Approach

Water stewardship has long been one of PepsiCo’s top priorities, and it's an important part of building a Positive Value Chain. As one of the first companies of our size to acknowledge access to water as a human right, we have a vision to become net water positive.

In order to achieve this, we have adopted an approach to watershed management that includes:

• Improving water-use efficiency across our value chain—on farms and in manufacturing facilities;
• Replenishing water and improving the health of the local watersheds that are most at risk where we operate; and
• Increasing safe water access for communities that face water insecurity, including scarcity and unsafe water sources.

PepsiCo is acutely aware of the critical role water plays in the food system, and it is our vision that wherever PepsiCo operates, water resources will be in a better state because of our presence. We work to understand water challenges at a local level and support collaborative solutions that address the specific needs of the watershed and the communities that depend on it.

Goals

We have set standards for ourselves and our supply chain that support our vision for net positive water impact and ultimately a Positive Value Chain. As part of our pep+ (PepsiCo Positive) ambitions, we're working towards becoming net water positive in our operations, enhancing watershed management in our agricultural supply chain and contributing to community water health. All together, our water ambition aims to reduce absolute water use and replenish back into the local watershed more than 100% of the water used². This 2030 agenda builds on our prior 2025 goals and outlines our ambitions to:

• Advocate for and contribute to a measurable improvement in the health of high water-risk watersheds where we directly source our crops, including an improvement in water-use efficiency of 15% by 2025³
• Improve operational water-use efficiency by 25% in high water-risk areas by 2025⁴
• Ensure that we have net water positive impact by achieving:
  • Best-in-class water-use efficiency in 100% of high water-risk PepsiCo and third-party manufacturing facilities
  • World-class water-use efficiency in all other PepsiCo and third-party manufacturing facilities
  • Replenish back into the local watershed more than 100% of the water we use
  • Continue to adopt the Alliance for Water Stewardship (AWS) Standard in high water-risk manufacturing facilities, by 2025, as a vehicle for water advocacy
  • Reach 100 million people with safe water access⁵

pep+ in context: Water

How we're working toward our vision of becoming net water positive

Operations

Improving water efficiency

PepsiCo supports the principles of circular water within our company-owned manufacturing operations and third-party manufacturers. This means we look to reduce our freshwater footprint and identify reuse opportunities for treating process water within our own operations and those of our third-party manufacturers, particularly in high water-risk areas.

We assess operational water efficiency against our peers, in both beverage and food production, based on publicly-available information as well as against peer company commitments and information shared with us through industry groups. With this knowledge, we have strived to set water efficiency goals that are best-in-class in the Consumer Packaged Goods industry for company-owned and third-party locations in high water-risk areas. Our definition of best-in-class is based on our assessments and benchmarking and corresponds to using:

• 1.2 liters of water per liter of production in beverage plants and
• 0.4 liters of water per kilogram of food within convenient foods production plants.

In PepsiCo and third-party manufacturing facilities not facing high water-risk, we strive for world-class water efficiency, which we define as using:

• 1.4 liters of water per liter of production in beverage plants and
• 4.4 liters of water per kilogram of food within convenient foods production plants.

With these goals, PepsiCo expects not only to improve production efficiency, but to also reduce absolute water use. Achieving our vision will require close partnership extending beyond company-owned operations and, as such, we have included our third-party manufacturers within the scope of our 2030 goals. We are starting to work closely with third-party facilities to share best practices and source performance data. Our aim is to be able to incorporate their progress into our goal metrics and drive towards best-in-class and world-class water-use efficiency across our entire manufacturing value chain.

At our 107 company-owned manufacturing facilities in high-risk watersheds, PepsiCo’s best-in-class efficiency standard would reduce our company-owned operational water-use by 50%  by 2030 compared to a 2015 baseline, avoiding the use of more than 11 billion liters of water a year.

This ambition and impact build on PepsiCo's long record of improving water-use efficiency. Between 2006-2015, water-use efficiency improved by 26% in global legacy operations, and we are approaching our goal of an additional 25% improvement between 2015-2025.

Our approach to improving operational water-use efficiency is multi-faceted and aims to capture efficiencies through initiatives such as our Resource Conservation (ReCon) program which identifies and shares operational efficiency best practices across our locations globally. We are also developing low water footprint manufacturing processes and investing in world-class technology, such as membrane technology, that allow us to safely reuse water within our manufacturing processes.

