WATER STEWARDSHIP
At PepsiCo, we believe that water is a fundamental human right, indispensable to every community around the world. More than 785 million people globally lack access to safe water. Climate change and increased consumption are placing an increasing burden on water supply resulting in cities facing “day zero” crises, communities being displaced, and environmental systems being degraded. At the current rate of progress, it is projected that there will be a 40% gap between global water supply and demand by 2030. There is a strong imperative for companies like PepsiCo to deploy their expertise and resources to address this issue.
Water is also 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 standards, 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.
OUR JOURNEY
Water stewardship has long been one of our top priorities. We understand that our ability to manage our water footprint is 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. In order to do our part to honor that right, we have adopted an integrated approach to watershed management that includes;
- Improving water-use efficiency on farms and in manufacturing facilities
- Replenishing local water in the regions that are most at risk and where we operate
- Increasing safe water access for communities that face scarcity.
OUR COMMITMENTS
As part of our sustainability agenda, we have set the following goals around water:
- In high water-risk areas, by 2025 we aim to:
- Improve water use efficiency by 15% in our agricultural supply chain (focused on corn and potatoes) (2015 baseline)
- Improve operational water use efficiency by 25% (2015 baseline)
- Replenish 100% of the water we use in manufacturing operations
- Adopt the Alliance for Water Stewardship standard as our vehicle for water advocacy
- Deliver safe water access to 25 million people by 2025
We learned from our early efforts and consulted with partners and independent experts to inform these water stewardship goals. As a result, we significantly raised the bar from our 2015 sustainability goals. Our 2025 sustainability goals are more comprehensive in their scope and focused on a holistic view of our value chain and the watersheds where we operate with an 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 United Nations Sustainable Development Goals.
PERFORMANCE
IMPROVE WATER-USE EFFICIENCY IN AGRICULTURE
Approximately 70 percent of the world’s freshwater being used for agriculture. As a company that depends on agricultural raw materials for our products, we understand how critical it is to improve our water-use efficiency in our agricultural operations. As a result, we place great importance on ensuring our agricultural partners are employing sustainable water management practices. 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 efficient water usage in farmers’ fields around the world.
Under our 2025 sustainability 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 by 2025 and are already making progress. Our 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.
Between 2015 and 2017, we improved direct agriculture water use efficiency in our high-water risk regions by three percent. Measuring progress is a complex undertaking requiring the support of hundreds of farmers beyond the scope of our own operations. As a result, and to focus efforts on implementing sustainable practices, we collect and publish agricultural water use efficiency data every three years.
To date, we have worked with water experts to establish the required processes and protocols, and have developed individual roadmaps in specific locations. In collaboration with the World Resources Institute, we undertook a study to evaluate our high-water-risk crops and regions using their Aqueduct tool. In addition, we utilize the UN Food and Agriculture Organization’s (FAO) Cropwat 8 modelling tool to determine our water use efficiency. We have gathered the baseline data and progress through the 2017 crop year from all countries where we have direct crops in water-stressed regions. We then calculated the baseline water opportunity, identified local goals, and developed implementation plans for each farmer group in scope. We expect these plans will benefit the farmers and the local communities by supporting more efficient water-use throughout the watersheds where PepsiCo sources our crops. Many of these plans have the added benefits of improving local watershed health, improving crop productivity, and mitigating and adapting to climate changes.
Work on the ground to make improvements on our water-use has included identifying opportunities in targeted locations, developing phased plans against each of those opportunities, ensuring farmers have the correct equipment, and developing plans to train farmers on the skills needed to execute against the goal. Some of the concrete ways we are working with farmers include helping them access more efficient irrigation equipment, supporting best practices for scheduling and maintenance, 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 have also created more than 100 demonstration farms around the world, many of which feature water-use efficiency best practices and provide an opportunity to engage large numbers of farmers in hands-on learning and understanding innovation. We are increasingly promoting the use of reduced tillage and cover crops, which improve soil health and water holding capacity. We will also explore new technologies and innovations that deliver improved water-use efficiency. Additionally, we have partnered with the University of Pretoria in South Africa, to establish a globally applicable pivot irrigation audit protocol that is aiding us in improving our water efficiency.
IMPROVE WATER USE EFFICIENCY IN DIRECT OPERATIONS
We continue to be focused on improving our water-use efficiency in our manufacturing facilities, with a particular focus on high-water-risk locations. Our 2025 water operations goal is to achieve a 25 percent efficiency improvement in high-water-risk areas. In 2019 PepsiCo had 71 high-water-risk manufacturing locations as defined by our internal water risk assessment process. These locations span five continents and 16 countries and account for more than a quarter of our company-owned production. Eight of our top 15 revenue markets have manufacturing operations in high-water-risk locations.
In 2019, we recorded a nine percent efficiency improvement in our water-use efficiency rate at our high-water-risk locations when compared to our 2015 baseline. 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.
