In an e-mail interview with H20, CSR Director, Asia Pacific Region, Pepsico and Vice President-Operations, PepsiCo Greater China spoke on how PepsiCo has embraced water stewardship and embedded sustainability into its business strategy.
How important is water in PepsiCo’s sustainability scheme of things?
Lynette Ryan: At PepsiCo, we are particularly aware of our responsibility towards this important resource because water is fundamental to our ability to operate efficiently. Water stewardship is a central part of our business strategy of Performance with Purpose, which is our mission to deliver sustainable growth by investing in a healthier future for people and our planet. We respect the human right to water through world-class efficiency in our operations, preserving water resources and enabling access to safe water. Because we use water to make our products, maintaining the highest quality standards for consumers means using the best water possible. At the same time, it is essential that we treat water as the limited resource it is. We are committed to optimising our global water use through greater efficiency, innovative processes and new technologies.
In 2009, PepsiCo conserved more than 12 billion litres of water through efficiency improvements within our operations, compared with the 2006 baseline.
Our goals and commitments in relation to water include:
• Improve our water use efficiency by 20% per unit of production by 2015.
• Strive for positive water balance in our operations in water-distressed areas.
• Provide access to safe water to three million people in developing countries by the end of 2015. We are working hard to reach these goals by minimising the impact our business has on the environment and by collaborating with industry peers, governments, academia, nongovernmental organisations (NGOs) and communities.
PepsiCo Greater China’s Nanchang beverage plant has been certified with the LEED (Leadership in Energy and Environmental Design) Gold status
PepsiCo routinely conducts assessments to monitor levels of water stress factors in the areas of our operations and proactively initiates water replenishment programmes around the world. The global water goals require continuous improvement to reduce our water footprint. From a global perspective, PepsiCo remains committed to its comprehensive and integrated movement to conserve and optimise water usage. Our initiatives reinforce our commitment to the UN Global Compact (UNGC), the CEO Water Mandate and the UN’s Millennium Development Goals of sustainable access to safe drinking water.
How successful has PepsiCo been with regards to ‘closing the loop’ between water use and recycling in your operations?
Lynette Ryan: Water is required to make our products so that we maintain the highest of quality standards for consumers and water is required to ensure a clean and safe workplace for our employees and our suppliers. In turn, efficient use of water across our operations is nothing short of imperative. We are committed to minimising our global water use through greater efficiency, innovative processes and new technologies. We conserved more than 12 billion litres of water through eco-efficiency improvements within our global operations. While using water responsibly is a top priority, we also believe in our ability to help address the broader challenge of water scarcity and to help avoid water conflicts in local communities.
In 2009, PepsiCo India achieved Positive Water Balance. Essentially, this means that we were able to give back to society more water than we used to manufacture our products, by recharging and replenishing water through various sustainable initiatives in agriculture and by replenishing water in communities around its manufacturing plants. In 2010, PepsiCo India saved 10.1 billion litres of water through various initiatives:
• Water savings through interventions in agriculture: In 2010, PepsiCo India’s water conservation interventions with farmers, such as direct seeding of rice in over 10,100 acres, yielded 30% saving in freshwater consumption amounting to 7.8 billion litres, as compared to traditional methods of cultivation. In DSR, the seeds are sown directly into the main field and no standing water is required at the base of the crop. PepsiCo India is also helping farmers in water-scarce areas in Maharashtra, Gujarat, Karnataka and Haryana and promoting drip irrigation in over 1,100 acres. It is estimated that every acre saves approximately 700 kilolitres of water.
• Recharging water through community initiatives: PepsiCo India has focused on activities that replenished or provided improved access to water to communities around its manufacturing facilities. In 2010 alone, community water projects have created the potential to recharge over two billion litres of water and benefiting nearly 41,000 community members. It has constructed 13 check-dams, 100 well-recharge structures in Paithan Maharashtra.
• In-plant water recharge and harvesting: PepsiCo India employs rainwater harvesting initiatives within its manufacturing locations, such as roof water harvesting and re-charge ponds. At some plant locations it harvests and collects rainwater in excavated ponds while at other plants it uses roof-water harvesting to recharge water.
What is your approach to measuring Return on Investment (RoI) on sustainability initiatives? How has PepsiCo built a business case for sustainability?
Lynette Ryan: Our approach to superior financial performance is straightforward – drive shareholder value. By addressing sustainability issues, we deliver on our purpose agenda. Our performance and our purpose are not separate – it’s a merger of financial achievement in each of the three elements that together form our purpose agenda: human, environmental and talent sustainability.
What have been PepsiCo’s achievements in China on the water front?