Water sustainability is integrated across all aspects of our business, including the design of line expansions, validation of new water reuse solutions and innovation in product design through our Sustainable from the Start program, and is taken into consideration during our capital approval process. Through these and other projects, we expect to invest significantly to support our water strategy.

Water replenishment

Good quality fresh water is vital to our business, as a key ingredient for our beverages, to maintain sanitary conditions throughout our operations, to grow the crops within our agricultural supply chain and to produce other raw materials necessary for our business. We expect that future water dependency in our company-owned and third-party manufacturing operations will change with improvements in both operational and agricultural water-use efficiency and water availability. With that in mind, and given the risks facing good quality fresh water, PepsiCo aims to replenish more than 100% of the water we use. In other words, we aim to restore and protect freshwater ecosystems by putting back more water than we take from local watersheds.

To do that, we’re working with partners to deploy a range of initiatives that restore the health of high-risk watersheds. The most common types of projects are those that:

• Conserve and restore land to reduce watershed impacts from excessive runoff and increase groundwater infiltration,
• Increase water supply reliability through water use efficiency improvements,
• Improve water quality and/or
• Restore and protect aquatic habitats and ecosystems through wetland protection or restoration.

Each watershed is unique, and it is important that replenishment projects are informed by the local conditions within the areas from which we source. An understanding of the unique challenges and risks of the watershed helps to inform which tactics will be the most impactful. For example, we have partnered with the Nature Conservancy through the Greater Cape Town Water Fund, a multi-stakeholder initiative, in South Africa to implement a project to remove invasive plant species from an aquifer's primary recharge zone, reducing the amount of the ecosystem's water used by invasive plant life and increasing water security. The partnership is also designed to contribute to the conservation and restoration of ecosystem functioning and to the diversity of native plant life and the habitat of native fauna.

Advocacy for improved water security

While we can make a significant impact in water stewardship through the actions we take across our value chain, we also have opportunities to help mitigate water insecurity on a broader level, through advocacy for improved water governance and through increased collective action.

We support existing collaborative efforts to address water risk and mitigate water insecurity. In addition to current collaborations, we seek out new opportunities to partner with other stakeholders. We do this by advocating for the adoption of smart water policies and regulations; by sharing information and best practices with water stakeholders; and by providing public education and training for consumers and communities. In addition, we joined the Alliance for Water Stewardship in 2018 and aim to adopt the AWS Standard at all of our high water-risk facilities by 2025, using it as a vehicle for advocacy and to help ensure that freshwater resources in high water-risk locations are available for all water stakeholders.

Community

Access to clean and safe water is a fundamental human right, and the fact that billions of people have been left with limited access to it for decades is a problem of global importance that must be addressed rapidly. Today, 2 billion people— about 1 in 4—lack access to safely managed drinking water services.⁶ Water insecurity puts communities at risk, increasing negative health outcomes, decreasing food availability, and, in the worst cases, driving communities out from their homes.

PepsiCo and the PepsiCo Foundation work with partners to close the gap in safe water access programs, implementing projects primarily in Latin America, Asia, the Middle East and Africa. These efforts are designed to help improve water security, including building sanitation facilities and community water systems, providing loans to families to build water infrastructure in their homes, supporting local water entrepreneurs, installing community water access points and helping to rehabilitate natural springs.

Women and water

According to WaterAid, the burden of unpaid work related to water, sanitation and hygiene (WASH) most often falls on women and girls. Recognizing this, implementing women-targeted WASH interventions can change the course of their future and for generations to come. The PepsiCo Foundation has been partnering with WaterAid India on multiple programs since 2017 to improve access to safe drinking water at the household level, improve hygiene practices in target communities with a focus on women, adolescent girls and children and establish water quality monitoring of community-managed systems.

Agriculture

To improve our water-use efficiency, we identify opportunities in at-risk locations, develop phased action plans, ensure farmers have the correct equipment and train farmers to execute against water goals. We help farmers access more efficient irrigation equipment, support best practices for scheduling and maintenance and enable the transition from flood irrigation to more efficient methods, such as drip irrigation. We created 89 demonstration farms around the world, many of which feature water-use efficiency best practices or demonstrable improvements in water quality and provide an opportunity to engage large numbers of farmers in hands-on learning and understanding innovation. For more on our efforts to spread the adoption of sustainable agricultural practices, see Agriculture.

