Sustainability Report 2011 & 2012 - PepsiCo

Sustainability Report 2011 & 2012Dear Fellow Stakeholders,

It is with immense pleasure that I present to you, PepsiCo India’s Sustainability Report 2011/2012. Performance with Purpose is PepsiCo’s goal to deliver sustained value by providing a wide range of foods and beverages, from treats to healthy eats; finding innovative ways to minimize our impact on the environment through energy and water conservation as well as reduce use of packaging material; providing a safe and inclusive workplace for our employees globally; and respecting, supporting and investing in the local communities in which we operate. As a responsible corporate organization, PepsiCo’s global goals find a strong echo in India operations and sustainable business practices remain a strategic priority in the growth of PepsiCo India.

I am pleased to share this report on the progress we are making on our Performance with Purpose journey at PepsiCo India. The report presents our sustainability goals and provides information on our efforts to achieve those goals.

HUMAN SUSTAINABILITY

We are working towards encouraging people to live healthier by o�ering a broad portfolio of foods and beverage choices. During the reporting period, PepsiCo India continued to work towards this through the introduction of Baked Lay’s in addition to

our existing range of 100% Tropicana juices and Diet Pepsi. Further, PepsiCo launched �avored options for Quaker Oats, making Wholegrain Oats tastier for consumers.

To ensure responsible advertising to children, PepsiCo launched its Global Policy on Responsible Advertising to Children in 2011. This policy was implemented in 2012, as a result of which PepsiCo is committed to advertise to children under 12 those products that meet PepsiCo’s Global Nutrition Criteria for Advertising to Children (A2C criteria) intended to encourage the consumption of healthier food and beverage products.

For PepsiCo, it is not enough to engage with those within its premises. In the communities where we are present, we strive for continuous engagement on key aspects. Besides extending employment opportunities and overall support, PepsiCo India has been successfully leveraging the strength of its people for the �ght against HIV/AIDS. I am proud to announce that in 2012, through HIV/AIDS awareness programes, we reached out to over 3 million people, compared with 1.2 million people in 2010. This milestone was accomplished through employee volunteerism and strengthening our HIV/AIDS Master Trainers pool by 50 percent.

ENVIRONMENTAL SUSTAINABILITY

We understand that even as we grow our o�erings to our consumers, our contributionto the economy and our initiatives for the community, we have to take cognizance of the e�ect on the environment. As a company with manufacturing facilities spread across the country, PepsiCo India is conscious and concerned about the impact its operations have on the planet’s resources and has taken decisive steps towards mitigating it.

Conserving and replenishing water is very critical to the sustenance of life. In 2012, PepsiCo India maintained its water positive status for the fourth consecutive year. Our impact has been signi�cant-5 billion liters of water recharge potential created through community water interventions in 25 villages across �ve states and impacting more than 50,000 people. PepsiCo India has taken responsible steps towards reducing energy consumption, using renewable sources of energy and bringing down green house gas (GHG) emissions. In 2012, PepsiCo India’s foods and beverage plants had a 52 percent

and 38 percent share from renewable energy sources, respectively. PepsiCo India has been extremely conscientious and systematic in managing solid waste. Compared to 57 percent in 2009, in 2012 we reused or recycled 100 percent of the solid waste generated in our foods plants and no waste was sent to land�ll. Our 14 wholly-owned beverage plants also recycled two-thirds of solid waste generated by them.

TALENT SUSTAINABILITY

We seek to provide a safe and inclusive workplace for our employees to attract and retain the best talent. Our people are vital to our continued success, and we continuously invest in our associates, giving them the tools and training to succeed. Career development, nurturing leadership and entrepreneurial qualities are core to PepsiCo. In 2012, we leveraged our solid base of existing training programs and strengthened them through targeted developmental interventions. This resulted in PepsiCo India being ranked third in the “Best Companies in Hiring Practices” category and fourth in the “Best Companies in Leadership Development” category by the Great Place to Work Institute. Throughout the reporting period, PepsiCo India continued its endeavor to make the workplace safer for its employees by implementing tools and measures to monitor the safety performance of its various facilities. Compared with 2011, we managed to reduce lost time injury severity rates by 22 percent in 2012. The company also extended several health initiatives as well as centralized the insurance for group life term and group personal accident, thereby giving employees the ability to be prepared for the adversities of life.

LOOKING AHEAD

At PepsiCo India, sustainability is not separate from the company’s overall business objectives. In a competitive, dynamic and diverse market such as India, PepsiCo recognizes that leadership comes with responsibilities. Our values, philosophy and responsible business practices not only distinguish us from our competition, but also place us among the most respected organizations in the world. This report outlines our journey to deliver on our Performance with Purpose goals. While we continue to make progress, we recognize that there is still a lot to be done. I look forward to your feedback, suggestions and comments.

Performance with Purpose 1

CEO Letter 3

Human Sustainability 5

Product Choice 6

Responsible Marketing 8

Community 9

Environmental Sustainability 11

Water 12

Packaging 17

Waste 18

GHG Emissions 19

Agriculture & Community 21

Talent Sustainability 24

Our People 25

Human Rights 30

Talent & Community 30

Annexure 32

About this Report: Report Pro�le, Boundary and Scope 33

PepsiCo India Region 34

Our Mission and Vision 35

PepsiCo Values & Philosophy 35

Our Corporate Governance and Risk Management Systems 37

Strategy and Analysis 37

De�ning report content: The process 38

Our Stakeholders 39

Associations and Memberships 41

Disclosures on Management Approach 42

Abbreviations 45

Assurance Statement 46

Gri Content Index 48

TABLE OF CONTENTS

Dear Fellow Stakeholders,














LOOKING AHEAD


Performance with Purpose is our goal to deliver sustained value by providing a wide range of foods and beverages, from treats to healthy eats; finding innovative ways to minimize our impact on the environment and lower our costs through energy and water conservation as well as reduce use of packaging material; providing a safe and inclusive workplace for our employees globally; and respecting, supporting and investing in the local communities in which we operate.

PERFORMANCE WITH PURPOSE

As we look out across the world, we see megatrends that make Performance with Purpose more important now than ever. These megatrends include the increasing focus of consumers and governments on health and wellness, growing concern over food safety and traceability, scarcity of critical global resources, and the growing importance of talent development within our business and communities. Each of these megatrends presents an opportunity for PepsiCo to add value by delivering innovative solutions to societal challenges and, in doing so, create value for our stakeholders.

These mega-trends also a�rm that the work of modern businesses must encompass partnerships with the public, private and non-pro�t sectors, which is a central tenet of Performance with Purpose. PepsiCo was one of the �rst contemporary corporations to recognize the important interdependence between corporations and society when we articulated Performance with Purpose back in 2007. We recognize that partnerships with stakeholders across the globe in the public, private and non-pro�t sectors are vital to our business and long-term success.















LOOKING AHEAD


Page 1

This goal-setting process focuses our e�orts as we strive

to deliver great performance by doing the right things for

people and communities around the world.

In 2012, we clari�ed and consolidated our Performance

with Purpose goals after consultation with a diverse

group of stakeholders in order to focus on the issues that

are of importance to our stakeholders, communities

and businesses. Because we believe in the power of

continuous improvement, our goals may further evolve

as we learn from our day-to-day operations, pursue and

adopt new technologies and other innovations, and

adjust to changes in the external environment in which

we operate.

