We can get by

with a little

help from our

friends

CBI low-carbon business breakfast

Can low carbon business be

profitable?

Andrew Smith

Head of Corporate Responsibility

PepsiCo UK & Ireland

andrew.i.smith@intl.pepsico.com

(+44) 07912 971090

The brief from the CBI:

“Supply chain carbon: measurement and reduction”

“Can low carbon really be profitable?”

3

•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?

CBI low-carbon business breakfast

Who we are

Isn’t climate change falling off the agenda?

The Guardian

Climate change will have profound impacts…

...which have already begun…

Walkers potato

crops, 2009

…and impact the bottom line

£360 / tonne , April 07

£950 / tonne, April 08

9

Continuous Improvement

2008-11 targets2008-11 targets

Renewable EnergyEnergy Water Waste

- 20%- 45%- 20%

+ 80%

A strategic response

Transformational change

Cupar Bio mass Waste oil Bio diesel Skelmersdale wind turbine

Achieve zero landfill waste

across our total supply

chain within 10 years

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

Achieve zero water intake at our

Walkers Crisps manufacturing sites

within 10 years

All energy used in PIUK manufacturing

and distribution to be from renewable

sources within 15 years

All energy used in PIUK manufacturing

and distribution to be from renewable

sources within 15 years

Fossil free, largest factories zero water,

zero landfill supply chain….

10Progress

All energy used in PIUK manufacturing

and distribution to be from renewable

sources within 15 years

All energy used in PIUK manufacturing

and distribution to be from renewable

sources within 15 years

En

erg

yE

ne

rgy

11Progress

All UK manufacturing sites now at zero landfill

12

CARBON REDUCTION –

SUPPLY CHAIN

13

59% Of Footprint

Outside Our Own Operations

Transport Disposal

30%

Processing

Cooking

9% 2%

Sunflower

growing

Potato

growing

Seasoning

Packaging

75g Of Carbon

Per Packet Of Walkers Crisps

Measuring the footprint of Walkers Crisps

14A commitment to reduce

•Carbon Reduction Label - launched on Walkers in March 2007

•A transparent commitment to reduce

•Our hopes:

ogalvanise our business and our suppliers / farmers

oraise public awareness on carbon

15

Engaging our suppliers

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

Reduction delivered

18Our footprint reduced by 7%, and we saved money

2007 - 2009 7% Reduction Breakdown

50

55

60

65

70

75

80

85

90

2007

(Reba

selin

ed)

Potato

trans

port

Corruga

te

Man

ufactu

ring -

Gas

Man

ufactu

ring -

Electri

city

Other

2009

Lab

el

g.C

O2.

equ

iv

• 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

19

Brand and consumer benefits

Source: Populus 2007-2009

2007 20090%

10%

20%

30%

40%

50%

60%

41%

47%42%

39%

8%

15% 14% 13%

It [Carbon Reduction

Label] makes me more

likely to buy their

products:

Companies will be more motivated to

reduce their carbon emissions if they

show the exact footprint on pack:

10%

46%

44%

Agree

Disagree

Neither/don’t know

20

44% Agriculture

30% Processing – cooking

9% Transport

2% Packaging

disposal

15% Packaging supply chain

The next stage: agriculture

Walkers footprint:

21

On-farm research > action

•ADAS -Sustainable Potato Project

•KPIs, metrics and improvement plans

developed around carbon, water,

agrochemical and energy hotspots

22

CAN LOW-CARBON

BUSINESS BE PROFITABLE?

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

Drivers for low carbon

Next Government will have

to introduce a range of tax

rises and spending cuts

Public Sector borrowing >

£300 billion over next three

years

Need to ‘plug the gap’

Waste, pollution and

environmental damage

attractive targets

“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”

Drivers for low carbon

Learnings

•Identify hotspots across the supply chain, and pursue them

•Transparency can drive positive change

•Share your insights

•Independent partners help

•Realise your influence

Why are we finding it

so much harder to plan

for / report on

adaptation than

manage and measure

mitigation?

We can get by

with a little

help from our

friends

CBI low-carbon business breakfast

Can low carbon business be

profitable?

Andrew Smith

Head of Corporate Responsibility

PepsiCo UK & Ireland

andrew.i.smith@intl.pepsico.com

(+44) 07912 971090