Governance

Our global approach to water stewardship is led by a team of water experts in PepsiCo’s Global Sustainability Office. They, in turn, work in partnership with our respective sector teams and external partners to execute our strategy and work toward achieving our goals. PepsiCo's water strategy applies to the entire organization, including all companies, entities or groups over which operational control is exercised. Portions of our water strategy, including world-class water efficiency and replenishment, also apply to third-party manufacturers.

The Board plays an essential role in determining our strategic priorities and considers sustainability issues (e.g., water stewardship) as an integral part of its business oversight. To this end, the Board established a Sustainability, Diversity and Public Policy Committee to assist the Board in providing more focused oversight of key sustainability, diversity, equity and inclusion and public policy matters. One of the primary responsibilities of the Committee is to review PepsiCo’s key sustainability programs and related goals and monitor the Company’s progress toward achieving those goals, including progress against its water goals.

The PepsiCo Executive Committee (PEC), made up of the Chairman & CEO, the CFO, sector CEOs and functional heads, meets quarterly to review progress against goals, progress against broader environmental risk mitigation and to ensure that we are adapting our sustainability strategy to changes in science, stakeholder expectations and marketplace conditions. In addition, the PepsiCo Sustainability Committee, a sub-committee of the PEC, takes further responsibility for sustainability matters and meets on a monthly basis to discuss strategy and progress.

Assessing water risk

Through our Enterprise Risk Management process, we identify and assess water-related risks within our direct operations and other stages of our value chain twice a year. Supplementing that process, we also conduct an in-depth global water risk assessment of all our company-owned operations on a rolling three-year cycle, most recently in 2022. Partnering with a specialized environmental consultancy, we have developed a robust water risk assessment process that leverages multiple data sets and local insights. This process is designed to provide PepsiCo with a holistic view of water-related risks, both current and future, in our global manufacturing locations.

Some of the inputs used include the World Resources Institute’s (WRI) Aqueduct tool, local site risk assessment surveys and third-party independent expert experience and knowledge operating within the watersheds. This helps us to determine and quantify the level of physical (quantity and quality), regulatory and reputational water risk.

The outcome of our operational water risk assessment informs which locations are designated as high risk and allows us to focus our efforts and resources where it matters most.

Progress

Improving water-use efficiency in our direct operations

In 2022, PepsiCo had 107 high water-risk manufacturing locations as defined by our global water risk assessment process. These locations span five continents and account for more than 30% of our company-owned manufacturing facilities, with high water-risk locations accounting for 25% of our company-owned production output. To track our operational water-use efficiency goal, we measure both water withdrawal (the total amount of water that we remove from a water source) in high water-risk areas and non-high water-risk areas as well as the volume of product produced. In 2022, we withdrew approximately 78 million cubic meters of water across all company-owned operations—approximately 25% from regions of high water-risk. Water consumption (the amount we withdraw that is not replenished back into its source watershed) across PepsiCo was nearly 27 million cubic meters of water—approximately 25% from regions of high water-risk.

In 2022, we recorded an 22%⁷ efficiency improvement in our water-use efficiency rate at our high water-risk locations when compared to our 2015 baseline. This represents an approximately 4% improvement from the prior year and builds on a 26% improvement already achieved between 2006 and 2015 as part of our Performance with Purpose goals.

To reduce our freshwater consumption, we are piloting innovative water treatment technology in high water-stress areas to use as models for other PepsiCo sites around the world.

• Vallejo, Mexico Facility: At one of our largest food sites in the world, PepsiCo has created its first circular water system. For more than 200 days in 2022, Vallejo achieved zero freshwater consumption (zero liter/kg), drawing zero water from the conventional supply during this period. By installing water-use efficiency technology to recycle water on-site, including a filtration and reverse osmosis system, low-water cooking processes and rainwater harvesting, and treating and reusing processed water from other nearby companies within our catchment areas, Vallejo has increased its water-use efficiency by 85% (compared to a 2015 baseline).
• Funza, Colombia Facility: For more than 200 days in 2022, this site operated using zero freshwater, with no burden on local municipalities, by capturing rainwater for use in our operations.
• Kolkata, India Facility: The average potato is made up of about 80% water. At our Kolkata plant, we found a way to give that inherent water a purpose by capturing it and cleaning it to safe drinking standards instead of letting it evaporate off as steam. The technology can recover more than 50% of the water used in the potato chip cooking process. Early results show the process can save up to 60 million liters of water per year. PepsiCo has the potential to scale this application, where regulations permit, at up to 30 high water-risk areas by 2030.