We believe these goals help position PepsiCo for

long-term, sustainable success by aligning what is good

for our business with what is good for society and

the planet.

Strive to deliver superior long-term �nancial performance and sustained shareholder value.

Continue to re�ne our food and beverage choices to meet changing consumer needs by reducing sodium, added sugars and saturated fat, and developing a broader portfolio of product choices.

Continue to provide clear nutrition information on our products, and sell and market them appropriately to our consumers, including children, in line with our global policies and accepted global standards.

Help protect and conserve global water supplies, especially in water-stressed areas, and provide accessto safe water.

Innovate our packaging to make it increasingly sustainable, minimizing our impact on the environment.

Work to eliminate solid waste to land�lls from our production facilities.

Work to achieve an absolute reduction in greenhouse gas (GHG) emissions across our global businesses.

Continue to support sustainable agriculture by expanding best practices with our growers and suppliers.

Create a safe, healthy, diverse and inclusive workplace that re�ects the global communities in which we operate.

Respect human rights in the workplace and across the supply chain.

PERFORMANCE

HUMAN

ENVIRONMENTAL

TALENT















LOOKING AHEAD


Page 2

When PepsiCo globally began its Performance with Purpose journey, we developed a broad set of goals to help guide

the Company’s strategy and operations.















LOOKING AHEAD


Page 3















LOOKING AHEAD


Page 4

Page 5

Human Sustainability Human Sustainability means providing a wide range offoods and beverages, from treats to healthy eats.















LOOKING AHEAD


Page 6

As an industry leader in the food and beverage business, we have a responsibility to help deliver healthy, nutritious and tasty products to our consumers. We are doing this by enhancing our product portfolio to deliver products that o�er improved nutritional and functional bene�ts. Our brands, which include Quaker Wholegrain Oats, Tropicana, Gatorade, Frito-Lay and Pepsi, are household names that stand for superior quality and great taste throughout the world. We have committed to reduce the average amount of added sugar, sodium and saturated fat per serving in key brands.

We are also committed to responsible marketing and nutrition labeling to improve nutrition education and we support programs that promote physical activity and a healthier lifestyle. The Food and Agricultural Organization (FAO) estimates that there are currently almost one billion people in the world with insu�cient food, and billions more with micro nutrient de�ciencies. These challenges are more pronounced for India. Our endeavor to address micro-nutrient de�ciencies in the community through a�ordable products is being realized through Project Asha, which o�ers forti�ed nutritious products at a�ordable cost to adolescent girls.

PRODUCT CHOICEGOAL: Continue to refine our food and beverage choices to meet changing consumer needs by reducing sodium, added sugars and saturated fat, and developing a broader portfolio of product choices.

As one of the world’s leading food and beverage companies, PepsiCo plays an important role in helping people lead healthier lives. We are focused on providing new o�erings that meet consumer needs for both nutrition as well as convenience, and are responsive to the concerns of governments and non-governmental organizations (NGO), as they broaden their focus on health and wellness.

We have understood our customers’ key expectations in terms our products being safe and of good quality. Therefore the products we make truly complement their nutritional requirements and provide positive health bene�ts. We are broadening our range of products to o�er consumers a wider variety of healthier choices that include more whole grains, fruits, vegetables, and less sodium, added sugar and saturated fat.

Breakfast is the most important meal of the day. After nearly eight to twelve hours of fasting post dinner, a balanced breakfast nourishes the body and brain so they can function at their best.

With India fast becoming the chronic vascular disease capital of the world with high cholesterol and diabetes, for PepsiCo it was an obvious choice of launching the iconic brand of Quaker Oats in India in 2006. Quaker Oats is a 100 percent wholegrain and natural source of carbohydrates and dietary �ber. It has strong heart health bene�ts, which is scienti�cally proven to help reduce cholesterol. As per US FDA (United States Food and Drug Administration), there was signi�cant scienti�c agreement that 3g of βeta Glucan, soluble �ber daily from oats, in a diet low in saturated fat and cholesterol, may help reduce the risk of heart disease. We tasked ourselves with the daunting challenge of changing consumer habits and making them healthier, meeting these nutrition gaps of wholesome, whole grain, �ber-based nutritious breakfast that not only keeps them going for the day, but keeps them healthy in the long term too.

It has been over half a decade journey in India with our core Quaker Oatmeal. However, we learnt that because oats was not a familiar taste for Indians, there were barriers to its consumption. In fact, many consumers told us they didn’t �nd oats tasty enough. We embarked on the journey to start building “taste” for our consumers, so that we could deliver not only nutrition, but also make consumers enjoy the nutrition we were giving. The oats taste great, but without compromising the core nutrition thought, and with addition of real fruits and vegetables. We launched savory and sweet �avored oats in 2012 at the price-point of INR 10 per sachet to facilitate its penetration in the market as a value for money proposition.

MAKING BREAKFASTNUTRITIOUS: QUAKER OATS















LOOKING AHEAD


Page 7

SODIUM

In 2011/12, we continued to use microlight salt in our consumer favorite Lay’s Classic Salted variant renovated in 2010 to reduce sodium (salt) by 25 percent while continuing to deliver the same great taste. We have also continued to invest in our R&D capability to develop di�erent approaches to sodium reduction in our food brands.

SATURATED FAT

In 2011/12, we expanded our baked range with launch of Baked Lay’s potato crisps. With its promise of 50 percent less fat and great taste, it is the perfect snack for consumers who are health conscious and adopt a balanced approach towards snacking. We are also investing in educating our consumers on trans fats to enable them to make informed choices. While trans fats are found naturally in small amounts in beef, mutton, butter, milk and other dairy products, most trans fats come from partially hydrogenated oils. Today, PepsiCo India’s snacks are free from trans fats in keeping with the Food Safety and Standards Authority of India (FSSAI) regulations. We continue to engage in advocacy of our Quaker range of products. On the World Heart Day organized by the Cardiology Society of India, Quaker was the Daily Nutrition Partner for the event and we supported through sampling and sale of Quaker Flavored Oats. The event led to a positive relationship with the Cardiology Society of India.

ADDED SUGAR

Our Tropicana 100 percent juices contain no added sugars, no added colors and no preservatives. We remain focused on achieving reductions in added sugar in our global beverage portfolio.

PepsiCo has made great strides in bringing balance to our beverage portfolio. We o�er low- or zero-calorie beverage options in all our key global markets, including India. We also help our consumers around the world manage calories and make educated choices by providing clear calorie labeling.

We also launched 7UP NIMBOOZ MASALA SODA in select markets. From consumer feedback, we learnt that they craved a real lemon drink. However, current products in the marketplace claiming to be “lemony” do not really contain any real fruit or juice and are essentially regular carbonated soft drinks with lemon �avor. We picked up this need

Our product o�erings are strongly premised in consumer expectation of taste, nutrition and value for money. Our consumers wanted to include oats in their diet – but wanted familiar tasting varieties. In 2012, we introduced our line of �avored oats – both salty and savory versions that draw on �avors which match the Indian palette. Our customers wanted smaller pack sizes, so we have revamped our packaging to introduce �avored oats in smaller pack sizes at a�ordable price points. We know that our consumers can be co-creators in our success as a source of innovative tastes and recipes. Consumers want to be a part of the brand experience, by not only receiving it, but also actively crafting it. Kurkure brought fame and happiness to many through its ‘Chai-time-achievers’ face on pack initiative. In 2010 we got consumers to co-create di�erent �avors on Lay’s, which was part of the Give-Us-Your-Delicious-�avor programs. Consumers wrote in with their recipes and the winning recipes were actually turned into Lay’s �avors, which were sold in the marketplace, with a royalty on the sales going to the consumers.In 2011, the year of the Cricket World Cup, Lay’s again engaged with the youth and ran the Flavors World Cup, where Lay’s created 6 unique �avors, one representing each of the cricketing tournament countries and consumers were asked to vote for the winning country �avor. This program met with huge consumer appeal, where consumers voted, wrote in, became part of the whole World Cup experience through Lay’s, via social media. Finally, it was the Indian �avor that �nally won the Flavor World Cup, just like the Cricket World Cup!

