 percent rPET in the U.S. LIFEWTR water brand will use smoothies already 100% rPET in the U.S. use 100% rPET than treating it as waste. ENHANCED RECYCLING bottles in the U.S. PepsiCo aims to ensure an We would use more recycled end-use value for each piece of plastic, like rPET, today if it were packaging that we put into the available. Insufficient supply of world. We’re striving for all our recycled material is part of the packaging to be recyclable, challenge we have to overcome compostable or biodegradable to make our sustainable plastics by 2025. To further our progress, vision a reality. we are integrating design for To address that, this year, we recyclability into our product entered into a multi-year supply development process. agreement with Loop Industries % % We also aim to use more recycled 89 50 to incorporate Loop PET plastic content in our packaging, into our product packaging. This displacing virgin plastic and is 100 percent recycled material 89% of our packaging was In western helping us toward our target designed to be recyclable, Europe, Tropicana produced through innovative relaunched using to reduce 35 percent of virgin compostable or biodegradable technology that allows even in 2018, progress toward our 50% rPET bottles plastic content across our low quality PET plastics to be target of 100% by 2025. and aims to reach beverage brands by 2025. recycled. 100% rPET by 2025. By buying recycled content, we help to create a market in which We also joined a consortium that recycling plastic is economically is investing in a unique enzymatic attractive. recycling technology, led by French company, Carbios. This PepsiCo is already among technology can produce high- the largest users of recycled quality 100 percent recycled PET PET (rPET) in the beverage from more forms of used plastic industry and in 2018, we set than other forms of recycling can, a new target to strive to use potentially offering a new source 25 percent recycled plastic of recycled content.

20 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

REDUCE RECYCLE REINVENT Boosting RECYCLING RATES

Increasing recycling rates diverts used packaging PARTNERS FOR CHANGE from becoming waste and PepsiCo and The PepsiCo Foundation are accelerating efforts to boost recycling rates also boosts the supply across the world. Between July 2018 and July 2019, we pledged over $51 million globally in partnership initiatives, with a specific focus on some of the areas with the poorest of recycled content that infrastructure and highest risk of contributing to plastic pollution. Investments include: we can use to create new packaging. Globally, the growth in plastic production has outpaced the development of the infrastructure In partnership with The PepsiCo joined the Alliance to End Plastic The PepsiCo Foundation contributed needed for collection and Recycling Partnership, Waste, a nonprofit organization that a $15 million grant to Circulate Capital The PepsiCo Foundation aims to spend $1.5 billion over the next to catalyze investment in solutions to recycling. In many parts launched “All In On Recycling,” five years to help stem the flow of ocean reduce ocean plastic pollution in South of the world, this impacts the largest ever industry-wide U.S. residential plastic and improve circularity. and Southeast Asia. recycling rates and holds recycling challenge, which aims to make back the development of recycling easier for 25 million families. a circular economy.

Launched “Recycling with Purpose,” which In partnership with TerraCycle, PepsiCo is a founding partner of the Global promotes a circular economy for plastics in the Walkers Crisp Packet Plastic Action Partnership a multi-stakeholder Latin America through consumer education Recycling Scheme has collected public-private collaboration platform housed and incentives, integrating grassroots recyclers over 10 million crisp packets by the World Economic Forum that is and working with the recycling industry. to be used to produce new products, like convening key leaders, promoting strategic benches and plastic lumber. Currently, 80 initiatives and connecting investments For more information about Recycling with percent of UK households are now within dedicated to accelerating progress towards Purpose, see this article by Paula Santilli, CEO of PepsiCo Latin America. just four miles of a collection point. a world free of plastic waste and pollution.

21 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

REDUCE RECYCLE REINVENT Going BEYOND 67BILLION Through the expansion of our SodaStream business, an estimated 67 billion single- use plastic bottles will be THE BOTTLE avoided through 2025.

In 2018, we welcomed SodaStream forms the heart SodaStream, the largest sparkling of our Beyond the Bottle water brand in the world by strategy. Complementing this acquisition, in 2019, we volume, into the PepsiCo family. announced our new mobile- Sustainability is at the core of the enabled Hydration Platform, which SodaStream brand. Its unique creates a connected eco-system that will product range enables consumers make it easier for people to stay hydrated to create customized beverages at on-the-go. It offers great-tasting low and no-sugar beverages served in consumers’ home using reusable bottles. reusable bottles. The platform is being We have ambitious growth plans for rolled-out initially in U.S. universities, SodaStream. By empowering consumers workplaces and with hospitality partners. to switch to reusable bottles, by 2025, we We are also continuing to innovate to estimate that around 67 billion single-use provide consumers with Beyond the plastic bottles will be avoided. This figure Bottle options for selected beverage is in addition to PepsiCo’s 35 percent brands. Gatorade, for example, has virgin PET reduction goal. launched Gx, which offers customizable Gatorade drinks in a reusable bottle.

