An important way to improve our water-use efficiency is by conserving water in our plants. To achieve these conservation goals, we embed conservation practices into the day-to-day operations of our manufacturing facilities, including a water component of our successful Resource Conservation (ReCon) tool. With this tool, our manufacturing facilities conduct self-audits of their water management practices, and identify and respond to water conservation improvements by mapping all water-use streams within the facility, and assigning relative values to each of these streams based on the local cost of water. The tool is now being expanded to our franchise bottler network, co-packer partners and direct suppliers.

Since 2009, the ReCon water conservation tool deployment has helped sites across the world identify 2.2 billion liters of water savings, with a corresponding cost savings opportunity of nearly $2.7 million.

Technological Improvements That Save Water

To meet our goal of improving our water-use efficiency by 20 percent per unit of production by 2015, we've incorporated many other technological improvements in our global manufacturing operations. For example:

In the U.K., our Walkers business is not only reducing its water usage at its largest potato chip facilities, but we're developing technology to capture the natural water from the processing of potatoes with the aim of making our major potato chip–making facilities water-self-sufficient by 2018. The initial milestone, part of a three-year target to reduce water-use, is a 45 percent reduction by the end of 2011.

In the U.S., a technique for cleaning new Gatorade bottles with purified air, instead of water, has been so successful that we're extending this and other conservation techniques to bottling plants around the world.

The Aquafina brand also uses an innovative method to save water during its packaging process—by feeding the pre-forms of bottles directly onto a blow molder. This technique produces a sanitary bottle and fills it directly, so there is no need to rinse the bottles with water.

Water Conservation Ingenuity in South America

By investing significantly in water-reuse technology in its plants, PepsiCo South America Foods (SAF) achieved its water conservation goals in 2010, five years earlier than expected. The success was made possible by such initiatives as the ReCon Program, which includes simple measures as well as large investments, like the installation of an aerator in the water jet system used in potato washing and cutting, which reduces water-use.

These water conservation tactics also include ultra-filtration and reverse-osmosis processes, which recirculated 70 percent of the water used in the production of snacks at the Funza, Colombia plant.

PepsiCo China Honored for Water Conservation

In late 2010, the China Beverage Industry Association (CBIA) honored 15 bottling plants in PepsiCo's Greater China Region with the 2010 Excellent Water-Saving Enterprises award. Nearly half of the PepsiCo awardees won for the fourth consecutive year. The CBIA awards committee is made up of a panel of industry experts who measure against the organization's strict national standards. A final selection is made among those who significantly exceed these standards.

Water Consumption

Water Consumption (MM Cubic Meters)	FY 2010	FY 2009	FY 2008	FY 2007	FY 2006
Legacy Food	34.0	34.8	38.2	38.2	38.0
Legacy Beverage	27.5	25.7	26.9	26.3	25.9
Total Legacy	61.5	60.5	65.0	64.5	63.9
Acquisitions	44.5	3.4	N/A	N/A	N/A
Total	106.0	63.9	65.0	64.5	63.9

"Legacy" operations exclude significant mergers and acquisitions after the 2006 baseline year. PepsiCo acquired a significant beverage business in Russia in August 2008 and Franchise Bottling operations in North America and Europe in the first quarter of 2010.

As we expand the model of water stewardship to PepsiCo facilities around the world, we are also focused on addressing the broader challenge of water scarcity and strive for positive water impact in our operations, especially in water-distressed areas.

That's why PepsiCo formed a partnership in 2010 with The Nature Conservancy.The idea is to test credible, scientifically sound ways to achieve positive water impact in high-risk areas. To start, the partnership has selected watersheds in China, Mexico, Europe, India and the U.S., where we hope to pilot a system that will characterize the water risk of our plants and identify locally relevant water restoration initiatives that will improve water availability. The results are available in the joint PepsiCo/The Nature Conservancy report, Striving for Positive Water Impact: Lessons from a Partnership Approach in Five Watersheds, published in 2011.

Meanwhile, achieving positive water impact where we can—a difficult and complex challenge—is possible with a comprehensive approach. In our 2009 report, we announced that PepsiCo's manufacturing facilities in India not only conserved more than 3 billion liters of water, but achieved a positive water balance—giving back more water than our facilities consumed. And they did this again in 2010.