ENGAGINGOUR CONSUMERS















LOOKING AHEAD


and with a lot of e�ort and work from our R&D team a new product that is a carbonated soft drink but with real fruit juice of lemons in it. We also customized the product with a very local Indian masala that gave it that additional taste and relevance to the Indian consumer. Thus, was born 7Up Nimbooz Masala Soda, that has been a runaway hit in the markets since its launch.

RESPONSIBLE MARKETING

GOAL: Continue to provide clear nutrition information on our products, and sell and market them appropriately to our consumers, including children, in line with our global policies and accepted global standards.

ADVERTISING

Conducting responsible marketing practices, especially for the most vulnerable consumers, such as children, includes endorsement of the International Council of Beverages Associations’ guidelines on marketing to children - a landmark industry initiative that does not permit marketing or advertising of beverages, other than water, fruit juice and dairy-based beverages to children under the age of 12 years. These guidelines promote implementing self-regulation of advertising to children under the age of 12.

PepsiCo has taken several important steps to ensure we are employing responsible advertising practices. We helped found the International Food & Beverage Alliance (IFBA), a Swiss-based NGO comprising multinational food and beverage manufacturers, to adopt a worldwide voluntary commitment to advertise to children under the age of 12 only those products that meet speci�c nutrition criteria. We launched our Global Policy on the Sale of Beverages to Schools in 2011.

This is aimed to help schools outside the US o�er a wider range of low calorie and nutritious beverages to their students. While it is the schools which must ultimately decide which beverages should be available to students, and where and when they should be sold, we hope we can play a role in shaping an environment in schools which facilitates healthy choices of school-age children everywhere.

MAKING BREAKFASTCOMPLETE: TROPICANA100 PERCENTIndian consumers have squeezed and drank juice for many years; and drinking juice either at home or on the street has been an age old habit. Consumers love drinking juice and therefore they love Tropicana fruit juices that promises them the authenticity and naturalness of the real fruit, along with the taste and pleasure of having the real fruit. However, juices are typically consumed as a pleasure drink, with limited knowledge about the nutrient bene�ts it o�ers. Based on our experience with Quaker Oats, we learnt the nutrition gap that exists at breakfast, especially among the urban consumers. Fast changing lifestyles is putting increasing pressure on them skipping breakfast at times and thereby depriving themselves of the valuable nutrition they need in the morning.

We worked hard on the product and the communication to share with our consumers that a serving of Tropicana 100 percent Juice (200 ml) equals one of the 5 servings of fruits and vegetables in a day and therefore completes breakfast, by providing 9 fruit nutrients they need, which they are likely to miss in the rush of the morning. We continue to move forward on this journey of educating consumers on the bene�ts of having juice with breakfast.















LOOKING AHEAD


Page 8

Page 9

As part of the policy, PepsiCo will instruct bottlers, vending companies and third-party distributors to strictly comply with all applicable laws and regulations. PepsiCo will also encourage our bottlers, vending companies and third-party distributors to work closely with parents, community leaders and school o�cials to ensure that only products that meet our guidelines are o�ered to schools for sale to students through vending machines, the cafeteria and school stores in primary and secondary schools.

By 2012, when the global school beverage policy was implemented, PepsiCo stopped o�ering full-sugar soft drinks directly to primary or secondary schools for sale to students worldwide. PepsiCo India will work with its independent franchise bottlers, third-party vending companies and other distributors of PepsiCo beverages, as well as schools and local authorities to further align this policy beyond PepsiCo's direct operations. PepsiCo's policies alone cannot assure the actions of businesses outside of our operational control, so it should be noted that our products may appear in schools, sold by independent third parties. However, we view our policy as an opportunity to engage our peers in the industry and local authorities to adopt similar policies. It is only through a collaborative, industry-wide e�ort that a full-scale implementation of such a policy can be achieved.

Our Global School Beverage Policy is available at http://www.pepsico.com/Download/PepsiCo_Global_Policy_On_The_Sale_OfBeverages_To_Schools.pdf

NUTRITION LABELING

PepsiCo India provides product details (including nutrition information) on the packs for all its food and beverage brands to help consumers make informed choices. In fact, the nutritional and ingredient pro�les of all our brands are provided on the website at

http://www.pepsicoindia.co.in/brands.html.

COMMUNITYMicro-nutrient de�ciencies and under nourishment stemming from poverty, food insecurity or poor quality of food ingredients, are increasingly impacting larger number of people. Food insecurity has become a pressing concern for countries and the volatility of raw material prices is likely to compound these issues. Our R&D teams continuously pursue product renovation, to deliver against nutrient priorities relevant in our socio-economic context. We have partnered with several organizations and stakeholders to develop a�ordable, nutritious o�erings for underprivileged and access

de�cit communities. We try and accomplish this internally and externally: across the spectrum of our workplace and communities, respectively.

Project Asha – Raising nutrition awareness among adolescent girls and women

We embarked on an ambitious mission “Project Asha” to address Iron-De�ciency Anaemia (IDA) amongst adolescent girls (13-19 years) and women belonging to low-income groups through forti�ed a�ordable product o�erings. Per estimates of the Ministry of Health and Family Welfare, Government of India, the country has the highest prevalence of IDA among women in the world, including adolescents: 60-70 percent of Indian adolescent girls are anaemic. Over two thirds of women and children consume less than 50 percent of the recommended daily allowance of iron. PepsiCo India is committed to address IDA in India, and has chosen to concentrate its e�orts in a pilot program within two towns (Guntur and Tenali) in the state of Andhra Pradesh in India, where seven out of ten adolescent girls su�er from IDA.

In March 2011, we introduced an intensive school and community-led educational program focusing on the girl child. The education program is led by a �lm that educates girls and their mothers on the symptoms, causes and prevention of IDA, while giving them simple behavior change and nutrition tips that would reduce IDA over time. To complement the educational program, an extruded snack and a sweet biscuit that are richly forti�ed by sodium iron EDTA (NaFeEDTA), recommended by the World Health Organization (WHO), delivering 25 percent of the recommended dietary allowance (RDA) of iron and 50 percent RDA of Vitamin B2, B12 and Folate each. Both are a�ordably priced at only Rs 2, the products are made with wholesome local ingredients like jaggery, peanuts, ragi and soya. This program is piloting a unique business model because it aims to mainstream nutrition-rich products to make it self-sustaining for funding the extensive education program. Since launch, the program has reached over 74,000 adolescent girls and women in 73 communities, 91 villages and 272 schools

We also participated in forums of the Indian Dietetic Association and Nutrition Society of India to advocate vociferously for efforts on addressing iron deficiency.