Learn more about our Beyond the Bottle strategy here.

22 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

REDUCE RECYCLE REINVENT Reinventing PACKAGING MATERIALS

To help achieve our target that, by 2025, trees, so they will not diminish food resources and the virgin plastics that we do use will be less carbon-intensive than oil-based PET. are fully recyclable, compostable or We are also innovating to transform our snack biodegradable, PepsiCo is investing in packaging. In India, Chile and the U.S. in the development of new, more sustainable 2018/19, we tested industrially-compostable plastic packaging materials. thin-film packaging for snack products that will biodegrade over time if disposed of in well- Through the NaturALL Bottle Alliance, we’re managed composting facilities. We worked with working with Origin Materials and peer companies technology pioneer Danimer Scientific to develop to develop fully-recyclable, 100 percent renewable this material and, together, we’re also developing plastic bottles. We aim for the bottles to be made a next-generation film that we aim to be fully from renewable feedstocks like sustainably farmed biodegradable regardless of how it is disposed of.

TRIALING SUSTAINABLE SHOPPING We are also looking at other alternative business models that avoid the need for single-use packaging. With our partner, TerraCycle, PepsiCo began a trial of Loop, a new sustainable shopping concept. Paris residents have been able to enjoy Tropicana Orange Juice delivered to their door in reusable packaging. After use, the packaging is collected and reused, eliminating waste and offering consumers enhanced convenience.

23 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

OUR GOAL

Improved choices across our portfolio by reducing added sugars, sodium and Improved Choices saturated fats. To learn more about how we’re tracking progress toward our goal, review target ACROSS OUR metrics on page 6. PORTFOLIO

For more than 50 years, our willingness to adapt has allowed us to transform from a company that made only chips and soda into a global leader offering a wide variety of the world’s most enjoyable foods and beverages. We continue to expand our portfolio to offer more options for every taste, lifestyle and occasion.

At PepsiCo, we believe that a more sustainable food system should meet human needs for both nutrition and enjoyment. We’re working continually to introduce new products that have more of the nutritious ingredients our consumers need. And we are continuing to reformulate existing recipes across our portfolio to reduce added sugars, sodium and saturated fat so that consumers can continue to enjoy our most-loved brands as part of a balanced diet.

To learn more about our progress toward our Products goals, visit our ESG Topics page.

Our work is aligned with Sustainable Development Goals (SDGs)

24 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

Improving Choices Across Our Portfolio by REDUCING ADDED SUGARS

“PepsiCo has continued to demonstrate a commitment to global health and well-being. Informed by the guidelines REDUCING ADDED SUGARS AROUND As part of its continuing effort THE GLOBE EXPANDING OUR BEVERAGE PORTFOLIO to transform its product on added sugars intake TO OFFER MORE OPTIONS portfolio and offer healthier provided by leading global Now in more than 80 markets around the world, options, PepsiCo is making we have rolled out a reformulated 7UP and Mirinda In the U.S. alone, we offer more than 650 great progress in reducing and national nutrition and added sugars and sodium, containing 30 to 50 percent fewer added sugars. beverages, including nearly 500 choices with health authorities, we 100 Calories or fewer per 12-ounces. Beverage as well as expanding product offerings with food groups and have set a target that helps At the end of 2018, no-sugar Pepsi Black, also brands like Gatorade and Mountain Dew offer nutrients to encourage.” consumers reduce the known as Pepsi Zero Sugar in the U.S. and Pepsi lower-sugar versions and Aquafina and bubly amount of added sugars in MAX in western Europe, was available in 82 provide consumers with refreshing zero-calorie Stacy Molander, markets, an increase of more than 50 percent Chief Operating Officer, Partnership options. for a Healthier America their diets. Our target, as from 2016. part of our sustainability • Gatorade Zero: Developed for athletes who agenda, is that by 2025, prefer a no-sugar, no-calorie alternative, at least 67 percent of our Gatorade Zero has zero sugar, but the same number of electrolytes as Gatorade Thirst ADDED SUGARS REDUCTION global beverage portfolio Quencher. volume will have 100 • bubly: bubly sparkling water uses natural fruit 2025 Calories or fewer from 2017 2018 Target flavors for a delicious taste with no calories and added sugars per 12-ounce no sweeteners. 40% 44% 67% serving. As consumers increasingly look to reduce sugar consumption, we will As of 2018, 44% of our beverage portfolio in our top 26 beverage continue to work to reduce markets met our added sugars added sugars across our reduction target.* beverage portfolio and expand our portfolio of zero- and lower-calorie beverages.

*Our global progress is based on our top 26 beverage markets, which represent 80% of our global beverage volume as of 2018.

