PERFORMANCE WITH PURPOSE Sustainability Report 2017 Welcome Our Approach Products Planet People Managing Impact PepsiCo makes great-tasting, feel-good food and beverages — from treats to nutritious eats. We’re committed to an approach to business that not only delivers top-tier financial returns, but one that is responsive to the needs of the more than 200 countries and territories we serve around the world. That commitment — reflected in a philosophy we call Performance with Purpose — is about expanding our portfolio of more nutritious products, shrinking our environmental footprint as a good global citizen and working to lift up people and families, from widening the circle of opportunity to providing relief in times of need. We’re striving to advance sustainability and profitability hand-in-hand — and we believe that in the 21st century, that’s more important than ever before. ABOUT OUR REPORTING Contents This is our second year of reporting progress against OUR APPROACH Climate 21 our Performance with Purpose (PwP) 2025 Agenda. About PepsiCo 1 Packaging 22 Our sustainability reporting suite comprises: CEO Letter 2 Waste 23 Vice Chairman’s Q&A 4 Global action 24 • This 2017 Sustainability Report summarizing key aspects 2017 Financial performance 5 Case study — Access to water 25 of the year’s performance Our sustainability journey so far 6 Progress against our goals 7 PEOPLE 26 • 2017 PwP Performance Metrics sheet containing detailed PwP through our value chain 8 Perspectives 27 performance data against our 2025 goals for the past three years Sustainable Development Goals 9 Our strategy 28 • Online ‘A-Z Topics’ covering detailed information on Human rights 29 progress, programs, governance and management PRODUCTS 10 Economic growth for growers 30 Perspectives 11 Diversity and inclusion 31 Our strategy 12 Global action 32 COVER IMAGE Portfolio transformation in action 13 Case study — Women 1 Tea leaves sourced for Pepsi 2 Innovation 14 with Purpose 33 Lipton Tea Partnership (Jakarta, 1 Global action 15 Indonesia) 4 5 Case study — Reformulation 16 MANAGING IMPACT 2 Tomatoes sourced for Alvalle 3 GRI materiality topics Gazpacho (Murcia, Spain) 8 PLANET 17 assessment process 34 6 7 3 Blueberries sourced for Naked Perspectives 18 GRI materiality topics Juice (Pasco, Washington, U.S.) Our strategy 19 assessment results 35 Agriculture 20 Governance 36 4 Potatoes sourced for Lay’s products (Camden, North Carolina, U.S.) More information 37 7 Potatoes sourced for Lay’s 5 Coconuts sourced for Kero Coco products (Mae Sot, Thailand) (São Mateus, Brazil) 8 Oats sourced for Quaker 6 Oranges sourced for Tropicana products (Saskatchewan, Juice (Bradenton, Florida, U.S.) Canada) PepsiCo Sustainability Report 2017 Welcome Our Approach Products Planet People Managing Impact ABOUT PEPSICO PEPSICO HAS A PORTFOLIO OF BILLION DOLLAR 22 BRANDS that generated more than $1 billion each in estimated annual retail sales in 2017, spanning Beverages, Snacks and Nutrition. PERFORMANCE PEPSICO PRODUCTS ARE ENJOYED WITH PURPOSE BY CONSUMERS MORE THAN is PepsiCo’s vision to deliver top-tier financial performance by improving the products we sell, operating responsibly to protect our planet and empowering 1BILLION people around the world. times a day. OUR PRODUCTS ARE SOLD IN THERE ARE MORE THAN 200+ 260,000 countries and territories around the world. PepsiCo employees worldwide. PepsiCo Sustainability Report 2017 1 Welcome Our Approach Products Planet People Managing Impact LETTER FROM INDRA NOOYI Our success — and the success of the communities we serve and the wider world — are inextricably bound together.” Twelve years ago, we embarked We know we need to deliver the kind of And that means managing PepsiCo with an Our aspiration of creating on a journey at PepsiCo that we top-tier financial results our investors, eye toward not only short-term priorities, associates and all our stakeholders but long-term priorities, not only the level call Performance with Purpose. expect. And we also know something else. of returns, but the level and duration of a good company — Since then, much has changed — We know we need to do it with a sense of returns, recognizing that our success — at PepsiCo and around the world purpose, a moral compass, guiding our way. and the success of the communities we good ethically and good serve and the wider world — are — but the underlying principles For me, and all of us at PepsiCo, inextricably bound together. commercially — is behind Performance with Purpose Performance with Purpose is — and always remain the same. has been — about the way we make money, Much of our early work on Performance with now coming to fruition, not the way we spend it. About who we are, Purpose required us to think differently the character of our company. about our business and make the kinds of yielding a broader, long-term investments — from researching We’ve tried to adhere to the idea of a social and developing new, more nutritious contract once defined by British statesman more lasting impact products, to finding ways to reduce water Edmund Burke as a partnership between the and energy use across plants and farms — living, those who’ve come before and those than we ever imagined.’’ that could help us deliver on the vision of yet to be born. making our growth, our operations and our impact more sustainable. 2 PepsiCo Sustainability Report 2017 Welcome Our Approach Products Planet People Managing Impact LETTER FROM INDRA NOOYI So, while we still have work to do in certain areas, That is still my answer. And I know that if we stay CONTINUED PLANET we’re incredibly proud of the progress we’ve made. focused on our mission, if we engage the head, heart We’ve raised the bar for what it means to be a Our aspiration of being a good company — good and hands of our more than 260,000 associates, and responsible corporate water steward, earning the ethically and good commercially — is now coming adhere to the idea that how we make money is as prestigious Stockholm Industry Water Award. In fact, we to fruition, yielding a broader, more lasting impact important as how we spend it, we’ll continue doing Sustainability has been defined as “meeting the achieved a 25 percent water-use efficiency improvement than we ever imagined, and setting a standard that more than advancing the heritage of a great and needs of the present without compromising between 2006 and 2015 in our legacy operations. And companies across our industry and beyond aspire iconic company. We’ll keep changing the world. the ability of future generations to meet their we’ve invested more than $40 million since 2006 to to meet. own needs.” Over the last dozen years, we’ve tried provide safe water access around the world, benefiting Sincerely, to meet the needs of the present while strengthening Looking ahead, we’ll continue viewing our work nearly 16 million people in some of the planet’s most the ability of future generations to meet theirs, through both a microscope and a telescope, focusing water-stressed regions. integrating that aspiration into our goals for what we on the most granular details — grams of saturated originally called Human Sustainability, Environmental We’ve also made our delivery fleet more energy fat, parts per billion of greenhouse gas, the number Sustainability and Talent Sustainability — today efficient, eliminating the need for over 1 million of women in management roles — as well as the known as Products, Planet and People: gallons of diesel fuel since our electric vehicle larger ambition of building a business that acts in initiative began in 2010 — the equivalent of keeping accordance with our values, each of us striving to do what’s right for the company and what’s right for our PRODUCTS more than 2,000 passenger cars off the road for a Indra K. Nooyi year — while also making our beverage coolers and communities. Because at the end of the day, there’s PepsiCo Chairman and CEO We’ve built on our legacy as the first company vending machines 60 percent more energy efficient. no separating the two. to voluntarily remove trans fat from our snacks by And we are one of the largest users of food-grade Leading this company remains a source reducing added sugars, sodium and saturated fat recycled PET in the U.S. In fact, if more recycled PET of incredible pride. In my first sustainability in our products, launching a revolutionary nutrition- were available, we’d buy it. We’ve also launched the report letter in 2007, I opened with a story: focused vending option, Hello Goodness, and growing first 100 percent compostable chip bag in test markets, our portfolio of Good for You and Better for You options while diverting more and more of our waste from from about 38 percent of revenue in 2006 to roughly landfill — approximately 95 percent as of the end 50 percent last year.* We also teamed up with of 2017. When I was a child in India, my others in our industry to form the Healthy Weight mother would ask my sister and me Commitment Foundation, removing 6.4 trillion Calories a simple but compelling question: from our food and beverage products, surpassing PEOPLE our collective pledge by more than 400 percent. We’ve reimagined what it means to support our ‘What would you do to change the And through Food for Good, we’ve provided 80 million associates, from ushering in on-site and near-site world?’ Today, I know my answer nutritious servings to low-income U.S. families since childcare at campuses around the world, to expanding would be that I want to lead a 2009 to date. PepsiCo University’s online course offerings to help company that is a force for good in associates upgrade their skills to navigate a rapidly changing world.