Mid-day meal scheme

In 2012, we partnered with Akshaya Patra, an NGO that supports the ‘Mid-day meal’ program launched by Government of India feeding over 1.3 million underprivileged students every day of the school year, in 22 locations, across 9 states in India. For children belonging to the weaker economic sections of society, a full meal, even once a day,

is a strong incentive to stay in school. This program enables hunger free education and it has led to a signi�cant rise in enrollment and attendance. So this partnership has a simple but powerful mission- to change the trajectory of countless lives in our community. Through this program PepsiCo India employees can participate in this cause by contributing as little as INR 4,500 to keep 6 children in a school for a year. The company matches the employee contribution to double the impact. The program is currently running in Hyderabad (Andhra Pradesh) where it is contributing to a kitchen serving meals for nearly 55,000 children across 454 schools in Medak district.

‘Get active’ program in schools

Our initiative of promoting good nutrition and active lifestyles through the school based nutrition edutainment program ‘Get Active’ has reached 1 million children in 12 metros and 477 schools since its inception in 2006. Get Active is a partnership program with NGOs like Swashrit Society, Hriday and Indian Dietetic Association and hasnutrition-education modules to help engage students on learning and modifying behavior to lead an active andhealthy lifestyle. With the thought leadership of promoting healthy lifestyle among children and addressing invisible yet big health issues such as micronutrient de�ciencies, we launched the 2012 module focused on creating awareness of IDA - causes, symptoms and prevention - among adolescent school children in private and government schools in 2 cities reaching nearly 130,000 adolescent children in 144 schools.

Make india heart healthy in corporate offices

Lifestyle diseases related to diet such as high blood pressure, cardiovascular disease and more, are due in part to diets that are not suited to the body’s needs in terms of both quantity and quality. This situation is worsening faster

in emerging economies such as India due to changing lifestyles and rapid nutritional transition. As part of our Mission to Make India Heart Healthy, under the aegis of Quaker brand, we conducted Heart Health Days at various corporate o�ces across �ve metro cities of Delhi, Mumbai, Bangalore, Chennai and Hyderabad. We have reached out to over 100 corporate offices touching nearly 150,000 employees.

2012 saw the scale up of our NourishCo Business, which is a joint venture with Tata Global Beverages, created speci�cally to cater to the beverage needs of the lower income consumers in India. The consumers at the lower end of the pyramid largely consume water, because their primary need is hydration, especially since the large part of their day is out of home, working for wages. Because of the challenge on budgets and income, they are looking for a�ordable hydration that can keep them going through the day, but many times the available water solutions in the market are of poor quality, and sometimes come with a serious threat to health. Through NourishCo, we aim to deliver a�ordable - yet - high - quality hydration products to this consumer group. In addition, the aim is to not only deliver basic hydration but have a wider portfolio of products with speci�c nutrients and health bene�ts (such as strengthening the immune system or providing instant energy) to provide a complete range of a�ordable beverage solutions to this set of consumers. During the reporting period, the NourishCo business successfully scaled up in 2 key hydration markets in South India - and met with great success.

REACHINGTHE BOTTOMOF THE PYRAMID

Page 10

is a strong incentive to stay in school. This program enables hunger free education and it has led to a signi�cant rise in enrollment and attendance. So this partnership has a simple but powerful mission- to change the trajectory of countless lives in our community. Through this program PepsiCo India employees can participate in this cause by contributing as little as INR 4,500 to keep 6 children in a school for a year. The company matches the employee contribution to double the impact. The program is currently running in Hyderabad (Andhra Pradesh) where it is contributing to a kitchen serving meals for nearly 55,000 children across 454 schools in Medak district.

‘Get active’ program in schools

Our initiative of promoting good nutrition and active lifestyles through the school based nutrition edutainment program ‘Get Active’ has reached 1 million children in 12 metros and 477 schools since its inception in 2006. Get Active is a partnership program with NGOs like Swashrit Society, Hriday and Indian Dietetic Association and hasnutrition-education modules to help engage students on learning and modifying behavior to lead an active andhealthy lifestyle. With the thought leadership of promoting healthy lifestyle among children and addressing invisible yet big health issues such as micronutrient de�ciencies, we launched the 2012 module focused on creating awareness of IDA - causes, symptoms and prevention - among adolescent school children in private and government schools in 2 cities reaching nearly 130,000 adolescent children in 144 schools.

Make india heart healthy in corporate offices

Lifestyle diseases related to diet such as high blood pressure, cardiovascular disease and more, are due in part to diets that are not suited to the body’s needs in terms of both quantity and quality. This situation is worsening faster

in emerging economies such as India due to changing lifestyles and rapid nutritional transition. As part of our Mission to Make India Heart Healthy, under the aegis of Quaker brand, we conducted Heart Health Days at various corporate o�ces across �ve metro cities of Delhi, Mumbai, Bangalore, Chennai and Hyderabad. We have reached out to over 100 corporate offices touching nearly 150,000 employees.

Environmental Sustainability Environmental Sustainability means finding innovative ways to minimize our impact on the environment and lower our costs through energy and water conservation as well as reduced use of packaging material.

Page 11

Page 12

Corporations have a particular responsibility to utilize resources e�ciently. And large companies like PepsiCo must balance this responsibility with delivering pro�table growth to shareholders, while also considering the integrated impacts on nutrition, the environment and agriculture in all business activities. According to United Nations estimates, the world’s population is expected to be more than nine billion by 2050. This population growth presents complex challenges and trade-o�s for both the health of people and the planet. Even by 2030, it is predicted that energy and food demand will be 45 percent and 50 percent higher, respectively, and two-thirds of the earth’s population will live in water-stressed countries, including in India.

We are focusing our e�orts to deliver on the promises to our stakeholders, in areas we are poised to create maximum impact through our business. We accomplish this by our ecosystem of partnerships that help us �nd solutions and address environmental challenges. Our global Environmental Policy applies to all our operations. PepsiCo monitors company-owned operations. We encourage our suppliers, service providers, bottlers and other partners to adhere to the policy.

We anticipated the need to take environmental stewardship to a whole new level at the start of the new millennium, recognizing that environmental sustainability was becoming a core component of sustainable success. We began to put in place the systems, processes and metrics needed to drive continuous improvement in energy and water conservation as well as packaging and waste reduction. Since the introduction of Performance with Purpose in 2007, we have made signi�cant progress toward reaching our environmental sustainability goals, and take great pride in these achievements.

WATERGOAL: Help protect and conserve global water supplies, especially in water-stressed areas, and provide access to safe water.

We continued our work in communities neighboring our manufacturing facilities

at Wahegaon, Nelamangala, Panipat, Sangareddy and added Mamandur to the list

in 2012. In all, we have established community-led rainwater harvesting and

recharge interventions in 25 villages across five states with a water recharge

potential of 5 billion liters and impacting more than 50,000 people.

As a food and beverage company that both depends on agriculture and water for our raw materials and seeks to deliver nutritious, delicious foods and beverages to our consumers, we remain committed to protecting the planet’s resources for the next generation. Water stewardship is one such focus area.