25 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

Improving Choices Across Our Portfolio by SODIUM REDUCTION

2017 2018 2025 Target 56% 58% REDUCING SODIUM 75% As of 2018, 58% of our food portfolio in our top 23 foods markets met our AND SATURATED FAT 2025 sodium reduction target.* SATURATED FATS REDUCTION

2017 2018 2025 Target Informed by the guidelines from leading % % global and national nutrition and health OFFERING IMPROVED CHOICES AROUND THE GLOBE 61 61 75% authorities, we have set product targets • In the Netherlands, Lay’s Sensations • In January 2019, we reformulated Lay’s to guide our reformulation efforts and Red Sweet Paprika, Mexican Peppers & and Sunbites in Poland, Lay’s and Ruffles As of 2018, 61% of our food portfolio Cream and Thai Sweet Chili have been in Romania and Lay’s in Ukraine, by in our top 23 foods markets met our support the reduction of sodium and reformulated to meet our sodium target. switching to vegetable oils that provide 2025 saturated fat target.* saturated fat throughout our portfolio. reduced saturated fat. • In Peru, we’ve started using an oil blend Our target, as part of our sustainability *Our global progress is based on our top lower in saturated fat for Natuchips • In 20 markets around the world, we 23 foods markets, which represent 89% agenda, is that by 2025, at least 75 Roots and Tubers. now offer Lay’s Oven Baked, a baked of our global foods volume as of 2018. percent of our global foods portfolio snack that has 65 percent less fat than • In India, Kurkure Multigrain caters to REDUCING INDUSTRIALLY volume will not exceed 1.3 milligrams regular potato chips. consumers who are looking for great taste PRODUCED TRANS FAT of sodium per Calorie and at least 75 and local ingredients. The recipe contains GLOBALLY percent of our global foods portfolio Ragi, a local whole grain ingredient, and In May 2019, International volume will not exceed 1.1 grams of meets our sodium target. Food & Beverage Alliance saturated fat per 100 Calories. member associations, including PepsiCo, committed

to adopt an industrially To meet our goal, we are gradually reducing produced trans fat (iTFA) sodium and saturated fat throughout our goal, which sets a maximum portfolio to offer consumers more options that threshold for iTFA in food fit within their varying tastes and preferences. products. This commitment Through recipe reformulation and new seasoning will help contribute to the technologies, we’re finding ways to continue to World Health Organization’s reduce the sodium content of our snacks without goal of eliminating sacrificing taste or quality. Where we can, we’re industrially produced trans- also using oils lower in saturated fat, such as fat (iTFA) from the global sunflower and canola. food supply by 2023.

26 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

Expanding Our Portfolio

EXPANDING OUR PORTFOLIO THROUGH ACQUISITIONS To expand our portfolio of options, we also look outside THROUGH INNOVATION our company to find innovative products that can help meet Snack brand that makes bars consumers’ dietary and and mug muffins with hydration needs throughout the nourishing ingredients like day. In 2018 and early 2019, we chia and pumpkin seeds. added several new world-class brands to the PepsiCo family: Over the years, we have built our balanced portfolio NOTABLE GLOBAL INNOVATIONS Makers of Muscle Milk and Quaker Chia Multi-Grain: Half Naked: Uses juices Evolve Protein. through a combination #1 sparkling water brand in the of brand extensions, Made with four types of whole naturally lower in sugars, grains and chia seeds providing like watermelon juice and world by volume, empowering new product innovations high fiber, protein, potassium, coconut water, to provide consumers to personalize their and acquisitions, while iron and magnesium to 50 percent less sugars per preferred beverage in an working to make our consumers in China. 8-ounce serving compared to environmentally friendly way. the leading 100 percent juice existing portfolio more Imag!ne snacks Yogurt Crisps: smoothie. nutritious through product Has yogurt as the first ingredient reformulations. and delivers four grams of Sunbites Veggie Harvest: Baked fruit and vegetable protein per serving, eight grams A high-fiber snack made snacks. To keep pace with trends of whole grains per serving and with pea flour, whole corn, and lifestyles changes, we’re is a good source of calcium. sunflower oil and whole wheat. innovating to introduce more products throughout our portfolio Tropicana Whole Fruit: Ojas Studio: Our new with the nutritious ingredients Provides consumers in the Ayurveda-inspired date SUSTAINABLE FROM THE START our consumers are looking for, like UK with a serving of fruit and and grain bites are sold via Through our Sustainable from and water footprints of a fruits, vegetables, whole grains, vegetables and significantly e-commerce in the U.S. the Start program, we’re putting product under development nuts and seeds. contributes to their fiber intake. sustainability and lifecycle and the carbon footprint and Also contains 50 percent thinking at the heart of PepsiCo’s recyclability of its packaging more fiber than fruit juices and innovation process, from and then compare the results smoothies on average. ingredients to packaging. This to benchmarks. program empowers all teams Over time, these insights will involved in product development, help us make smart, sustainable from concept to launch, to decisions from start to finish consider the environmental and help consumers trust that impacts of their decisions—from the products they love have been ingredients to packaging and made in a responsible way. distribution. New tools enable them to estimate the carbon

27 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

Helping Consumers to MAKE MORE INFORMED DECISIONS

As a consumer-centric company, we are always adjusting our approach to deliver what our consumers are looking for today while anticipating their future needs. We are working to make the information on our packaging simpler and clearer to help our consumers make informed choices, while rethinking our packaging sizes and how they are presented in stores.