Water replenishment

With the launch of pep+, we extended our 2025 replenishment goal to 2030, increasing the scope to include third-party manufacturers and striving to replenish more than 100% of the water we use in high water-risk areas. See Calculation methodology for detail on how we measure progress against our pep+ goals. In 2022, through our projects across the globe, we replenished approximately 8.7 billion liters of water, or 45%⁸ of the water we consumed in our company-owned manufacturing facilities in high-risk watersheds. Progress is driven by 36 projects across the globe, with our support of the Greater Cape Town Water Fund and our reforestation partnership with the Arbor Day Foundation in California representing the projects with the greatest individual impacts.

Access to safe water

Since 2006, PepsiCo and the PepsiCo Foundation have helped more than 80 million people gain access to safe water through distribution, purification and conservation programs—good progress towards our goal of providing access to safe water for 100 million people by 2030.

In 2022, the PepsiCo Foundation invested approximately $2 million in safe water access programs, and it plans to continue to expand the reach of its safe water access program by providing grants over the next three years to two new water stewardship programs in Latin America and Africa.

Building on a decade-long, successful partnership with the Inter-American Development Bank's Aqua Fund, the PepsiCo Foundation aims to improve water access and sanitation services across the Latin America region, bringing the Foundation's total investment to over $10 million.

In Nigeria, the Foundation is providing a $1 million grant to WaterAid to support the construction of water supply and sanitation facilities and the development of programs to promote good hygiene practices. Funding from the grant will support improvements to the lives of about 173,000 people with sustainable access to adequate water, sanitation and hygiene.

Advocacy for improved water security

In 2019, we launched pilot projects to adopt the AWS Standard at high water-risk facilities in South Africa, Pakistan and Mexico, with a fourth pilot launched in the United States in 2020. These pilots stood up cross-functional teams of PepsiCo associates who have come together to diagnose local water risks and opportunities for the facilities to be good water stewards. These efforts continue to expand, and at the end of 2022, we had 61 facilities in high water-risk areas in the process of adopting and 8 facilities that have completed adoption of the AWS Standard.

Improving water-use efficiency in agriculture

Measuring our agricultural water consumption requires the support of hundreds of farmers in a complex global value chain. We collect and publish agricultural water-use efficiency data every three years, or sooner if warranted by organizational changes, updated methodologies or more accurate data. Our most recent data collection was conducted in 2020. Between 2015 and 2020, we improved direct agriculture water-use efficiency in our high water-risk regions by 14% against a 2015 baseline.⁹ As the science evolves, we aim to continue to improve the integrity and efficiency of our data collection, processing and reporting systems.

Strategic partnerships

PepsiCo draws on the expertise and local knowledge of an array of partners in order to deliver on its water stewardship ambitions. These include non-profit organizations, research institutions, developmental experts as well as collaborative initiatives. For detail on a selection of these partnerships, see Water partnerships and engagements.

What's next?

In the coming year, we will continue to bring our net water positive vision to life. This will include prioritizing:

• Operational water-use efficiency: Working towards achieving “best-in-class” water-use efficiency at our 107 high-risk company-owned manufacturing facilities, and more than 200 third-party manufacturing facilities in high-risk watersheds and "world-class" efficiency at nearly 200 other company-owned sites and more than 500 other third-party manufacturing locations;
• Water replenishment: In high water-risk areas, aiming to replenish more than 100% of the water that we use in company-owned facilities and 100% of the water used in third-party manufacturing facilities back into the local watershed by 2030; 
• Community access to safe water: Implementing new programs and expanding existing partnerships to make progress on our safe water access goal benefiting a total of 100 million people by 2030 since 2006;
• Advocacy: Scaling up our efforts to adopt the AWS Standard at our high water-risk facilities in new geographies; and
• Agricultural water-use efficiency: Continually improving water-use efficiency towards our 2025 goal with a particular focus on our most severe high water-risk growing regions.