Water stewardship is among the most important strategic initiatives we have as a company. It is a critical resource for our business, at all points along our value chain – from the farms where we grow the fruits, vegetables and grains that make up our product portfolio, to our manufacturing processes where water is used to ensure we meet the highest quality food safety standard, and as one of the key ingredients in many of our products. PepsiCo’s business depends on water, and as such, we have a vested interest in conserving and protecting it.
We believe that water is also a fundamental human right, indispensable to every community around the world. With water scarcity impacting nearly 3 billion people worldwide today, including people in communities where we operate, there is a strong imperative for companies like PepsiCo to deploy their expertise and resources to address this issue.
From the very beginning of Performance with Purpose (PwP) in 2006, water stewardship has been one of our top priorities. We knew then that our ability to manage water was inextricably linked to the success of our business and of the local communities where we operate. We were one of the first companies of our size to acknowledge water as a human right, and in order to do our part, we needed to take an integrated approach to watershed management, from improving water-use efficiency on farms and in manufacturing facilities, to replenishing local water in the regions that are most at risk and where we operate, to increasing safe water access for the most vulnerable. We have learned from our efforts of the last decade and consulted with partners and independent experts to inform the water stewardship goals that went into our PwP 2025 agenda. As a result, we have significantly raised the bar from our first set of Performance with Purpose goals. Our PwP 2025 goals are more comprehensive in their scope and focused on a holistic view of our value chain and the watersheds where we operate.
We have set a number of interconnected goals that aim to contribute to our Positive Water Impact – meaning our efforts and partnerships will be designed to enable long-term, sustainable water security for our business and others who depend on water availability. This robust view of water stewardship is espoused by organizations such as The Nature Conservancy and the World Wildlife Fund, and aligns with a number of the UN Sustainable Development Goals.
Improve water-use efficiency in agriculture
With approximately 70 percent of the world’s freshwater being used for agriculture, we know how critical it is to improve our water-use efficiency in our agricultural operations. As a company that depends on agricultural raw materials for our products, we place great importance on operating sustainably on the farm level when it comes to water management. For several years, PepsiCo has been working with growers through our global Sustainable Farming Program (SFP) (formerly the Sustainable Farming Initiative), and through local partnerships to drive efficiency in farmers’ fields around the world. For example, between 2011 and 2016, PepsiCo’s 50 in 5 program succeeded in reducing the carbon and water footprints of our United Kingdom potato supply chain by 50 percent.
Under our PwP 2025 agenda, we have set a global goal to improve water-use efficiency in high water risk areas of our direct agricultural supply chain by 15 percent by 2025. This goal was established through a preliminary baseline that was modeled on irrigation practices with growers in high-water risk areas. While this goal is very ambitious, we will work hard to achieve it between now and 2025. This goal focuses on improving our water-use efficiency where the need is greatest, in high-water risk locations, as defined by the World Resources Institute’s Aqueduct tool, a mapping device that helps institutions understand where and how water risks are developing globally.
To date, we have focused our efforts on establishing the required processes and protocols, and developing individual roadmaps in specific locations, in order to make progress against our target of 15 percent efficiency improvement by 2025. In collaboration with the World Resources institute, we undertook a study to evaluate our high water risk crops, and we utilized the UN Food and Agriculture Organization’s (FAO) Cropwat 8 modelling tool to determine our baseline crop water footprint. We have gathered the baseline data from countries where we have direct crops in water-stressed regions. For each farmer group, we have calculated their baseline water opportunity and are identifying local goals and implementation plans. We expect these plans will benefit the farmers and the local communities by supporting more efficient water-use throughout the watershed where PepsiCo sources our crops.
Work on the ground to make improvements on our water-use has included determining opportunities in targeted locations, developing phased plans against each of those opportunities, ensuring farmers have the correct equipment needed, and developing the plans to train farmers on the skills needed to execute against the goal. Some of the concrete ways we are working with farmers include supplying them with more efficient irrigation equipment and enabling them to move from flood irrigation to more efficient methods, such as drip irrigation. This conversion in turn, changes the way farmers apply nutrients, improving soil health, yields and crop quality. We are increasingly promoting the use of cover crops, which improves soil health and water holding capacity. We will also explore new technologies and innovations that deliver improved water-use efficiency. We are also partnering with the University of Pretoria, based in South Africa, to establish a globally applicable pivot irrigation audit protocol that will let us improve our water efficiency.
Improve water-use efficiency in direct operatons
We continue to be focused on improving our water-use efficiency in our manufacturing facilities, as we progress against our PwP 2025 goal to achieve a 25 percent improvement in water-use efficiency in direct operations, with a focus on manufacturing operations in high water risk areas. While we are working with all plants on water-use improvement, we are prioritizing work in high water risk areas. As of June, 2018, PepsiCo has 79 locations defined by our internal water risk assessment process as high water risk. These locations span 5 continents and 14 countries and account for more than a quarter of our company-owned production.
