performanceperformance withwith PurposePurpose Sustainability Report 2013 • • •••••• • • • •••••• • • • •••••• • • • ••• Table of Contents Performance with Purpose 1 Environmental Sustainability 25 Our Sustainability Reporting 2 Talent Sustainability 47 CEO Letter 4 Global Citizenship 55 About PepsiCo 6 Celebrating Progress 62 Our Performance with Purpose Goals 8 GRI Index 64 Human Sustainability 11 PepsiCo Chile sustainability manager at a Rainforest Alliance–certifi ed potato farm in Melipilla, Chile 1 PepsiCo Sustainability Report 2013 Performance with Purpose • • In practice, Performance with Purpose means Wherever we operate, Performance with Purpose At the heart of PepsiCo ••• providing a wide range of foods and beverages is our guide. We believe that delivering for •• from treats to healthy eats; finding innovative ways our consumers and customers, protecting our is Performance with to minimize our impact on the environment and environment, sourcing with integrity and investing • • reduce our operating costs; providing a safe and in our employees are not simply good things to do, Purpose— our goal to • • inclusive workplace for our employees globally; and but that these actions fuel our returns and position ••• respecting, supporting and investing in the local PepsiCo for long-term, sustainable growth. deliver top-tier fi nancial communities where we operate. •• performance while • • • • creating sustainable value ••• for all stakeholders. •• Our Sustainability Reporting 2 PepsiCo is pleased to share PepsiCo Sustainability Report 2013 the progress we’ve made in 2013 on our Performance with Purpose journey. This report outlines our sustainability goals and includes supporting data and examples of our eff orts to achieve those goals. Our companion Global Reporting Initiative (GRI) report provides greater detail on our 2013 sustainability activities. An index providing a comprehensive list of topics covered by the GRI report can be found in the GRI Index on pages 64–65. Additionally, we regularly update the Performance with Purpose section of PepsiCo.com, as well as our corporate social media channels, with news and data regarding our sustainability efforts. Please follow us on Twitter @PepsiCo and on Facebook at https://www.facebook.com/PepsiCo. Sustainability Governance The Sustainability Task Force, chaired by the President of PepsiCo, leads our corporate sustainability strategy development, an integral part of our overall business objectives planning. This effort is executed in partnership with leadership teams who oversee the three focus areas of Performance with Purpose: Human, Environmental and Talent Sustainability, and As part of this review, an internal team identified with the operational leads of each of our approximately 175 possible social, environ- businesses. The leadership teams are respon- mental and economic topics that could impact 3 sible for developing strategy for each of the our business. We then prioritized those topics respective Performance with Purpose focus based on their importance to our business and PepsiCo Sustainability Report 2013 areas, driving implementation, and identifying to stakeholders. The results were used to select and addressing issues and risks that are then the topics covered in this report. communicated to the Sustainability Task Force for action. The Sustainability Task Force also This list of topics may change from year to year regularly updates the Chairman and CEO along based on updated materiality assessments. In 2013, PepsiCo was included with the PepsiCo Executive Committee on For further information about our materiality on the Dow Jones Sustainability sustainability stakeholder-related matters. assessment and the full list of topics, see our North America Index for the eighth companion GRI report. consecutive year and on the Dow Materiality Jones Sustainability World Index Stakeholder Engagement for the seventh consecutive year. PepsiCo conducted a formal assessment to identify those matters that are most We count on our stakeholders across the important socially, environmentally and globe to engage and partner with us on how economically — both for our business and for we can continuously improve, innovate and our stakeholders. This assessment of “material adapt. This feedback is critical to our long-term aspects”¹ was conducted in accordance with success. We emphasize engagement at every the GRI Sustainability Reporting Guidelines, stage of operations with all stakeholders, a widely used comprehensive sustainability including consumers, customers, communities, reporting standard issued by the Global employees, suppliers and investors. In 2013, we Reporting Initiative organization. invested time and resources to evaluate and improve the mechanisms through which we This process of prioritizing the topics we report engage stakeholder groups, develop partner- on helps us to make a more direct link between ships and evaluate customer satisfaction. See our growth strategy and the societal challenges the GRI report, page 20, for more information we face as a responsible company in order to on this process. As always, we are deeply deliver long-term, sustained growth. Throughout appreciative of all of our stakeholder partners the year, PepsiCo regularly engages with our who help us advance our sustainability goals in stakeholders on a wide variety of issues. We countless ways. listen carefully to, and gather information and opinions from, our employees, shareholders, Comments suppliers, the communities in which we operate, 1 In this and our other sustainability reports, when we use the terms “material,” our retail service customers and consumers of We welcome all comments and inquiries “materiality” or other similar terms, we are using such terms to refer to topics that our products, as well as from regulatory agencies about this report through email at refl ect PepsiCo’s signifi cant economic, environmental and social impacts or that substantially infl uence the assessments and decisions of stakeholders, or what the and nongovernmental organizations (NGOs). [email protected]. GRI Sustainability Reporting Guidelines defi ne as “Material Aspects.” We are not using these terms as they have been defi ned 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 fi nancial statements and fi nancial reporting, and nothing in this report should be construed to indicate otherwise. 4 PepsiCo Sustainability Report 2013 ceo letter When I first articulated Performance with Let me explain. Today, we are a $66 billion Purpose seven years ago, sustainability was company with products found in virtually every often viewed as tangential to the business, corner of the world. But even with our size, or a program owned by a dedicated team. we see vast opportunity to grow and thrive But PepsiCo has shown how a clear, focused in an evolving environment. As we do so, sustainability agenda can be ingrained into Performance with Purpose is our guide. a company’s daily operations, be a powerful rallying cry among employees, drive strong The corporations that win in today’s competitive, performance and unlock shareholder value. resource-scarce and hyper-transparent world Performance with Purpose is not a defined are those that create real value for society. They set of issues, a collection of goals or metrics, are those who see their success as inextricably or something of interest only to a select set linked to the success of the world around them. of stakeholders. It is quite simply the way all of us at PepsiCo do business to deliver That’s why we see Performance with Purpose as sustained growth. the catalyst for our success. It’s our contract with society, and it’s also the driver of our innovation Performance with Purpose means just what and our competitive advantage. it says. It is delivering results in the right way, in a sustained way. It means we live our values and do so in a way that fuels our performance. We like to think of it as the way we strive to “future-proof” PepsiCo. CEO LETTER Let me give you some examples: As the global population continues to grow, that collaboration is the best path to innovative 5 and the middle class expands, demand for solutions and progress. If you have comments For a number of years, we have seen a shift finite natural resources is rising. Capturing on this report and our Performance with PepsiCo Sustainability Report 2013 by consumers to more nutritious products, a efficiencies in our operations through innovation Purpose journey, we welcome them via email at trend we believe is here to stay. Consumers are is an absolute necessity. In recent years, we [email protected]. increasingly looking for foods and beverages have positioned our business for the future by that offer nutrition and convenience without doing just that. Water stewardship, in particular, While it gives me great pleasure to publish this sacrificing taste. Thanks to the range of is an area of intense focus for PepsiCo. Having sustainability report detailing our progress and products we offer and our world-class scientific already met our 2007 goal to improve water use accomplishments, in many ways it becomes capabilities, PepsiCo is in position to meet this efficiency by 20 percent with a 2006 baseline, more difficult with each iteration. It is becoming need. In recent years, we have invested in our we are now looking to set more challenging harder to answer