HELPING CONSUMERS MAKE MORE INFORMED CHOICES THROUGH LABELING DELIVERING MORE OPTIONS THROUGH Providing easy-to-find, easy-to-understand REDUCED PACKAGING SIZE information about what’s inside our products helps We’ve also introduced smaller package options—like consumers make the right choices for themselves 7.5-ounce mini cans—for people looking for a little and their families. In 2018, we announced a trial of less. Our mini cans provide our consumers with interpretative color-coded labeling on our packaging an easy, portion-controlled option for many of in many European markets. Additionally, we have our beverage brands including products like Pepsi, joined peer manufacturers and retailers in developing Mountain Dew, Sierra Mist and bubly. front-of-pack labeling programs in some countries. COMMUNICATING WITH OUR CONSUMERS THROUGH RETAIL PARTNERSHIPS As part of the Consumer Goods Forum’s Collaboration for Healthier Lives, we’ve worked with our retail partners in Hagerstown, Maryland, U.S., to trial mechanisms for providing easier access to a diverse portfolio and improved nutrition. We’re placing Hello Goodness-branded merchandising displays in high- traffic areas within select stores and offering recipes and samples to demonstrate new ways to use PepsiCo products. Through this program, we also offered in-store education sessions on general nutrition topics, such as reading nutrition labels and ingredient lists. We will use the outcomes from this trial to inform future in-store programs.

28 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

Purposeful BRANDS

At PepsiCo, we’re proud Stacy’s: Since May 2019, the Gatorade: Gatorade has Naked: Nearly 30 million bubly: In celebration of of our brands and the Stacy’s Rise Project has built an been fueling athletes for more Americans don’t have access to WorldPride, bubly released an “All experiences they offer to online community of more than than 50 years and has seen affordable, quality, fresh fruits and for Love” pride pack, celebrating 1,400 businesswomen, and by the positive impact sports vegetables. Through the “Drink all the flavors of love. bubly is consumers. We believe in the November will award $300,000 can have on youth, including Good Do Good” campaign, Naked proud to support Stonewall power of our brands to bring through its unique executive improvements in school, health, has partnered with Wholesome Community Foundation in positive change to society mentorship and funding program emotional well-being and future Wave, a nonprofit organization positively impacting the lives and smiles to consumers. designed to advance female career success. Between 2016 helping to increase affordability of LGBT+ people through entrepreneurs in the food and and 2019, Gatorade’s “Play It of locally and regionally grown grant making, scholarships and beverage industry. Forward” granted more than foods, to raise awareness through leadership programs. LIFEWTR: LIFEWTR is $2 million to nearly 1,000 education of this issue and help Lay’s: Lay’s used their bags to IMAG!NE: IMAG!NE has entered committed to advancing different organizations to provide increase access for those in need. spotlight 31 inspirational “Everyday a three-year partnership with No and showcasing sources resources to help more youth Since 2013, Naked has given over Smilers” across 60+ unique bag Kid Hungry to provide up to three of creativity. Through participate and fuel a better $3 million to Wholesome Wave to designs, resulting in $1 million in million meals to children in need, #BringArtBackToSchools, world through sport. help communities in need. LIFEWTR has pledged to impact sales proceeds being donated as well as an annual donation of 10 million students through to Operation Smile to further $50,000 to fund creative play at surprise school beautification the brand’s mission to share joy summer meal sites—because one projects and teacher grants. through the power of a smile. less hungry kid means one more imagination that can take flight.

29 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

OUR GOAL

Doing our part to curb climate change by reducing GHG emissions across our Action on value chain. To learn more about how we’re tracking progress toward our goal, review target CLIMATE metrics on page 6.

The world faces worsening climate change. The fourth-warmest year on record was 2018, beaten only by 2015, 2016 and 2017. The rapid warming of our planet is likely to worsen risk factors in our global food system, from extreme weather and water scarcity to soil quality loss and disruption to the political, economic and social systems that underpin how we produce and distribute food.

The global food system is responsible for around 30 percent of greenhouse gas emissions. We believe that it can become more carbon-efficient and resilient and also play a significant role in regenerating the health of our climate through carbon sequestration.

To learn more about our progress toward our Climate Change Mitigation goals, visit our ESG Topics page.

Our work is aligned with Sustainable Development Goals (SDGs)

Wind farm in La Esperanza, Puebla, Mexico. In 2018, our Mexico foods business sourced 76% of its power via wind energy, which includes energy generated from this wind farm.