Our approach is multi-faceted and aims to capture efficiencies through initiatives like our Resource Conservation (ReCon) program, which identifies and shares operational efficiency best practices across our locations globally. Additionally, PepsiCo is developing and deploying design water efficiency improvements in our manufacturing processes and in downstream water recovery technology. These include enhanced wastewater treatment systems and recovery technology for water reuse. We have also deployed advanced technologies such as Minimal-Liquid Discharge (MLD) systems, a low water splash cone for potato slicing, membrane bioreactor (MBR) systems, reverse osmosis (RO) systems and Closed Circuit Reverse Osmosis (CCRO) systems to drive further progress in water quality and efficiency. For example, in several of our snacks facilities in Mexico, we have installed membrane bioreactors coupled with reverse osmosis wastewater treatment technology to enable water reuse and deliver greater water use efficiency. At our Sabritas Vallejo manufacturing facility in Mexico, 68% of site process water is treated to potable water standard and reused. In addition to Mexico, we have applications of this process water recovery membrane technology in India, Belgium, Chile, Colombia, Brazil, Dominican Republic and the U.S., and are actively investing in more locations.
WATER REPLENISHMENT
While we focus on improving water-use efficiency 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 use 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 2019, we updated our goal, committing ourselves to replenish the amount of water used (previously our goal related to the volume of water consumed, per the World Resources Institute’s differentiation between water use and consumption). This change has had the effect of more than doubling our target replenishment volume.
In 2019, we replenished more than 1.6 billion liters of water through projects across the globe. Staying true to our goal of replenishing water in the high-risk watersheds from which it is extracted, we have capped at 100 percent the reporting of benefits from projects that achieved more than 100 percent of their watershed targets. In 2019, we replenished 10 percent of the water we consumed in our company-owned manufacturing facilities in high-risk watersheds. This represents an increase from our restated 2018 performance (8%).
PARTNERSHIPS
In the arid western United States, our team has partnered with The Nature Conservancy and others as part of 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 more than 200 million liters of water within the river system in 2019.
In 2019, our new water replenishment initiatives included projects in three locations - Peru, Pakistan, and the United States:
- PepsiCo is working with The Nature Conservancy to restore traditional Incan canals in Peru that will redirect high water flows during the wet season and enhance groundwater recharge across mountain slopes.
- In Utah, PepsiCo is supporting The Nature Conservancy’s work in the Price River to increase water for ecological uses, restoring wetlands and riparian habitats, and protecting threatened and endangered species in the river system.
- PepsiCo signed a Memorandum of Understanding with the World Wildlife Fund in Pakistan to launch a new partnership aimed at improving water security near Lahore with rainwater harvesting and recharge interventions and constructed wetlands.
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 support 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.
ACCESS TO SAFE WATER
As the world’s population continues to grow, there is an increasing need for safe water and sanitation facilities. According to The United Nations, 2.2 billion people lack access to safely managed drinking water and 4.2 billion lack safely managed sanitation services. Access to safe, clean water is becoming more important as the severity of climate change-driven droughts and floods increases and rainfall become less predictable. Without adequate water, it is expected that crop yields will sharply drop and hundreds of thousands of hectares of farmland will be unproductive. Climate change will disproportionately affect women and girls, who already bear the burden of family water collection—which UNICEF estimates at 200 million hours every day.
From the early days of our sustainability program, addressing safe water access has been a priority for PepsiCo. Since 2006, through partnerships funded by the PepsiCo Foundation, we have provided access to safe water to more than 44 million people as of the end of 2019.
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; and
- 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, our philanthropic arm, The PepsiCo Foundation, and our partners to drive innovative, sustainable and comprehensive solutions to the crisis of water insecurity.
We will continue to enable long-term, sustainable water security for our business and others who depend on water availability by investing in the essential elements of a sustainable food system - helping to alleviate hunger, manage water and waste responsibly, and supporting women as champions of nutrition from farm to family. By doing this, we feed potential - one community at a time.
ADVOCACY FOR IMPROVED WATER SECURITY
Having a positive water impact means improving water security not just within our four walls, but out in the watersheds in which we operate. We know we can make a significant impact in water stewardship through the actions we take across our value chain, but we also have opportunities to help mitigate water insecurity on a broader level, through advocacy. We are supporting existing collaborative efforts to address water risk and mitigate water insecurity and creating new opportunities to collaborate where we see need. 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 providing public education and training for consumers and communities.
PepsiCo is a member of the Alliance for Water Stewardship (AWS). We 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. In 2019 we launched pilot projects to adopt the 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.
PepsiCo is an active member of the 2030 Water Resources Group (WRG) and 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). This work includes installing water pumps and pipes for difficult-to-reach rural and dispersed communities in Peru, Mexico, Colombia and Honduras, which traditionally have received much less support for safe water access projects than more densely populated areas. IDB and PepsiCo have also launched a modeling tool called HydroBID to help local governments estimate the availability of freshwater in water-scarce regions and aid in water budgeting and water-resource planning.
LOOKING AHEAD
In the coming year, our water priorities include:
- Water-use efficiency: Continually improving water-use efficiency towards our 2025 goal with a particular focus on our most severely high-water-risk growing regions (agriculture) and site performance at our 25 high-water-risk sites in the United States (direct operations);
- Water replenishment: Scaling up replenishment projects in key watersheds to advance our progress against this goal;
- 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;
- Advocacy: Complete our four pilot AWS Standard adoptions in South Africa, Pakistan, Mexico, and the United States and scale up our efforts to start applying the Standard at other high water risk facilities.