Kerswick Leung: We regard ourselves as the role model in terms of water savings in the China beverage industry. In 2010, 65% of PepsiCo Greater China’s bottling plants won Water Conservation Excellence Awards from the CBIA. The new plants of Chongqing Pepsi and Nanchang Pepsi received the US Green Building’s LEED Silver and Gold certification. By the end of 2010 contributions to support access to clean water from the PepsiCo Foundation, PepsiCo Greater China and its employees have totalled RMB18.7 million, funding more than 1,500 water cellars and over 30 centralised small-scale water supply projects, benefiting 58,000 people in seven provinces.
Could you elaborate on the LEED-certified bottling plant?
Kerswick Leung: PepsiCo Greater China’s Nanchang beverage plant has been certified with the LEED (Leadership in Energy and Environmental Design) Gold status. It is the first plant to receive the LEED NC (New Construction) Gold certification in the beverage industry in China.
The LEED Gold Certification for Pepsi Nanchang new plant is a further proof of PepsiCo’s commitment to promoting environmental sustainability through the development of more sustainable facilities in China. The relocated Nanchang new plant can save potable water use by 34% and can achieve energy consumption savings of 51%, compared to the old Nanchang plant. PepsiCo now has 24 bottling plants in Greater China region and all the future plants in China will be built by LEED standards.
What have been the business and social benefits coming out of these water saving initiatives? How do they align to PepsiCo’s global goals?
Kerswick Leung: PepsiCo, through its foundation, continues to make social investments in sustainable water resource management initiatives, which positively impact both quantity and quality of water supplies for local communities, particularly in developing countries. At the core of our commitment is establishing strategic public-private-partnerships (PPP) with innovative organisations to make an impact on water scarcity. In China, we work with the PepsiCo Foundation and the China Women’s Development Foundation (CWDF) to help install village water systems, construct rainwater harvesting cisterns, and improve community health and sanitation.
Such public-private partnership approach is also making a real and sustainable impact on people in countries including Ghana, Kenya, Brazil and India. Globally, the PepsiCo Foundation and PepsiCo have committed more than $15 million to organisations working to deliver safe water and sanitation in this way since 2005. Together, PepsiCo and the PepsiCo Foundation are working to provide access to safe water to one million people from the world’s most drought-stricken regions. This programme has already impacted around 400,000 people since its launch in 2008. In China, water resource conservation, management and clean water access have become critical national priorities. PepsiCo China began making social investments in clean water access 10 years ago with our partnership with the Water Cellars for Mother’s programme of the China Women’s Development Foundation. Since 2001, the PepsiCo Foundation and the PepsiCo China business have contributed more than $2.5 million to bring safe clean water access to 58,000 rural residents in western and central regions of China.
Why did PepsiCo choose to take the NGO route in the Philippines? How can it serve as a role model for other countries in similar situations?
Lynette Ryan: PepsiCo, together with the Wholistic Transformation Resource Centre (WTRC) – an NGO focusing on humanitarian work and development in the Philippines – created ‘WaterHope’ in 2007.
Waterhope is a social enterprise that helps provide clean and affordable drinking water to poor communities and supports wider social development. With an initial focus in disadvantaged areas of Metro-Manila, Waterhope is a sustainable and scalable approach to dealing with the lack of clean drinking water in poor communities and supporting the development of local livelihoods.
Water Hope station in Metro Manila, created by PepsiCo and Filipino NGO Wholistic Transformation Resource Centre (WTRC )
‘Performance with Purpose’ outlines PepsiCo’s commitment to financial achievement along with environmental sustainability; human sustainability and talent sustainability. In 2006, the head of PepsiCo’s business in Asia wanted to pursue a community project that fit with the company’s sustainability strategy. There was a particular interest in addressing access to drinking water issues given the importance of this in the region.
As the Philippines is one of PepsiCo’s key markets in the Asia- Pacific Region, it was decided to start Waterhope there. WTRC has a long history and experience with local Manila communities, and were able to provide great access to a network of relationships which has helped Waterhope deliver a significant positive impact in those communities. I think it’s important for companies to invest in projects from the start-up phase. This approach means that projects target specific needs of the community in a way that is sustainable for the community and for the companies. Developing a model which allowed PepsiCo to invest the skills of its people in partnership with local NGOs has brought great results in Waterhope.
WaterHope water stations have helped provide safe and clean drinking water at affordable prices in poor communities and helped residents improve their lives through their micro-enterprises and participating in the business, and through additional social and education activities facilitated by the stations.
PepsiCo and WTRC are keen to get companies to do more to invest in poor communities in a sustainable way and Waterhope should serve as an example of how that can be done successfully and therefore, get more companies on board.
WaterHope is currently reviewing the model to consider its applicability in different markets in and outside of the Philippines.