PepsiCo India’s aspiration is to attain world-class e�ciency in our operations, conserving water resources and enabling improved access to water. 2009 was a landmark year for us when PepsiCo India achieved ‘Positive Water Balance’ status. This means we replenished more water than we used to manufacture our products. We understand that water access issues are often location speci�c and we moved ahead in our journey in 2010 year to aim for positive water balance at a local level. In 2012, we were water positive for the fourth consecutive year since 2009. This status was achieved by water conservation through various sustainable initiatives in agricultural, in-plant conservation and recharging/replenishing water in communities around our manufacturing facilities.

In the reporting period, we have made strides and our water credits surpass debits. We rely on our network of partnerships - with NGOs, local administration and farmer communities - for our e�orts. 2012 represents a milestone year in our water journey – we have managed to increase our positive water balance footprint by nearly ten times since 2009 and more than double of what we replenished in 2010. In 2011, we conserved 14.7 billion liters of water, exceeding the intake of 6.3 billion liters of water used in our manufacturing facilities. In 2012, we conserved 15.1 billion liters of water, exceeding the intake of 6.8 billion liters of water used in our manufacturing facilities. We also retained location specific positive water balance at three plant neighborhoods and are working towards accomplishing this in two more. We were water positive by 8.3 billion liters in 2012.

13500

9500

4000

20231911

1100012000

Wahegaon Nelmangala Panipat Sangareddy Mamandur

16000

14000

12000

10000

8000

6000

4000

2000

0

OUR IMPACT

162762

178

POTENTIAL WATER RECHARGE (MILLION LITERS) IMPACTED PEOPLE

2009 2010 2011 2012

14

12

10

8

6

4

2

0

WATER CREDITS (BILLION LITERS)

DSR DRIP IRRIGATION COMMUNITY INTERVENTIONS

2.18

0.45

12.4

2.64

0.91

11.1

2.08

0.14

7.8

1.15

4.7

SAVINGS THROUGHAGRICULTURAL INTERVENTIONS

a) DSR (Direct Seeding of Rice)

During 2012, an additional 5,950 acres were converted to DSR. This translates into 15,280 acres overall, as compared to 9,330 acres in 2010 and 6,500 acres in 2009. This has brought in water savings of 12.4 billion liters in 2012.

b) Drip irrigation of potato

In 2011/12, incremental e�orts were undertaken to promote drip irrigation in potato cultivation. From 1,100 acres in 2010, we achieved this for 1,926 acres in 2012 and saved around 455 million liters.

SAVING THROUGHCOMMUNITY INTERVENTIONS

Our community-led interventions such as check dams and recharge ponds are focused at harvesting and recharging water in the neighborhood of our manufacturing facilities thereby allowing improved access to water for our communities.

POSITIVE WATER BALANCE PERFORMANCE(BILLION LITERS)

9

8

7

6

5

4

3

2

1

0

0.83

4.31

8.38 8.25

2012201120102009

In 2011/12, our community water interventions have created the potential to recharge over 5 billion liters of water contributing towards positive water balance, bene�ting more than 50,000 community members, reaching new communities at Sangareddy (2011) and Mamandur (2012). A detailed water resources analysis, including a hydro-geological study has been conducted at all intervention sites and suitable structures such as check-dams and recharge wells have been identi�ed to augment water resources in our plant neighborhood.

Community ownership is at the heart of all our community water interventions. We work with the local administration and engage the community right from project inception in planning and executing the project. Our integrated water management techniques, inclusive approach and introduction of improved agronomic practices and education programs on water conservation are aimed at improving ground water levels, improving access to water, farm yields and incomes.

Page 13

For the communities, we implemented Sustainable Water Resource Development and Management (SWRDM) initiatives to replenish ground water. We are aware that in the absence of shared ownership, these interventions will not be self-sustaining. In our journey, we have also learnt that while the implemented interventions have already gained faith within the community, a�rmative complementing actions to support capacity building and skill development on larger developmental issues and speci�c issue-based support are necessary. The relationship with the community is conceived on principles of “Active Participation” and “Collective Action”. Our work program integrates the philosophy of community empowerment, holistic development and strong community participation. Approaches are aimed at identifying common grounds for action and maximising utilization of human resources.

In this context, we have institutionalized a stakeholder based framework for overall management of the projects. Stakeholders have clearly articulated roles and responsibilities in planning, implementation and maintenance of co-created assets. We seek to work in close harmony with the formal and informal groups that exist in the village communities. We play the role of catalysts to promote collaboration and action, providing technical inputs, training local people, networking with government departments, training institutions and banks so that village communities can e�ectively leverage the interventions. The local administration takes the ownership of co-created assets including operational and maintenance responsibility. Additionally, Water User Groups (WUGs) comprising farmers who are direct bene�ciaries have been formed. They work along with the local administration for maintenance of co-created assets. The WUGs are encouraged to open the group’s bank account and make regular deposit of the groups’ savings.

Discussions with villagers

Resource planning of the area along with villagersand sharing the broad �nding

Once sanctioned, Gram Sabha called by the Gram Panchayat for detailing the plan and the Gram Panchayat

resolution adopted

Formation of Water User Groups for each structure and resolution passed by each Group for their involvement in

implementation and maintenance of the created asset

Several community meetings with diverse stakeholdersand formation of Woman groups

Implementation

Continuous training to WUGs and woman groups

Interaction with government agencies

Monitoring and Evaluation

COMMUNITYENGAGEMENT PROCESS

Page 14

Location Specific Water Balance: We conducted an assessment of water resources and community needs around our plant neighborhoods and suitable interventions such as check dams, ponds have been implemented to improve water availability. In 2011/12, these initiatives helped achieve location specific Positive Water Balance in three areas near our manufacturing plants. These were Aurangabad, Nelamangala and Panipat. We also initiated projects at two more plant neighborhoods at Sangareddy and Mamandur.

Another key element of community involvement is focused on women’s empowerment. The representation of women in WUGs is encouraging. We are attempting to mainstream women involvement in these interventions. In the second phase of the interventions, we aim to focus more on gender issues, particularly in the context of promoting income generating initiatives and management of natural resources. This includes:

• Organizing women into functional groups, based on their interest

• Initiating thrift and credit management programs

• Introducing appropriate income generating activities

• Developing women-friendly technologies

• Capacity building

• Involving women in post-project management, agricultural promotion and decision making

We also undertake capacity building of the communities. The training modules for the members are designed in a manner so as to provide comprehensive information about watershed development, and focus on skill development. We also actively work in collaboration with government agencies responsible for implementing rural poverty alleviation programs in the communities. For the interventions, we have monitoring mechanisms to assess impacts on environment and socio-economic dimensions.

WATER USE EFFICIENCY

Water use e�ciency in our operational activities has remained a focus area since the start of our sustainability journey. At PepsiCo, we achieved our goal, four years ahead of schedule, to improve global operational water-use efficiency by 20 percent per unit of production by 2015, compared to a 2006 baseline. The improvements we have made in efficiency enabled PepsiCo to save nearly 14 billion liters of water in our direct operations in 2012 which, in turn, enabled the company to save more than $15 million in water costs.

We measure water use e�ciency as liter of water consumed per liter for beverages business, and liter of water used per kilogram of �nished product in foods business. The water used refers to water consumed within the plant boundary. We periodically survey our plants to identify and minimise over-use and wastage of water and implement initiatives that encourage optimal usage of water. Our initiatives at our manufacturing facilities have enabled us to make improvements in water use in beverage units in 2011/12. We also plan to have monitoring mechanisms to track individual water conser-vation initiatives with regard to water use e�ciency, in place by 2013.