Direct Seeding Saves Water in India

One method we utilized to achieve a positive water balance is our work with farmers in India to reduce the amount of water used in rice cultivation by automating an agronomic practice called "direct seeding." Instead of growing the seedlings in a nursery, planting them and then flooding their fields, we favor direct seeding—planting the seeds directly into the ground—which bypasses the nursery, eliminates the need for flood irrigation, and reduces water-use by as much as 30 percent. The practice of direct seeding has been around for decades, but PepsiCo developed the innovative farm equipment to help automate this process.

In 2010, PepsiCo expanded direct seeding in India and applied it to approximately 10,000 acres, saving more than nine billion liters of water. And, because direct seeding requires less water at the base of the crop, it reduces the production of methane created during flood irrigation techniques, reducing the amount of greenhouse gas emissions by an estimated 70 percent.To build on the achievement of positive water balance, PepsiCo India has developed a strategic plan to double the replenishment of its consumption of fresh water by 2015.

Creating Water Balance in Water-Stressed Regions

In other areas of the world, we're finding ways to improve water balance, based on the conditions, technologies and available resources in the specific area.

In south Chile, for example, our farmers are replacing reel-type irrigators with central-pivot irrigation units on 140 hectares, improving water application efficiency by up to 35 percent.

Our Frito-Lay facility in Casa Grande, Arizona, has been equipped with a state-of-the-art water filtration and purification system, using membrane bioreactor and low-pressure reverse-osmosis technology, which can recycle and reuse up to 75 percent of the water used in production. For 10 consecutive years, PepsiCo has significantly reduced the amount of water used to make our Frito-Lay products in North America.

Similar technology is also being deployed in our Tingalpa facility in Australia, and in our first green plant in South America, Funza, Colombia—both water-stressed regions. In 2010, our Funza facility was able to reuse 50 percent of its water and has currently raised the reuse level to 50 percent, not only contributing significantly to water conservation, but also adding an economic benefit in the process. The technology makes it possible to recycle 4,228m³ of water monthly.

In all these cases, PepsiCo is looking for ways to take the lessons learned in one facility and apply them to facilities across the globe for the benefit of local communities.

Water flooding creates anaerobic and anoxic conditions in the soil that are conducive to the growth of bacteria that emit more methane (21 times the global-warming potential of CO₂) and nitrous oxide (310 times worse than CO₂) than what you would expect from dry/aerobic soil conditions.

The amount of water we use is one part of the equation; the other critical components are the availability and quality of that water. Across PepsiCo, we have a variety of standardized processes and procedures to ensure the safety of our water for consumers and the integrity of our products.

In addition to conducting routine assessments to monitor water quality in the areas of our operations and proactively initiate water replenishment programs around the world, PepsiCo supported the development of a Water Resource Assessment Tool sponsored by the World Business Council for Sustainable Development (WBCSD). This tool, which was launched to global acclaim in 2007 and updated in 2009, is a risk-mapping and management tool that assesses the relative water availability (abundance, stress, scarcity) for any location.

We have mapped PepsiCo manufacturing facilities around the world for both current and projected water-stress risks, where watershed data is available. Today, over 99 percent of PepsiCo's water consumption has been mapped to the tool. Today we estimate that 45 percent of our manufacturing facilities are located in areas suffering some degree of water stress or scarcity, based on interpolation between retrospective (1995) and prospective (2025) data obtained through use of the WBCSD Water Resource Assessment Tool. In recognition of the fact that water stress can arise from physical limitations, economic demands, regulatory requirements or other causes, we are using the WBCSD tool as an initial screening instrument as we develop, with The Nature Conservancy, a locally focused, multifaceted assessment tool that will allow any of our global sites to identify its level of risk, as well as watershed restoration strategies that are appropriate in that site's specific physical, economic and community context.

Our facilities in developed countries primarily use water from municipal water supplies. Many of our plants, particularly in developing countries, have established their own water sources (such as extraction from on-site wells), and we do so in full compliance with applicable regulations covering the use of local resources. In these cases, we work with the local authorities to assure that the quantity of water needed to run our business—and to help support the local community and economy—is consistent with regulations and is safe.

For wastewater discharge, we realize that the quality of water in streams, rivers and lakes is a key area of concern around the globe, and that the quality of our wastewater discharges can have a significant impact on the local environment. Consequently, in 2008 PepsiCo developed its Responsible Effluent Standards for Processing Wastewater, which provides specific limits for chemical and physical discharge. The PepsiCo Global Environmental Compliance Council is currently reviewing this standard to update and ensure its ongoing applicability for our global operations.

