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.
With 69 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 Initiative (SFI) and through local partnerships to drive efficiency in farmers’ fields around the world. For example, our 50 in 5 program is a program that PepsiCo embarked on in the U.K. five years ago to reduce the carbon and water footprints of its potato supply chain by 50 percent.
For our PwP 2025 agenda, we have set a goal to improve water-use efficiency in 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. This 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.
Practically, we anticipate making progress on this goal in a number of ways. We are supplying farmers with more efficient irrigation equipment, enabling them to move from flood to more efficient irrigation 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 moisture. We will also explore new technologies and innovations that deliver improved water-use efficiency.
One example of how we have successfully improved both water-use efficiency and yields at the same time comes from the Indian state of Maharashtra. There, we worked with 1,000 local farmers to replace flood irrigation with more efficient drip irrigation equipment. These conversions resulted in a net savings of nearly 0.9B liters of water, while improving crop yield by approximately 30 percent. Using drip irrigation instead of traditional irrigation in this case improved our water use efficiency by approximately 32 percent in 2015, provided an increased reliable supply of potatoes for our products.
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 ensuring that we prioritize the work in high water-risk areas. PepsiCo has 78 locations defined by our internal water risk assessment process as high risk. These locations span 5 continents and 15 countries and account for more than a quarter of our company-owned production.
In 2016, we achieved an improvement of 1 percent across our all of our company-owned manufacturing locations. 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 25.8 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 ReCon program, uncovering and sharing best practices from the program across our locations globally. Additionally, PepsiCo is working on installing technologies in its operations aimed at wastewater treatment and recycling of water including zero-liquid discharge systems and membrane bioreactor systems which are critical drivers of progress. For example, in several of our facilities in Mexico, we have installed membrane bioreactors, a wastewater treatment technology that will help to deliver greater water-use efficiency. It is partially through the use of such technology that our Mexico operations have been able to improve water use efficiency by over 40 percent since 2006. We currently have MBRs in India, Russia, U.K., Chile, Colombia and the U.S.
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 used. 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, ensuring that replenishment takes place in the same watershed where the water was extracted.
We are achieving this 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 are also focused on projects that enable water for productive use, such as rainwater harvesting, dam rehabilitation, and seasonal water storage.
Our Replenishment goal is focused specifically on high-water risk areas where we operate and where the need is greatest. In 2016, we replenished over 2.6 billion liters of water, focused in this first year of our target delivery period on projects in India, Jordan, and the United States. In India and Jordan, 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. 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 26 percent of the way to our 2025 target of replenishing 100 percent of water consumed annually in high risk watersheds. While this is strong progress in our first year, it reflects activity in a limited number of watersheds and as such we are expanding replenishment activity to more high risk watersheds across multiple countries.
Our methodology for calculating the volume of water consumed is based on the World Resources Institute definition that states “water consumption is the portion of water use that is not returned to the original water source after being withdrawn. Consumption occurs when water is lost into the atmosphere through evaporation or incorporated into a product…and is no longer available for reuse.” 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 pond rejuvenation.
In Jordan for example, our team has forged a strong partnership with Jordan’s Ministry of Water and Irrigation to create opportunities to replenish watersheds across the country while we also work to drive operational water use efficiency and water awareness through our Aquafina brand. Together, this partnership is replenishing more than 600 million liters of water every year in one of the most water-stressed countries in the world.
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. Regardless, every single project must reflect input and support from the local community and generate quantifiable water benefits, while supporting overall risk mitigation in the watershed.
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. Part and parcel of mitigating business risk, it is our objective to play a positive role in ensuring safe water in the communities where we operate. As part of our PwP 2025 agenda, we have set a goal to ensure that 100 percent of wastewater from our operations meets PepsiCo’s standards for protection of the environment.
This is a priority we have been working towards since 2006. At that time, we developed the PepsiCo Responsible Effluent Standard, which codified our requirements in this area. We further strengthened this in 2011, when we launched a revised global standard as part of our Global Environmental Health and Safety Management System (GEHSMS). This standard advanced our work by making it globally applicable, and by aligning it with standards developed by the World Bank’s International Finance Council and BSR’s 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 often not enough. In some parts of the world, local wastewater discharge limits are not 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. Our wastewater discharge standard, along with all of the standards in PepsiCo’s GEHSMS, is periodically reviewed to ensure adequacy and ongoing relevance.
We are currently deploying a global program to centralize and streamline the collection and reporting of wastewater data, which will support the completeness of our reporting on progress toward our goal. We expect to be able to report on our performance against this PwP 2025 target in 2018.
In the meantime, we continue to improve wastewater discharge quality through improved operations and capital investments. For example, in Goiania, Brazil, wastewater discharge from PepsiCo’s snacks production facility was compliant with local laws but did not meet PepsiCo’s internal standard. From 2013-2016, PepsiCo identified issues, proposed a solution to the local government, worked to secure the necessary construction permits and ultimately installed a new wastewater treatment system onsite.
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 ensure access to WASH to 100 percent of 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, which PepsiCo signed in 2015.
In 2016, we audited our production locations against fourteen criteria encapsulated in our internal WASH standard and based on WBCSD guidance.
We grouped these criteria into two tiers. Tier 1 includes those criteria we deem most critical and highest priority, such as access to toilets, safe water, and hand washing facilities. Tier 2 includes remaining criteria such as requirements for behavioral training programs and provision of proper signage. We established these designations in order to prioritize capital investment, and ensure that the most urgent needs are addressed first. Today, more than 89 percent of our manufacturing sites are in compliance with Tier 1 criteria, with 73 percent compliant with Tier 2.
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 11.4 million people as of the end of 2016. By 2025, we intend to extend access to a total of 25 million people since 2006.
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.
One of our partners has been Water.org, which has implemented a model of microlending called WaterCredit that enables vulnerable populations in India to purchase the safe water and sanitation solutions they need. As the loans are repaid, the money is reinvested in the community, sustaining and expanding the reach of initial investment. Over a number of years, this model has proven its success, and has scaled up over time.
Another of our partners, the China Women’s Development Foundation, launched the Water Cellars for Mothers program, which brings safe water access to communities in rural central and western China through rainwater harvesting or building centralized water supply systems. With the support of China’s Ministry of Water Resources, a PepsiCo Foundation grant is funding safe water access projects for people in rural villages and primary schools in 8 provinces and municipalities. PepsiCo employees volunteered to install drinking water equipment in the Housuo primary school of Banqiao town, Luliang County, Yunnan province.
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 countries 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.
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.
One such collaborative effort is taking place across Latin America, through a public-private partnership between PepsiCo, the PepsiCo Foundation and the Inter-American Development Bank. Following an initial $5 million grant in 2011, the PepsiCo Foundation announced a new $5 million grant in 2016 to fund a new program called “From Source to Home.” Through this program, we will continue to work toward achieving universal and equitable access to safe and affordable water to people living in rural and disperse areas, focusing on benefitting women and girls. We are working together to launch a regional center for applied water resources management through the Hydro-BID program, to reduce the number of people suffering from water scarcity and advance climate change adaptation efforts. Hydro-BID is an innovative data management and modeling tool that estimates the availability of freshwater in water-scarce regions, giving municipalities the ability to better govern water resources. The tool was piloted in Brazil and Peru from 2014-2016, and 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 partnership with local partners.
In addition, PepsiCo is represented on the Governing Council of the 2030 Water Resources Group, a public-private collaboration hosted by the IFC that stimulates open dialogue about water management, and develops proposals to help improve the management of water resources in the country. The 2030 WRG is active in a number of key markets for PepsiCo, including India, Mexico, and South Africa.