We undertake water e�ciency initiatives under the three buckets of reduce, reuse and recycle. We reduce through continuous upgrade of operational e�ciencies. We reuse treated water from the E�uent Treatment Plant (ETP) in utility operations. We recycle through our e�uent treatment plants. We are currently running a pilot of a new technology, Zero Liquid Discharge (ZLD) which will be launched in 2014. This will enable us to produce nearly 40 percent more of the quantity of beverage from the same quantum of input water. In our foods plant at the Kolkata, we have installed Vapor Absorption Chillers (VAM) with condensate recovery capabilities. These are expected to save 15 million liters of water annually going forth.

Our overall water use efficiency has improved in beverage manufacturing by 12 percent in 2012 compared to 2009, at 2.15 liters per liter of beverage produced in 2012 compared to 2.35 liters in 2009. We have accomplished this through our e�orts in company owned plants (COBO), franchise-owned plants (FOBO) and bulk water plants. In our foods plants, specific water consumption per kilogram of finished product has reduced by 2.6 percent since 2009, and stands at 7.4 liters per kilogram of finished product in 2012.

Page 15

THE EARTH INSTITUTE’SCOLUMBIA WATER CENTER

During 2011/12, the PepsiCo Foundation continued partnering with The Earth Institute’s Columbia Water Center (CWC) on a number of strategic water initiatives in India, mainly in Punjab and Gujarat. The ongoing e�orts seek to address water sustainability in key geographies that su�er from water stress. To improve interaction with stakeholders at all levels (government agencies, communities, corporations, farmers); the CWC established an o�ce in India and collaborated with local universities.

National water risk mapping and changes in policy on crop procurement were also developed as big picture solutions to dramatically reducing water stress in the country.

SAFE WATER NETWORK

Throughout 2011/12, Safe Water Network continued to re�ne and improve innovative solutions to provide safe water access to the more than 90 million in need in India. The PepsiCo Foundation supported their work in Andhra Pradesh, Uttar Pradesh and Rajasthan to establish self-su�cient water systems that are operated and managed locally. Safe Water Network’s activities in India enabled more than 1000 such rain-water harvesting systems providing water access to more than 16,000 people.

As part of the broader mission to foster best practice across the water sector, PepsiCo participated in Safe Water Network events, such as their Beyond the Pipe Forum held in New Delhi in January 2011 that brought together key stakeholders across the country’s water sector.

Water.org

In 2011/12, the PepsiCo Foundation, announced an expansion of its partnership with Water.org to scale WaterCredit, a market-driven model that provides micro loans to families throughout India. The WaterCredit partnership model and �nancing mechanisms serve to channel and redeploy �nancial resources more e�ciently and e�ectively to enable increasing numbers of people to meet their drinking water and sanitation needs. This expansion seeks to enable approximately 800,000 people to access safe water by March 2016. The commitment is built upon a long-standing partnership between the PepsiCo Foundation and Water.org and is made possible by an $8 million grant – the largest contribution by the Foundation in its 50-year history.

TESTIMONIALS“I own 4.5 acres of land in my village Hosur. My parents

used to cultivate the land and live happily. But, during

the past 10 years I lost interest in cultivating as the rains

are unpredictable and many times I lost my crop during

summer. Two years back, I came to know about the

work for renovation of the tanks near my land, but it did

not interest me. However, once the work was �nished

and rain water �lled the area within the tank, I found

my bore well o�ering me more water. It was

unbelievable and I realized that it is possible to increase

water in my bore well without deepening it. I o�ered to

share my experience to others and readily agreed to

join a group in my village. Now, I grow banana and

coconut in my land and my income has almost

doubled.”

Hanumaiah, farmer, Hosur village (Karnataka)

“In our village Babarpur since last 10-12 years water

table was continuously going down. In the year 2010,

PepsiCo through ADI carried out a survey and

proposed rejuvenation of two ponds which falls under

Babarpur Panchayat. We, the villagers, are thankful to

PepsiCo for the rejuvenation of these two ponds while

enhancing its capacity and involving the community.

PepsiCo, through ADI, is providing expertise on water

conservation which has increased the awareness

within the community. PIH’s e�orts to motivate farmers

to grow less water intensive crops and irrigation

through sprinkler technology have resulted in saving of

ground water.”

Baldev Singh Dhamija, Sarpanch, Babarpur (Haryana)

Page 16

PepsiCo Foundation, the philanthropic anchor of PepsiCo Inc. funded valuable initiatives to provide access to safe, clean water to underserved communities in India in conjunction with its strategic partners.

OUR PACKAGINGPROGRESS2011/12 Packaging Weightreduction in Aquafina1000 ML bottle

Metric Tonnesof PET savings

Metric Tonnes ofestimated paper savings

Metric Tonnes ofestimated laminatesavings

4.5%

865

2068

425

Page 17

PACKAGINGGOAL: Innovate our packaging to make it increasingly sustainable, minimizing our impact on the environment.

Packaging reduces waste by protecting foods and beverage products during transportation and storage, in retail shops and at homes. It is also essential for safety, freshness and a tool for providing consumers with nutritional information and portion guidance. We are rethinking the way we package and deliver our products to minimize our impact on the environment. We are working with suppliers and experts to reduce packaging material developing programs that aim to reduce, recycle and remove environmentally sensitive materials while reducing our packaging footprint. Our aim is to adopt a life- cycle-based approach from the beginning of the design process to the disposal stage.

Our food and beverage products use a variety of packaging materials, including glass, polyethylene terephthalate (PET), corrugated paper boards, laminates and tin. In addition, our product packaging return systems in place allow us to reuse certain packing materials (such as glass bottles).

In 2010, our packaging sustainability e�orts in beverage operations were driven around our 350 ML juice packs. In 2011, we reduced the weight of our Aquafina 1,000 ML bottle from 22 grams to 21 grams, resulting in savings of PET used. We saved over 100 metric tonnes of PET in 2011. In 2012, we extended this to 600 ML soft drink category and 500 ML juice category, resulting in savings of over 750 MT of PET. We accomplished this by working concertedly on a number of parameters improvising the pre-form designs, optimizing secondary packaging, working on reducing label and shrink �lm thickness and reduction in process materials. Apart from resource saving, this has led to savings in fuel that would have been needed to transport the extra weight.

We are committed to innovative use of technology to solve the pressing challenge of over exploitation of stressed resources. We have initiated, along with one of our partners, a unique fourth-generation pilot for recycling of polypets. In a single pass, the technology has the potential to convert multilayer PET laminates to granules. The resulting material from the granules is expected to have various industry applications such as for domestic appliances and �exible secondary packaging.

In our foods packaging, we adopted a two-fold strategy. Firstly, we reduced laminateconsumption across our key pack sizes in potato chips category. The

estimated savings are 425 metric tonnes. Secondly, we drove carton loadability improvements amongst our supply chain partners, which led to carton savings and had knock-on e�ects on paper consumption required for the cartons. The estimated paper savings amounted to 2,068 metric tonnes in 2011. In 2012, we launched, along with our partners, the pilot of a unique fourth generation recycling project which carries the possibility of converting PET laminates into materials that have various industrial applications.

WASTEGOAL: Work to eliminate solid waste to landfills from our production facilities.