In 2017, we recorded an improvement of just under 2 percent in our water usage efficiency rate per unit of production across our all of our company-owned manufacturing locations compared to 2015. This improvement builds on the work that we have been focused on for the last decade, in which we improved water-use efficiency per unit of production by 25 percent through 2015, against a baseline of 2006 in our legacy operations.
We are focused on capturing efficiencies through a variety of methods, including placing increased emphasis behind our Resource Conservation (ReCon) program, uncovering and sharing best practices in operational efficiency from the program across our locations globally. Additionally, PepsiCo is working on developing and deploying leading technologies in its operations aimed at improving water-use efficiency. We do this through design improvements in our manufacturing processes and by looking downstream at enhanced wastewater treatment systems and recovery technology for water reuse. Technologies such as Minimal-Liquid Discharge (MLD) systems, membrane bioreactor (MBR) systems, and reverse osmosis (RO) systems are advanced technologies that we deploy to drive progress around water quality and efficiency. For example, in several of our snacks facilities in Mexico, we have installed membrane bioreactors coupled with RO wastewater treatment technology that enables water reuse and helps to deliver greater water-use efficiency. We currently employ membrane technology in Mexico, India, Belgium, Chile, Russia, Colombia, and the U.S., and are actively investing in more locations.
While we focus on maximizing efficiency of the water we use in our agricultural and manufacturing operations, creating a healthier watershed also requires that we give back water that we have consumed. This is critical to the continuity of our business, our license to operate, and the health of our communities. That is why we have set a goal to replenish 100 percent of the water we consume in manufacturing operations located in high-water risk areas by 2025, and ensure that such replenishment takes place in the same watershed where the extraction has occurred.
Our Replenishment goal is focused specifically on high-water risk areas where we operate and where the need is greatest. In 2017, we replenished more than 2 billion liters of water, focused in projects in Brazil, Guatemala, India, Mexico, and the United States. In India, completed projects have over-delivered on our replenishment targets, reflecting strong local programs to reduce community water insecurity that have been in place for several years and which pre-date the launch of our global replenishment goal for PwP 2025. Staying true to our goal of replenishing back to each of the high risk watersheds we are drawing from, we have capped at 100 percent the reporting of benefits from projects that achieved more than 100 percent of their watershed targets. Globally, we are 22 percent of the way to our 2025 target of replenishing 100 percent of the water we consume annually in our company-owned manufacturing facilities in high risk watersheds.
Our methodology for calculating the volume of water consumed is based on the World Resources Institute definition of water-use and water consumption. Both our methodology and our replenishment activities are based on this context – that water withdrawals should be replenished when our activities result in a water loss to a high risk watershed and that such replenishment should occur within the same watershed as where the loss of water occurs.
While we are redoubling our efforts on replenishment to achieve our PwP 2025 goal, this has been a foundational piece of PepsiCo’s water stewardship agenda since the early days of Performance with Purpose. We have made a significant impact in recent years in high-water risk countries like India and Jordan, partnering with local organizations on projects like check dams, water harvesting, and recharge pond rejuvenation.
In the arid western United States, our team has partnered with The Nature Conservancy and others in the Salt and Verde Alliance, a partnership that brings together companies, farmers, communities, and other organizations with an interest in the Salt and Verde watersheds. By supporting varied on-farm practices, more efficient irrigation, and water-efficient crop conversions, PepsiCo kept over 400 million liters of water within the river system in 2017.
We plan to continue delivering against our goal by investing in projects in high-risk watersheds that improve the quantity and/or the quality of the water in the watershed. These include watershed protection projects like reforestation, wetlands rehabilitation, and aquifer recharge. We also are focused on projects that enable water for productive use, such as rainwater harvesting, dam rehabilitation, and seasonal water storage. Our projects must reflect the input and support of the local community.
Wastewater in direct operations
Responsible wastewater discharge from our manufacturing operations is a critical element of achieving positive water impact. For PepsiCo, adhering to this goal is vital to the continuity of our manufacturing plants, as it protects our license to operate in local communities. As part of our PwP 2025 agenda, we have set a goal to have 100 percent of wastewater from our operations meet PepsiCo’s high standards for protection of the environment.
PepsiCo’s Global Environment, Health and Safety Management System is a robust set of management and technical standards that provide guidance on acceptable and applicable operating parameters for our operations. One such technical standard is the Discharge of Process Wastewater Standard, which is aligned with the World Bank’s International Finance Council and Business for Social Responsibility’s (BSR) Sustainable Water Group. Our global wastewater standard formalizes the expectation that wastewater discharged from facilities will:
- Meet applicable regulatory requirements
- Be conducted in an efficient, safe and responsible manner
- Maintain an effluent quality that does not cause degradation of water quality of the local environment
PepsiCo maintains the high standard that although compliance with local standards is necessary, it is sometimes not enough. In some parts of the world, local wastewater direct discharge limits may not be sufficient to protect against degradation of the water quality of the local environment. In such cases, we require our manufacturing operations to meet PepsiCo’s more stringent discharge limits.