Photo Credit: Iberdrola México 30 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

Reducing Greenhouse Gas Emissions ACROSS OUR VALUE CHAIN

PepsiCo will play its part UNDERSTANDING OUR EMISSIONS CONTINUING TO DRIVE DOWN EMISSIONS OUR PROGRESS in mitigating the risks THROUGHOUT OUR VALUE CHAIN of climate change. Our • In our agricultural supply chain: We are working Scope 1 & 2 goal is to reduce absolute to end deforestation and help farmers implement GHG emissions across our climate-friendly practices. By improving its health, we can also increase the carbon sequestration value chain by 20 percent 92% capacity of the soils we farm. by 2030 (2015 baseline). Scope 3: 6.4% Approimtel 8% • In our manufacturing: In seven European This is a science-based of our emissios markets—Spain, Belgium, Portugal, Italy, the Scope 1 & 2: In 2018, we decreased our Scope come from outside our target, representing Approimtel United Kingdom, the Netherlands and Poland—we 1 & 2 emissions by 6.4% (2015 PepsiCo’s contribution to direct opertios of our emissios already use 100 percent renewable electricity in baseline) this represents 32% icludi riculture come from our direct our manufacturing operations. Additionally, nearly progress toward our 2030 goal. achieving the initial goal of pci opertios icludi 75 percent of the electricity used at our Bursom the . trsporttio d poeri our distriutio mufcturi Road Walkers Crisps factory in Leicester, UK, is fcilities generated from food waste via anaerobic digestion. • In our packaging: We’re reducing the amount of carbon-intensive virgin plastic we use, enabling the Scope 3 recycling of more of our packaging, and reinventing the packaging materials and systems we use, including by co-developing lower carbon, bio-based PET. • In our distribution: We operate the largest 2.2 MILLION commercial fleet of electric vehicles in North America, In 2018, we reduced Scope 3 and Frito-Lay North America’s fleet of trucks running emissions by approximately on compressed natural gas, which produces 15 2.2 million metric tonnes; this percent less GHG emissions than standard gas, has represents about 7% progress driven over 61 million miles in total. We placed a toward our 2030 goal. reservation with Tesla, Inc. for 100 all-electric trucks. • In our retail: We’re improving vending and cooler equipment by replacing less energy efficient models with more efficient ones, saving more than a billion kilowatt hours (kWh) of energy in 2018. We’re also transitioning to hydrofluorocarbon-free equipment.

31 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

OUR GOAL

Advance human rights, promote diverse and inclusive workplaces and increase the earnings potential of women to drive economic growth People & and increase food security.

To learn more about how we’re tracking progress PROSPERITY toward our goal, review target metrics on page 6.

Around the world, people work every day to power the food system. From harvesting ingredients, to loading the truck for distribution, to placing an item on the store shelf, we rely on our farmers, our PepsiCo associates, our retail partners and many others each day to create and sell our globally recognized products.

This means we have an interest in the success and well-being of our people. We are committed to advancing respect for human rights throughout our value chain, building diverse and inclusive workplaces and investing to promote shared prosperity in local communities where we live and work.

To learn more about our progress toward our human rights, diversity and engagement and talent goals, visit our ESG Topics page.

Our work is aligned with Sustainable Development Goals (SDGs)

In 2018, PepsiCo’s women-only manufacturing and packing line in Mexico City—La Linea Rosa—achieved zero lost time for injury and zero quality complaints.

32 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

Investing in PEOPLE

ADVANCE RESPECT FOR awareness of potential human HUMAN RIGHTS rights risks across our value We aim to leverage PepsiCo’s chain. We have formal training influence to advance respect programs for our employees for human rights throughout and direct third-party suppliers. our value chain. As part of our For example, we use our approach, we are committed to Sustainable Sourcing Program to implementing the UN Guiding communicate our Supplier Code Principles (UNGPs) on Business of Conduct (SCoC) to our direct and Human Rights throughout third-party suppliers. Annual our business and publicly training helps to ensure suppliers reporting on our progress. understand and comply with the principles of our SCoC and PROMOTE DIVERSE AND Training plays an important role support our goal of a sustainable INCLUSIVE WORKPLACES in our work to embed respect supply chain. for human rights throughout Our commitment to building SUSTAINABLE SOURCING our business activities. Through a more diverse and inclusive 40% 23% training, we can communicate Our Sustainable Sourcing workplace is woven into our our policies, standards and Program (SSP) is a supplier company’s values and beliefs. Increasing Gender Parity Promotion to Higher Levels In 2018, we made significant expectations to our employees engagement program for our 40% of our global managers In 2018, our global women and suppliers while raising most business-critical first-tier advancements toward are women. promotion rate was 23%. suppliers that includes formal our diversity and employee risk assessments, third-party development goals. audits, mitigation and capability In addition, we offer employees building. In 2018, more than 960 learning and development on-site audits were conducted or opportunities designed to 100% recognized with first-tier suppliers broaden their skills and grow WITHIN 1% 1.3MILLION In 2018, 100% of our business- using the industry standard their careers. critical direct suppliers completed SMETA 4-Pillar Audit Protocol or Compensation Prioritizing Continued Employee Training and Development SCoC Training. an equivalent assessment. Men and women are paid within To learn more about PepsiCo’s 1% of each other in the 33 countries Our employees completed To learn more about our Position on Diversity & that represent 93% of our salaried 1.3 million hours of learning, Inclusion, review our 2018 To learn more about our Human Sustainable Sourcing Program, employee population.* a 7% year-over-year increase. Diversity Report. Rights approach and initiatives, visit our Sustainable Sourcing visit our Human Rights ESG ESG Topics page. *After controlling for legitimate drivers of pay such as job level, geographic location and Topics page. performance ratings.