Waste management occupies a signi�cant position in our e�orts on environmental sustainability. It is estimated that about 960 million tonnes of solid waste is being generated annually as by-products during industrial, mining, municipal, agricultural and other processes. To safeguard the environment, our e�orts are channelled towards recycling di�erent wastes and utilizing them in value-added applications. We accomplish this by working with our partners who help us reuse and recycle our waste. We are committed to reducing the generation of all types of waste, reusing or recycling waste whenever feasible, and are environmentally responsible for waste disposal wherever reduction, reuse and recycling are not feasible. We have entered into agreements with vendors who recycle, reuse or dispose waste generated from our operations.

Through concerted efforts, our foods plants recycled or reused 100 percent of their waste, and no waste was sent to landfill. Our 14 wholly owned beverage plants also recycled more than two-thirds of their solid waste generated.

We have enhanced the portion of waste in our foods plants going for reuse or recycle instead of land�ll, identifying new areas where our organic and inorganic waste can be used such as reuse of packaging �lm waste, composting and animal feed for our organic waste and use of other inorganic waste in cement plants. Organic waste is treated and converted into manure through vermicomposting across three of our beverage plants in India.

FOOD PLANTS RECYCLING PERFORMANCE

2012201120102009

110%

100%

90%

80%

70%

60%

50%

57.5%

71.0%

94.0%100%

Award-winning Waste to Wealth model in Republic Day Parade

As a result of our initiatives, the percentage waste reused or recycled at our foods plants is 100 percent compared to 57 percent in 2009. A key development this year was that no waste to land�ll went from any foods plant. Across our foods plants, we are using Biozyme (a biodegradable product) instead of traditional chemicals in our e�uent treatment units, which reduce our ultimate waste.

Our “Waste-to-Wealth” program is a unique livelihood generating four-way partnership model, between PepsiCo India, NGO Exnora Green Pammal, the local administration and bene�ciary communities. It is focused at collection, segregation of urban solid waste at source. The program has reached out to over an aggregated population of

465,000 people across Pammal, Sangareddy including Pothireddypalli, Panipat,

Tenkasi, Nagapatinam and Cuddalore by the end of 2012. Our true success emerges from the fact that many of these projects have been transferred to the local municipalities, perpetuating self-sustenance of the projects. We e�ectively transferred knowledge and strategies and empowered local administration to continue running the projects independently in several areas.

Page 18

GHG EMISSIONSGOAL: Work to achieve an absolute reduction in greenhouse gas (GHG) emissions across our global businesses.

We rely on energy in our operations, our o�ces, and supply chain. We have imbibed energy stewardship in our operations and have been pioneering technological innovations, continuous process improvements, renewable energy and energy e�ciency initiatives. We continuously strive to minimise our energy footprint. Our focus is on scaling up our use of renewable sources and reduction in energy intensity of our operations and our distribution chain.

IN OUR OPERATIONS

Specific GHG emissions have reduced by over 12 percent in 2011/12 over 2010 in our foods plants. In 2011/12, our foods plants reduced specific non-renewable use intensity by 27 percent over 2010. Our foods plants had a 52 percent share from renewable energy sources in 2012, increasing from 13 percent over 2010 and 31 percent in 2011. Our Kolkata foods plant has a biomass based boiler and we also installed a vapor absorption chiller which is expected to reduce the speci�c energy required at the plant. In our endeavor to reduce energy consumption, we initiated wastage control. Our compressed air system was audited for leakage and we found 112 leakage points. All the leakages have been plugged resulting in a 30 percent reduction in compressor energy consumption. Further, nitrogen usage was optimized by maintaining the right level of oxygen in packets, reducing the consumption of nitrogen in packing resulting in reduction in energy by 10 percent.

TOTAL EMISSION PROFILE2011/12 (foods+ beverages)

IndirectEmissions

64%

DirectEmissions

36%

RECON-RESOURCE CONSERVATIONAt PepsiCo, our proprietary Resource Conservation System (ReCon), which we built, enables us to identify and implement new ways to advance our Environmental Sustainability goals. ReCon provides assessment and knowledge management tools that help us identify and share best practices for water conservation, GHG measurement and management, and solid waste reduction. Incremental improvements enabled by ReCon have added up to significant cost savings for PepsiCo.

The following stages form the core of operationalizing ReCon:

• The �rst stage comprises a diagnostic and understandingof plant speci�c issues.

• The second stage assists in �nding solutions to issues.

• The third stage comprises an overall life cycle analysis to reduce environmental footprint.

• In the �nal stage, the expertise is extended to the supply chain universe of PepsiCo.

In 2011, ReCon was introduced to Indian operations to help our personnel become more sensitive to resource conservation. In 2012, our Mahul plant demonstrated leadership in water conservation by hosting the ReCon Water 2 beverage pilot in August 2012. This was the �rst ever ReCon Water class in India and was critical to ensuring the course material’s clarity and e�ectiveness prior to wider deployment. The water pro�ler, a detailed audit tool was deployed to understand where and how water is used. Exercises on avoiding and reducing water use helped quantify and prioritize savings opportunities. The tool guided Mahul plant’s adoption of water saving practices. In addition, the plant began regular water awareness sessions. On account of ReCon Water Tool, Mahul’s water use ratio (liter used per liter produced) decreased by 20 percent.

We continued the process of reducing GHG emissions through measures across our foods and beverage operations and distribution chain. These measures include:

• Renewable energy use• Reducing non-renewable energy use intensity• Optimizing supply chain operations

Page 19

Our COBO beverage plants achieved significant reductions in specific energy use.

The specific energy use in 2012 stands at 0.865 kWh per 8 ounce case and specific

GHG emissions are at 0.42 kg CO2 per 8 ounce case. Beverage plants had a

38 percent share from renewable energy sources in 2012.

PERCENTAGE CONTRIBUTIONFROM RENEWABLE ENERGY

60%

50%

40%

30%

20%

10%

0%2009

BEVERAGE PLANTS FOOD PLANTS

2010 2011 2012

36.0%

40.0%42.4%

53.0%

38.0%

31.0%

13.0%

5.0%

Page 20

IN OUR LOGISTICS AND SUPPLY CHAIN

We have optimized our beverage supply chain processes reducing 25 percent vehicles in Mumbai during the pilot launch with a direct impact on fuel reduction. In 2010, we had commenced a supply chain project--‘Future-Ready Post-Manufacturing National Supply Chain” to improve time to market by re-engineering our national supply chain distribution. Across the country, we and our distributors deploy thousands of vehicles

to deliver to several thousand retail outlets. Typically this delivery route is designed based on a static truck and outlet relationship. Due to this static relationship, the process is not optimal and leads to low asset utilization for the �eet – and larger number of on-road vehicles to meet sales skews, and higher fossil fuel consumption. This project has been kicked o� in 2011 in the city of Mumbai where we run company owned �eet direct to retain. This initiative took shape in 2012 with on-ground implementation. Dynamic Routing software has helped in increasing the asset utilization and decreased the overall vehicle running in the busy streets of Mumbai with a direct impact on fossil fuel reductions.

When scaled to nationwide operations, it will result in estimated 500 fewer vehicles required to handle delivery operations and average savings of 24 kilometres per day per vehicle. We won the ‘Innovator of the Year-Supply Chain’ Award, 2011 at KPMG-SCLC Foods Retail & SCM and Agro Logistics Summit’ for route optimization.

