Presentation by Andrew Smith, head of corporate responsibility, PepsiCo UK, at the CBI's low-carbon business breakfast. London, 15 April, 2010.

1. CBI low-carbon business breakfast
Can low carbon
business be
We can get by profitable?
with a little
help from our
friends
Andrew Smith
Head of Corporate Responsibility
PepsiCo UK & Ireland
andrew.i.smith@intl.pepsico.com
(+44) 07912 971090

2. The brief from the CBI:
“Supply chain carbon:
measurement and
reduction”
“Can low carbon really
be profitable?”

3. 3
CBI low-carbon business breakfast
• PepsiCo (and why climate
change matters to us…)
• Supply chain footprint &
reduction:
• Measurement and Disclosure:
carbon reduction label
• Partnership: supplier
engagement
• Learnings
• Can low carbon be profitable?

4. Who we are

5. Isn’t climate change falling off the agenda?
The Guardian

6. Climate change will have profound impacts…

7. ...which have already begun…
Walkers potato
crops, 2009

8. …and impact the bottom line
£950 / tonne, April 08
£360 / tonne , April 07

9. 9
A strategic response
Continuous Improvement Transformational change
Renewable Energy Water Waste
Energy All energy used in PIUK manufacturing
and distribution to be from renewable
sources within 15 years
+ 80%
Achieve zero landfill waste
across our total supply
chain within 10 years
Achieve zero water intake at our
Walkers Crisps manufacturing sites
within 10 years
- 20% - 45% - 20%
2008-11 targets
Cupar Bio mass Waste oil Bio Skelmersdale wind
diesel turbine
Fossil free, largest factories zero water,
zero landfill supply chain….

10. 10
Progress
Energy
All energy used in PIUK manufacturing
and distribution to be from renewable
sources within 15 years

11. 11
Progress
All UK manufacturing sites now at
zero landfill

12. 12
CARBON REDUCTION –
SUPPLY CHAIN

13. 13
Measuring the footprint of Walkers Crisps
75g Of Carbon
Per Packet Of Walkers Crisps
Potato
growing
Processing
Cooking Transport Disposal
Sunflower
growing
Seasoning
30% 9% 2%
59% Of Footprint
Packaging Outside Our Own Operations

14. 14
A commitment to reduce
• Carbon Reduction Label - launched
on Walkers in March 2007
• A transparent commitment to reduce
• Our hopes:
o galvanise our business and our
suppliers / farmers
o raise public awareness on carbon

15. 15
Engaging our suppliers

16. 16
Supplier feedback
Gerald Rebitzer, Global Director Product
Stewardship, Alcan Packaging:
"Our collaboration with Walkers has been
unprecedented. We’ve swapped information,
expertise, and ideas with all the partners in the
value chain. This value chain cooperation can
be seen as a role model to implement life cycle
thinking in practice – an essential element
towards more sustainable products.”

17. 17
Reduction delivered

18. 18
Our footprint reduced by 7%, and we saved money
• 7% reduction of footprint between 2007 and 2009
• Equal to 6g of CO2e per standard bag of Walkers
• Overall saving of 4,800 tonnes of CO2e
• Cost savings of £400,000 over two years
2007 - 2009 7% Reduction Breakdown
90
85
80
g.CO2.equiv
75
70
65
60
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19. Brand and consumer benefits 19
It [Carbon Reduction Companies will be more motivated
Label] makes me to reduce their carbon emissions if
more likely to buy they show the exact footprint on
their products: pack:
60% 10% Disagree
50% Neither/don‟t know
47%
40% 41% 42% 44%
39%
30%
Agree
20%
10% 15% 14% 13%
46%
8%
0%
2007 2009
Source: Populus 2007-2009

20. 20
The next stage: agriculture
Walkers footprint:
44% Agriculture
30% Processing – cooking
15% Packaging supply chain
9% Transport
2% Packaging
disposal

21. 21
On-farm research > action
• ADAS -Sustainable
Potato Project
• KPIs, metrics and
improvement plans
developed around carbon,
water, agrochemical and
energy hotspots

22. 22
CAN LOW-CARBON
BUSINESS BE PROFITABLE?

23. In reality, we can’t be high carbon and profitable…
23

24. Drivers for low carbon
Next Government will
have to introduce a
range of tax rises and
spending cuts
Need to „plug the gap‟
Waste, pollution and
environmental damage
attractive targets
Public Sector borrowing
> £300 billion over next
three years

25. Drivers for low carbon
“We should reduce uncertainty
over the future price of carbon.
Taxation can help to provide a
floor beneath which the price of
carbon will not fall. The Climate
Change Levy needs to be
replaced by a Carbon Levy…a
tax on carbon”

26. Learnings
• Identify hotspots across the supply
chain, and pursue them
• Transparency can drive positive
change
Why are we finding it
• Share your insights so much harder to plan
for / report on
adaptation than
• Independent partners help manage and measure
mitigation?
• Realise your influence

27. CBI low-carbon business breakfast
Can low carbon
business be
We can get by profitable?
with a little
help from our
friends
Andrew Smith
Head of Corporate Responsibility
PepsiCo UK & Ireland
andrew.i.smith@intl.pepsico.com
(+44) 07912 971090