33 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

Supporting the Communities MILLION WHERE WE LIVE AND WORK >85 SERVINGS In partnership with the Global SUPPORTING WOMEN’S FOOD INSECURITY DISASTER RELIEF FoodBanking Network, we ECONOMIC ADVANCEMENT Since 2009, Food for Good, In September 2018, Hurricane delivered more than 85 million servings of food in 2018. We have committed to invest The PepsiCo Foundation’s Florence caused catastrophic $100 million by 2025 to purpose-driven initiative damage to the Carolinas. support workforce readiness that provides food bundles New Bern, North Carolina, and empower women. Since to underserved children, has the birthplace of Pepsi-Cola, 2016, we’ve invested $27.3 delivered over 100 million suffered significant damage. million to support initiatives that nutritious servings to children With roots in the area and over benefit women in communities in need. 16,000 employees in the region, where we operate. we sprang into action. Within By 2025, Food for Good aims days, The PepsiCo Foundation With the goal of increasing to deliver 50 million nutritious identified partners to help the interest and confidence of servings per year across 25 cities support the disaster relief girls and women to succeed in in the U.S. mission and committed $1 million science, technology, engineering to the American Red Cross and and mathematics (STEM) The Salvation Army, while Food careers, PepsiCo Middle East for Good distributed 350,000 and Northern Africa launched meals to the families impacted. the region’s first Million Women Mentors® (MWM) chapter in Riyadh, Saudi Arabia. MWM supports the engagement of mentors and attracts young minds to technical career fields. This program will help local girls and women to break through $5.6 MILLION long-standing cultural barriers and build rewarding careers. In 2018, The PepsiCo Foundation responded to emergency situations and natural disasters around MILLION the globe, committing a total of $5.6 million in disaster relief and In partnership with The Global FoodBanking Network (GFN), a nonprofit organization MILLION SERVINGS humanitarian support. that develops and supports food banks in more than 30 countries, we delivered more >100 than 85 million servings of fresh food, reaching nearly 175,000 people in communities WOMEN in need, in 2018. 10.2 In 2018, Food for Good delivered GFN and PepsiCo partnered to help FoodForward South Africa (FFSA) deliver more Since 2016, we have invested 29.3 million servings to children in than two million servings to those in need in 2018 by distributing rescued produce $27.3 million in initiatives that need, boosting our total since 2009 from local farms. have benefited 10.2 million to over 100 million collectively. women and girls. Photo Credit: Global Foodbanking Network

34 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

GRI Materiality Topics ASSESSMENT

Year-round engagement with diverse stakeholders informs our sustainability reporting and overarching sustainability strategy. We 1 2 3 publicly report on topics that are priorities for both our business and our key stakeholders. Our list of Global Reporting Initiative (GRI) Material Topics represents the issues that we plan to continue managing, measuring and reporting on. These are the sustainability-related topics that we believe are currently the most relevant not only to PepsiCo, but also our stakeholders. IDENTIFICATION PRIORITIZATION VALIDATION In 2017, we completed our most recent formal We identified 28 We prioritized the 28 industry- After analyzing stakeholder assessment, defined by the GRI Sustainability industry-specific topics specific topics based on input, we narrowed the list of Reporting Guidelines. In late 2018, we for prioritization, based feedback from key internal and 28 industry-specific topics for conducted a refresh, as we streamlined our on industry research, a external stakeholders through prioritization to 17 topics specific sustainability agenda further. This refresh benchmarking analysis of interviews, surveys and review of to our business. We validated reconfirmed the results of our 2017 assessment, competitors and peers, and source materials. We interviewed the results in a workshop with identifying the most significant issues that stakeholder input. knowledgeable internal and members of our Sustainability, “reflect an organization’s significant economic, external stakeholders to gather Communications and Public environmental and social impacts; or that diverse insights into topics Policy and Government Affairs substantively influence the assessments where PepsiCo has significant leadership teams. We then shared and decisions of stakeholders,” as per the impact and topics that influence results for validation by members GRI definition. stakeholders’ view of PepsiCo. of the PepsiCo Executive Committee (PEC) before Our 2017 Material Topics assessment and late disseminating them more broadly, 2018 refresh included a three-step process: both internally and externally.