In 2017, nearly 95 percent of wastewater from our operations met PepsiCo's high standards for protection of the environment. This translates into 63 percent of manufacturing locations that are 100 percent in conformance with PepsiCo standards.
Wash in direct operations
Our business depends on the thousands of dedicated employees in our manufacturing sites who ensure the safety and quality of our products, and we in turn, are committed to ensuring safe conditions for them. Critical to this is the provision of employees’ access to safe water, sanitation and hygiene (WASH) for our employees.
Accordingly, as part of our PwP 2025 agenda, we have set a goal to provide appropriate access to safe water, sanitation and hygiene (WASH) for 100 percent of our own manufacturing employees by 2025. This is aligned with our participation in the World Business Council for Sustainable Development’s (WBCSD) WASH in the workplace pledge, the premier global standard related to WASH in the workplace, which PepsiCo signed in 2015.
In 2017, PepsiCo reset the baseline to account for full reporting from all manufacturing locations and better alignment to the WBCSD WASH pledge. These factors resulted in manufacturing locations assessing their conformance against 12 criteria encapsulated in our internal WASH standard and based on WBCSD guidance.
We grouped these criteria into two categories: critical and programmatic. Critical criteria Tier 1 include those we deem most critical and highest priority, such as access to toilets, safe water, and hand washing facilities. Programmatic criteria include remaining items such as requirements for behavioral training programs and provision of proper signage. We established these designations in order to prioritize capital investment, and look to address that the most urgent needs are addressed first. Today, 46 percent of manufacturing facilities are WASH conformant, with 71 percent meeting critical criteria (sufficient WASH facilities) and 53 percent meeting programmatic criteria (signage/training).
Access to safe water
Increasing access to safe water for vulnerable individuals is one of the most urgent challenges the world faces. From the early days of Performance with Purpose, addressing this challenge has been a priority for PepsiCo. Since 2006, through partnerships funded by the PepsiCo Foundation, we have provided access to safe water to nearly 16 million people as of the end of 2017. By 2025, we intend to help provide access to safe water to a total of 25 million people since 2006 in the world’s most at-water-risk areas, with a focus on communities near where PepsiCo works.
Access to safe water is a multi-faceted issue, and we are focused on achieving it at the watershed, community and household levels. With our partners, we work to implement sustainable solutions on the ground that:
- Make water more readily available, through market-based programs for household water connections and toilet installations, and/or renovation of pumps and pipes
- Better manage supply or volume of water, through water resource management, water basin restoration, and/or pollution reduction
- Ensure quality through water treatment, improved hygiene and community sanitation
Co-creation is critical to impactful partnerships, and PepsiCo is an active collaborator with our water partners. Each partner shares with PepsiCo the common goal of sustainable access to safe water for millions of people. Collectively, we seek to leverage the individual and unique strengths of PepsiCo, the PepsiCo Foundation and our partners to drive innovative, sustainable and comprehensive solutions to the crisis of water insecurity.
Going forward, the PepsiCo Foundation will continue to focus on supporting programs in China, India and Latin America. These are regions where the need for safe water access is great and we have the ability to reach large numbers of people, maximizing our impact. At the same time, these are all geographies that are important to the PepsiCo business, and we believe that we in turn have a responsibility to act as a responsible corporate citizen for the people in those communities where we operate.
Advocacy for Improved Water Security
While we know 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 PepsiCo, this means initiating and supporting collaborative efforts to address water risk and mitigate water insecurity. We do this in three ways: by advocating for the adoption of smart water policies and regulations, by sharing information and best practices with water stakeholders, and by public education and training for consumers and communities.
One example of our advocacy program is our collaboration with the 2030 Water Resources Group (WRG), where PepsiCo is represented on the Governing Council. The 2030 WRG is a public-private collaboration hosted by the World Bank that stimulates open dialogue about water management, and develops proposals to help improve the management of water resources in the country. 2030 WRG is active in a number of key PepsiCo markets including India, Mexico, and South Africa.
Another collaborative effort is taking place across Latin America, through a public-private partnership between PepsiCo, the PepsiCo Foundation and the Inter-American Development Bank (IDB). The PepsiCo Foundation and the IDB teamed up in 2014 to address the mismatch between water supply and demand with Hydro-BID, a ground-breaking water resource data management and modeling tool that estimates the availability of freshwater in water-scarce regions, giving municipalities the ability to better govern water resources. To date, HydroBID has been implemented in Argentina, Brazil, Ecuador, Guatemala, and Peru. In Peru alone, 40 National Water Association experts applied Hydro-BID to 65 percent of the country’s water basins, including the Atlantic, Pacific and Titicaca water bodies. Programs like these work because they are rooted in deep understanding of the needs of local communities, and executed in collaboration with local partners. Hydro-BID is responding to the challenges faced by governments, water utilities, the private sector, and other water stakeholders related to lack of information, reliable data, and tools - helping us all plan and make better decisions for the sustainable management of water.