Partnership with Water.org

Beyond our consumers and our own need for water, PepsiCo has been involved in helping people in disadvantaged communities gain access to clean, fresh water.

Since 2008, for example, Water.org's signature partnership with PepsiCo Foundation has enabled people to gain access to safe water and/or sanitation in more than 1,400 communities in India. Of these figures, more than 156,500 people have received access to safe water, putting Water.org on track to meet its advanced target of reaching more than 160,000 people with safe water by the end of May 2011. Water.org has also exceeded its advanced sanitation target of 65,000 people, having reached more than 84,500 people. This is a 30 percent increase in water beneficiaries and a 15-fold increase in sanitation beneficiaries.

For more information on our partnership with Water.org, go to PepsiCo Foundation.

Clean Water to Three Million People

As part of our commitments, PepsiCo seeks to provide access to safe water to three million people in developing countries by the end of 2015. By the end of 2011, the PepsiCo Foundation expects to reach its interim goal of providing access to safe water and sanitation to one million people. This will be achieved through the support of such partners as Water.org, Safe Water Network, The Energy Resources Institute (TERI), China Women's Development Foundation (CWDF) and the Earth Institute at Columbia University.These projects are helping to install village water and irrigation systems, establishing water health centers, constructing over 1,000 rainwater harvesting cisterns, improving sanitation programs and recharging aquifers in developing communities, particularly in Ghana, Kenya, Brazil, China and India.

Here is a sample of the water initiatives PepsiCo and the PepsiCo Foundation are funding:

• The PepsiCo Foundation and the PepsiCo China business have contributed $2.5 million to bring access to safe water to 56,000 people in western rural areas of China since 2001.
• The PepsiCo Foundation announced its contribution of $5 million to the IDB's AquaFund, which aims to provide access to safe water and sanitation to at least 500,000 people in Latin America and the Caribbean.
• The PepsiCo Foundation announced a $5 million grant in June 2011 to support the All-China Women's Federation (ACWF) in its efforts to provide access to clean water in rural areas of China. The grant—which will be awarded over a three-year period and administered by Give2Asia, a U.S.-based nonprofit organization founded by the Asia Foundation—will help fund the efforts of ACWF's China Women's Development Foundation (CWDF) to provide safe water access for 500,000 people in the central and western regions of China by 2015.

WaterHope

WaterHope, a four-year-old community-driven enterprise to make safe, clean drinking water available to poor communities in the Philippines—while supporting local development—is a successful illustration of PepsiCo's Performance with Purpose model in action.

WaterHope was established by a partnership between PepsiCo and the Wholistic Transformation Resource Centre (WTRC), a Philippine humanitarian and development organization. WaterHope's stated vision is to help transform and empower poor and marginalized communities into ones that are vibrant, healthy and productive.

WaterHope helps establish community-owned and -operated water stations. The water stations are owned and operated by local NGOs that provide low-cost water to a network of community water dealers who in turn sell this water to consumers. Profits from the operation of the water station are to be channeled back into the local community in the form of community development programs. By ensuring that the profits from this enterprise are used in this way, WaterHope provides a mechanism for delivering clean, safe water that can support health and other services within a community.

In communities with WaterHope stations, a large portion of residents lack access to the main water supply, and many rely on wells or rivers for their drinking water. Poor families can't afford water offered by private water stations, and there is often little assurance on the quality.

Water from WaterHope stations is more affordable than alternatives on the market. And while the price still might not be within reach of the poorest of the poor, WaterHope provides high-quality, free drinking water to schools, churches, health clinics and public transport stations in two of the three functioning stations.

PepsiCo and the WTRC started building WaterHope stations in the Philippines in 2007 and have since completed three stations in urban Manila. The stations provide nearly 26,000 people in poor communities with accessible, affordable and safe drinking water—a clear demonstration of PepsiCo's commitment to respect water as a human right. WaterHope has also helped residents improve their lives through microenterprise and participation in business, while additional health and education activities facilitated by the stations have helped nearly 1,500 people.

During the participatory review in 2010, many of the dealers commented that through their involvement in WaterHope they have learned new skills and built new networks that help them in their day-to-day lives. Many of these women put their additional income toward their children's education.

Feedback from community stakeholders in both the 2009 and 2010 reviews also suggests that WaterHope is contributing to a reduction in water-borne diseases like dysentery.