In this Sustainability Report and in our other sustainability reports and statements, when we use the terms “material,” “materiality” and similar terms, we are using such terms to refer to topics that reflect PepsiCo’s significant economic, environmental and social impacts or to topics that substantively influence the assessments and decisions of stakeholders in what the GRI Sustainability Reporting Guidelines define as “material topics.” We are not using these terms as they have been defined by or construed in accordance with the securities laws or any other laws of the U.S. or any other jurisdiction, or as these terms are used in the context of financial statements and financial reporting, and nothing in this Sustainability Report or our other sustainability reports and statements should be construed to indicate otherwise.

35 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

GRI MATERIALITY TOPICS ASSESSMENT RESULTS Stakeholder This list of 17 material topics specific to our business includes issues To download our GRI Index, that we intend to manage, measure and report on. These are the visit our Sustainability topics that our stakeholders have said are the most relevant to Reporting page PepsiCo, and those that they are most interested in understanding our management of and progress on. ENGAGEMENT

FOUNDATIONAL TOPICS MAJOR TOPICS PRIORITY TOPICS we must get right to operate we need to manage to which are the highest impact toward as a responsible business operate e iciently within building a stronger, more sustainable the global food system global food system

Food Quality & Safety Climate Change Improved Product Choices Agriculture Packaging Water We value the views of our stakeholders, including customers, consumers, shareholders, employees, suppliers and NGOs and other expert organizations and individuals. The Marketing & Labeling Deforestation input that we receive from them is a cornerstone of how we develop, implement and evolve our sustainability agenda and improve our understanding of current and emerging Community Human Rights Supply Chain sustainability issues. Operational Waste Management Engagement Throughout 2018 and early 2019, members of our management team met with a diverse range of stakeholders. For example, bilateral and roundtable meetings with NGOs Ethics & Corporate about plastics waste and sustainable agriculture have helped Governance to shape our approach to implementing our policies and developing industry initiatives. At the GreenBiz Conference in February 2019, we held a roundtable event for a number of expert stakeholders including peer company executives, Employee Talent Public Policy Financial Workplace key NGO representatives and other opinion leaders in the & Diversity Engagement Performance Health & Safety sustainability space. Together, they discussed the challenges facing the food system and the need to accelerate systems- based action. We have also worked with a stakeholder research company to garner the views of sustainability experts, from NGOs, peer companies, business partners and others, about the strengths of PepsiCo’s sustainability Next Generation Positive Circular Future Improved Choices Climate People Company Agriculture Water Impact for Packaging Across Our Portfolio Change Mitigation & Prosperity & Governance strategy and the opportunities we have to improve outcomes.

For a comprehensive list of the sustainability-related topics that matter To learn more about our approach to stakeholder engagement, to our business and our stakeholders, visit our ESG Topics page. visit our ESG Topics page.

36 Introduction Helping to Build a Next Generation Positive Water Circular Future Improved Choices Climate Change People & Managing More Sustainable Agriculture Impact for Packaging Across Our Portfolio Mitigation Prosperity Impact Food System

