Converting Strategy into Results

The Promise of PepsiCo

San Antonio, TX

February 25, 2011

PepsiCo is one of the largest Food and

Beverage Companies in the World

Major Brands: 19 Billion Dollar Plus Brands

– Frito Lay

– Gatorade

– Pepsi Cola

– Quaker

– Tropicana

Global Distribution

– Businesses in Virtually Every Country in the World

– 700 Company Owned or Licensed Manufacturing Sites

High Visibility

– Water

– Energy and GHG

– Land Fill

3

Support From the Top: Performance With Purpose

“Performance with Purpose” mission: our belief that our financial success — Performance — must go hand-in-hand with our social and environmental responsibilities — our Purpose. We call this “the Promise of PepsiCo is a manifesto that includes ambitious global goals — 47 commitments in all — that will guide our company this decade”

The Challenge of Alignment and

Implementation

Integrated in

Business

Strategy

Headquarters Field

Aligned

with Core

Values

Compliance

“We have set targets for the Field”

“Global Tools with Local Solutions”

“This is a company mandate”

“Work through the Regional and Site

Captains”

“Sustainability can be self serving and

whole serving”

“It’s in our AOP and

Evaluation”

“We will do it our way”

“It’ll Never Work”

“We have to imbed sustainable practices or

we wont be doing business in the future”

“We Need Help”

Dr. Peter Senge: The Creative

Tension Model

The gap between vision and current reality creates the “creative tension”

The larger the gap between vision and reality, the more tension exists

ENERGY to

CHANGE

•Dr. Peter Senge

o Founder of Society

for Organizational

Learning (SoL)

o Author, The Fifth

Discipline (1990) and

The Necessary

Revolution (2008)

o Professor at MIT

Converting Strategy to Results

Create the Vision

Create the Tension

Enable Success

Recognize and Reward

The Promise of PepsiCo Creates and

Enshrines the Vision.

7

• Leading Innovation in Water Stewardship – Achieving 2015 Goals and

enabling Positive Water Impact

• Minimizing External Waste – Zero Landfill

• Innovation in Carbon Reduction – Enterprise and Product Level reductions

• Building Community Trust – Human Right to Water, Sustainable Agriculture

Create the Tension with Globally Aligned

Objectives

First Universal Operating Targets in PepsiCo

Tracked at Every Level in the Organization

Water Reduction Targets are ahead of Plan, Fuel and Electricity are on flight plan

-8-

MFG WATER L/L or KG MFG FUEL per Unit MFG ELEC per Unit

20%

Reduction

‘15 vs ‘06

25%

Reduction

‘15 vs ‘06

20%

Reduction

‘15 vs ‘06

Build Capability : ReCon is the Most Widely Used

Tool within PepsiCo and its Supply Chain

STAGE I

Common Priorities

Climate Change Water Land/Waste

Awareness

Energy Efficiency People Practices

Water Value

Water Conservation

Awareness

Waste Reduction

Recycling Practices

Waste Value

STAGE II

Critical Systems

Combustion

Compressed Air

Refrigeration

Water Treatment

Process Water

Waste Water

Packaging

Product

STAGE III

Enterprise Solutions

Absolute GHG

Enterprise Solutions

Life Cycle Analysis

Watershed Mgmt.

Water Balance

Enterprise Solutions

Zero Landfill

Enterprise Solutions

STAGE IV Supply Chain Reapplication

Energy Efficiency

Absolute GHG

Water Risk

Mitigation

Supply Chain

Waste Reduction

Waste Value

Zero Landfill

From “In House” to the Supply Chain

Today

2011

Future

ReCon has established PepsiCo’s leadership,

from fundamentals to breakthrough research.

STAGE I

STAGE II

STAGE III

STAGE IV

Walkers 34.5 grams

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1

Pepsi 2L

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1

Pepsi 2LWalker’s 34.5 gm

CO2e Content

Agro/Ingredients

Packaging

Transportation

Processing

End Of Life

Legend

1070 Gm CO2e80 Gm CO2e

Enabling Tools, Metric Indicators

Best Practice – Broad Deployment

Go Deep on the Critical Systems

Best Practice – Targeted Deployment

Expert Partnerships (TNC, WRI)

Enterprise-wide Impact Drivers

Research Partners ( Columbia, MIT)

Supply Chain Impact

All Stages of ReCon are supported

by Universal Tools

PI Xpert Diagnostic ReCon

Scorecard

On Line Profilers

for Energy, Water

and GHG

The XPERT Diagnostic is the

Single most applied tool

In the program – 200 sites

In all Sectors, Multiple Co-Packers,

Suppliers and Franchises. 27 Audits

In First 3 Weeks of 2011!

Hotlist

Building Capability in “Green Design” :

Sustainable Engineering

Identify and Deploy New Technology

Promote Good Ideas from Local to Global

Leverage Knowledge Management Systems to Spread Expertise and Capability

Support LEED Certification and similar programs

Aligning Sustainable Engineering with LEED

Certification.

Nanchang

Azov

Chongqing

Monterrey

PepsiCo has earned 19 LEED

Certifications and has more in progress.

Complete In Progress

Building Capability through

Knowledge Management Tools

Sustainable Engineering Guidelines

– On-Line LEED Guidance

– Green Product Search

– Best Practice Library

– Credit Submission Examples

Certification Support

– In-House LEED AP Guidance

– Consultant Support

Low Cost Certification

– Minimize Consultant Reliance

– Overcome Cost Objections

Reward and Recognition: At the Site

and for the Individual

Demonstrated Sponsorship

Excellence in Implementation

Impact to the Business

Creativity in Sustainment

Center of Excellence Award

• Above & beyond to achieve breakthrough business results.

• Outstanding performance with purpose in core accountabilities.

• Recognized leader and role model by management, peers, and/or customers.

Success Criteria

Invest in Alignment – it pays off

Avoid Shortcuts – not sustainable

Stay the Course

Recognize and Reward – Early and Often