Letter from Indra Nooyi

Dear Fellow Stakeholders,

Every day, PepsiCo earns its license to operate in the thousands of communities we serve.

As one of the world's largest food and beverage companies, we have some distinct responsibilities. We have a responsibility to support economic development, to improve our environmental footprint and to help work toward solutions to issues such as obesity and undernourishment. This report, called Performance with Purpose: Creating a Better Tomorrow for Future Generations, captures the progress we have made thus far and provides a map of where we intend to go.

Performance with Purpose is fundamental to our overall success. There's no question that these are challenging times. Like many companies, we're facing headwinds such as rising costs, an uncertain economic outlook and shifting currency exchange rates. While we can't control macroeconomic trends, we must adapt to the near-term challenges to deliver on our long-term growth plans.

But this cannot be an excuse to reduce our commitment to responsible business. Indeed, financial performance can and must go hand in hand with sustainability. Our performance and our purpose are not separate— each is knitted inextricably with the other. That relationship can be seen in the three areas that together comprise Performance with Purpose: Human, Environmental and Talent sustainability. These focus areas will guide the way we do business. They will continue to be shaped in dialogue with key stakeholders. In this way, we intend to maintain our long-term commitment to the overall sustainability of our company.

Human Sustainability

The world today faces many public health challenges and, as a responsible company, we recognize our part in helping to improve the well-being of populations in both developed and developing countries.

Our aim is to nourish consumers by developing products that satisfy the consumer's changing preferences and that deliver exceptional taste and convenience. Increasingly, our product portfolio makes it more enjoyable to lead a healthy life. We're changing because our consumer is changing and because the health of the world's growing population demands it.

To meet this demand, we've appointed new leaders to our global R&D team, including world-renowned clinical scientists. We have increased our R&D investment and dramatically expanded our capabilities. We have accelerated our innovation pipeline, acquired companies to extend our offerings of more nutritious products and actively cultivated partnerships to guide our work. We will use our influence to drive positive change in the food industry.

Environmental Sustainability

As a responsible company, we seek to continually drive environmental sustainability by abiding by applicable laws and regulations and, in certain instances where we believe the requirements may not be sufficiently advanced, we apply higher standards.

Recently, Bureau Veritas issued independent verification of our environmental data. We will continue to audit our performance, share our progress and actively lead and engage in private-public partnerships to spur action and solutions to address the world's environmental issues.

But we want to go further than that. We have focused our environmental sustainability efforts on the areas where, because of our expertise, we can have the most impact:  water, climate change, agriculture and packaging. We are working hard to minimize our water footprint and improve public access to clean water through alliances with nonprofit groups such as The Earth Institute and Water.org. We are intent on mitigating climate change and continuing our efforts to reduce greenhouse gas emissions. After more than a decade of action, we continue to form partnerships with key stakeholders such as the Carbon Trust to provide us with additional insights, expertise and knowledge.

Talent Sustainability

By valuing our employees, we are ensuring that PepsiCo is the kind of company where talented people of all backgrounds want to work.

We recognize our responsibility to take care of our employees and their families, especially during this global economic downturn. We remain committed to providing opportunities for our associates to acquire new skills, grow professionally and share in our company's success. Our dedication to workplace safety is unwavering, and we offer health care benefits and wellness programs that enable our employees to live healthier lives.

We foster an inclusive workplace by increasing female and minority representation in management ranks, creating rewarding opportunities for people with disabilities and recognizing our employees for their contributions.

We are extending our human rights standards throughout our operations and encourage our suppliers and agricultural partners to uphold our commitment to sustainable development.

Conclusion

I believe our Performance with Purpose mission defines our roles and responsibilities very clearly. It motivates our 198,000 employees to be leaders in social responsibility and helps each of us create a better tomorrow for future generations. We look forward to sharing our progress and I look forward to your feedback. I encourage you to share your comments on our corporate citizenship report at PerformanceWithPurpose@pepsico.com.

Indra K. Nooyi
Chairman and Chief Executive Officer