Strategy and progress against our to create and oversee global A dedicated team within Sustainability sustainability goals are discussed strategy and execution for each the Sustainability Office during meetings of the full senior of our sustainability goals. These has developed a robust leadership team on a regular leaders, who were selected data governance structure basis, providing opportunities for for their deep knowledge of underpinning each of our our senior leadership to align on the goals they are directing, sustainability goals, ensuring GOVERNANCE major strategic issues relating to work with teams comprised accuracy, consistency and sustainability. In between these of representatives from key precision of the data, while meetings, senior leadership functions and all geographic driving accountability among team members remain actively sectors to ensure successful our teams. Data Governance engaged in executing against our implementation of processes includes documenting the GOVERNANCE AS A risk, international and science- sustainability goals, driving the across our businesses. processes and methodologies DRIVER OF PERFORMANCE related skills, qualifications and agenda with their teams. we use to gather and process experience that are valuable We believe strong governance SUSTAINABILITY OFFICE data to ensure consistency and to the Committee’s oversight To help drive progress, we award is the foundation for delivering repeatability. By accumulating over key public policy and our executive officers annual PepsiCo’s Global Sustainability on our sustainability agenda. At year-over-year metrics, we can sustainability matters. incentives for achieving key Office drives governance and PepsiCo, sustainability topics are track progress, identify trends business and individual objectives delivery of the Company’s integrated into, and not separate and activate course corrections if ROLE OF PEPSICO’S SENIOR against preapproved targets. sustainability agenda across from, our business. needed. In addition, we continue LEADERSHIP The business objectives reflect the value chain. Serving as the to build the capability to increase a combination of Company-wide key central connection point, ROLE OF THE BOARD OF In 2016, we reviewed our confidence in not only our DIRECTORS performance or business-unit the Sustainability Office works sustainability governance internal data, but data collected performance, depending on closely with leaders from across As stewards of PepsiCo, our structure to identify throughout our supply chain, as on the executive’s position the business to ensure continued Board plays an essential role in opportunities to strengthen we develop new tracking tools and scope of responsibility. performance progress against determining PepsiCo’s strategic the integration of sustainability and methodologies in areas Individual objectives are based our sustainability agenda. priorities. The full Board into our business agenda and previously not measured. We on an executive’s contribution The Sustainability Office also considers sustainability issues processes. Beginning in 2017, believe this work is the critical to PepsiCo’s strategic business plays a key role in bringing a a vital element of its business PepsiCo’s senior leadership foundation for the transparency imperatives, such as: sustainability lens to long-term oversight, as sustainability team, made up of the Chairman and data integrity that we strive and CEO, Sector CEOs corporate strategic planning and topics are integrated into, and • Driving sustainable innovation for in our reporting processes. and top functional leaders, key business processes, ensuring not separate from, our business that sustainability is always strategy. To align with our assumed direct oversight • Improving operating efficiencies of the sustainability agenda embedded into the fabric of sustainability agenda, in 2017, • Increasing customer To learn more about our strong and strategic decisions, and what we do as a Company. our Board created a Public Policy satisfaction governance foundation, visit champions performance our Sustainability Governance and Sustainability Committee. Another key role of the ESG Topics page. The Committee assists the management. This ensures • Developing a diverse and Sustainability Office is managing Board in providing more focused that sustainability is a key talented workforce the integrity of the data on oversight over the Company’s accountability factor for every which we report. Data integrity policies, programs and related member of our senior leadership SUSTAINABILITY is absolutely vital to maintaining LEADERSHIP ACROSS risks that concern key public team. Placing sustainability the trust between PepsiCo and PEPSICO policy and sustainability matters. accountability within the our stakeholders and is aligned The Committee is comprised Company’s most senior PepsiCo’s senior leadership with the high internal standards entirely of independent directors leaders reflects the emphasis team has empowered selected to which we hold ourselves. and reflects a mix of public policy, we place on achieving our leaders within the Company sustainability agenda.

37 FOR MORE INFORMATION FORWARD-LOOKING STATEMENTS To download additional tools from our This PepsiCo, Inc. (“PepsiCo” or the “Company”) Sustainability Report contains statements reflecting Sustainability Reporting Suite, such as our our views about our future performance that constitute “forward-looking statements” within the Performance Metrics Sheet and meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are Global Reporting Initiative (GRI) Index, please generally identified through the inclusion of words such as “aim,” “anticipate,” “believe,” “drive,” visit our Sustainability Reporting page. “estimate,” “expect,” “goal,” “intend,” “may,” “plan,” “project,” “strategy,” “target” and “will” or similar statements or variations of such terms and other similar expressions. Forward-looking statements Detailed information on our policies and inherently involve risks and uncertainties that could cause actual results to differ materially from those performance is in our Environmental, Social & predicted in such statements. Such risks and uncertainties include, but are not limited to: changes in Governance (ESG) Topics page. Among others, demand for PepsiCo’s products, as a result of changes in consumer preferences or otherwise; changes topics include: in laws related to the use or disposal of plastics or other packaging of PepsiCo’s products; changes in, • Animal welfare or failure to comply with, applicable laws and regulations; imposition or proposed imposition of new or increased taxes aimed at PepsiCo’s products; imposition of labeling or warning requirements on • Corporate governance PepsiCo’s products; PepsiCo’s ability to compete effectively; political conditions, civil unrest or other • Deforestation developments and risks in the markets where PepsiCo’s products are made, manufactured, distributed or sold; the ability to protect information systems against, or effectively respond to, a cybersecurity • Diversity and engagement incident or other disruption; increased costs, disruption of supply or shortages of raw materials and other • Environmental, health & safety supplies; business disruptions; damage to PepsiCo’s reputation or brand image; loss of, or a significant reduction in sales to, any key customer; disruption to the retail landscape, including rapid growth in • Ethics and integrity hard discounters and the e-commerce channel; climate change or water scarcity, or legal, regulatory • Marketing to children and school sales or market measures to address climate change or water scarcity; and other factors that may adversely affect the price of PepsiCo’s publicly traded securities and financial performance. For additional • Nutrition information on these and other factors that could cause PepsiCo’s actual results to materially differ from those set forth herein, please see PepsiCo’s filings with the Securities and Exchange Commission, • Nutritional labeling including its most recent annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K. • Product safety and quality Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. PepsiCo undertakes no obligation to update any forward- • Public policy and political engagement looking statements, whether as a result of new information, future events or otherwise. • Stakeholder engagement PEPSICO WEBSITE • Talent For more information about our Company, our sustainability priorities, our policies and the award recognition we have received, please visit our corporate website at www.pepsico.com For additional information about PepsiCo, please see our latest Annual Report Design: MerchantCantos merchantcantos.com