Our vehicle mix in our beverage business has been transformed with higher proportion of high capacity vehicles, with the similar objective of reducing kilometres travelled and vehicles on road. High capacity vehicles require larger quantum of upfront investment, which reduces its quick uptake amongst logistics partners. We worked extensively with our logistic suppliers to change their paradigm – and promote up-scaling to such vehicles. Our primary equipment mix comprises a signi�cant share of high capacity vehicles, allowing us to make substantial reduction in trips, distance travelled and number of vehicles. For the year 2012, higher tonnage vehicles got used for 74 percent of transportation for company owned operations.

We also undertook loadability improvement studies for our food business. Through this, we can increase the number of cartons loaded on delivery vehicles, and thereby reduce the number of vehicles required. With support from PepsiCo’s Global Transportation team, we implemented software for improving the cubic feet utilization of the trucks. The software’s algorithm evaluates the cubic capacity of the truck reported for loading and also looks at the order quantum for the day. As a result, the software instructs the loading pattern to the loaders to optimally use cubic capacity of vehicle. This simultaneously required tremendous change management e�orts too. Our Pune plant undertook this commendably. There was a reduction of 180,000 kilometres and 45,000 liters of diesel. Currently we are in process of implementing the software for rest of manufacturing locations. In the next two to three years, this is expected to save 576,000 liters of diesel and reduce 1,543 metric tonnes of CO2 emissions.

Promoting sound fleet management practices for a better environment: We have been working closely with our logistics partners – increasing their awareness on the benefits of switching to higher capacity vehicles, from a productivity standpoint. This has associated benefits from an environmental standpoint as well. These vehicles require higher upfront investment, but bring positive emission reduction benefits and fossil fuel reductions through reducing the number of vehicles on road. This initiative required a massive change management program undertaken with partners to convince them of the business case and environment case. We are now seeing encouraging results, and our vehicle mix has more high capacity vehicles as compared to 2009.

REFRIGERATION

Refrigeration is a critical business activity in our extended supply chain, consisting of foods and beverage retailers. We took a conscious organisation-wide decision globally in 2007 to comply with the California Energy Commission norms, which stipulate standards for maximum daily energy consumption in our refrigeration equipment in the supply chain(www.energy.ca.gov).

We have implemented energy management systems on our coolers since 2009. This has helped reduce energy consumption by a �fth. The energy savers help internalize cooler usage patterns thereby enabling control of cabinet temperatures. There is an enhanced feature to control evaporator fan motor functioning during door openings helping in reduction of energy wastage. By the end of 2012, we placed 45,859 coolers fitted with energy management devices.

We had field-tested over 300 coolers (including 288 in 2010) with climate-friendly refrigerant (hydrocarbon based) which has no ozone depletion potential and an extremely low global warming potential (GWP). We have now successfully negotiated with local compressor manufacturers to partner us in mainstreaming the production of these coolers. We refurbished more than 20,700 existing coolers across India during 2011-12 leading to reduction in new purchases and thereby GHG emission levels.

AGRICULTURE & COMMUNITY

GOAL: Continue to support sustainable agriculture by expanding best practices with our growers and suppliers.

Our community engagement e�orts aim to ensure thriving farmers and thriving communities which are in harmony with nature and environment. We work at both a farm and community level to improve yields, provide resource access, safeguard incomes, transfer knowledge and design replicable environmental interventions. In addition, we help to drive social and environmental improvements through continuous on-ground training and capacity building of community members. These include sharing best practices on water management and sustainable agriculture. In our e�orts, we place communities as the central stakeholder, empowering them to continue the interventions implemented by us and our partners. This ensures sustainability of the intervention, and inculcates best practices at grassroot levels.

FARMER OUTREACH PROGRAMS

Over the last 20 years, we have been working with farmers in India providing them access to improved farming practices and extending PepsiCo’s global technological expertise to transform the lives of farmers. We established a model of partnership with farmers and now work with over 24,000 farmers across nine states to improve the yields in various crops, including potato and paddy. We work closely with farmers through the crop cycle by providing new varieties, technologies and sustainable farming practices.

PepsiCo’s 360-degree farmer connect program has transformed the lives of small and marginal farmers across India. PepsiCo India was the �rst corporation to introduce contract farming in India in 1990’s and currently works with over 24,000 farmers-a majority of them being small and marginal farmers, spread across Gujarat, UP, Maharashtra, Karnataka, Bihar, West Bengal and Punjab.

In West Bengal, our potato contract farming program touches 90,000 lives, with assured buyback program for 12,500 farmers. With highest ever contract farming procurement of 70,000 metric tonnes of potato from eight districts in West Bengal, we have demonstrated an enduring, successful, contract farming program built on the ethos of creating shared value.

Page 21

TECHNICAL COLLABORATION

In 2011/12, we extended this connect to technical collaboration. To improve quality and productivity, we have brought low cost farm mechanization tailored to local conditions. In case of West Bengal, where farmers are largely small and marginal and �eld size is small, we have developed potato harvesters compatible to locally available power tillers. This planter also brings down fertilizer requirement by increasing fertilizer use e�ciency. Our harvester reduces potato damage during harvesting, speeds up harvesting operation, reduces weather risk and harvesting cost. The small farm equipment developed by us are helping farmers in reducing farm inputs cost, improving productivity and quality of their produce and leading towards sustainable farm development. These machines are delivering high degree of success, being produced at commercial scale and spreading our wings beyond the national boundary. We have exported few sets of equipment to Myanmar to support PepsiCo’s program there. Our e�orts to commercialize these technologies represent Lab to Land Program in true sense.

We conducted oats trial in Agra and Sri Ganganagar, with the objective to select short-duration and high yielding varieties relative to existing varieties. We managed to shorten the oats crop duration by 40 days, saved 1-2 irrigations as compared to old varieties and achieved a higher yield potential. This gave us the con�dence to take these varieties to commercial scale, and selected varieties were tried at farmers’ �elds in four states of Rajasthan, Madhya Pradesh, Uttar Pradesh and Jammu and Kashmir. We received a positive response and at farmer camps, nearly 200 farmers came to see the oats crops.

We have also attempted to replicate our success in collaborating on potato farming to other crops such as paddy rice and barley. We provide technical extension services, sell quality seeds and help provide avenues to conduct sale of produce. We facilitate �nancial support by connecting the farmers with banks to obtain funding. We have nearly 6,000 farmers collaborating with us on these two crops.

Through various interventions in the area of agriculture such as DSR, turning �ood irrigated �elds under sprinkler and drip; we have advocated water saving practices across several states. Farmers from di�erent geographies are the major stakeholders. Our agronomists conduct intensive training programs in several geographies to train farmers on best crop practices. Geography and variety speci�c best-practice literature prepared by our research team is also provided to farmers during the sessions. We also link up our agenda on HIV/AIDS awareness with farmer training for a wider reach.

COMMUNITY ENGAGEMENT

Our ongoing community waste management model and best

practices initiative bene�ted 465,000 people across 7 locations and we

trained 7,500 people on waste management practices. On our

community water projects, we trained 1000 community stakeholders

across 4 locations.

In our water harvesting and recharge projects, empowerment of local

communities is a prerequisite to build sustained strengthened groups

for maintaining created assets. Creating a sense of ownership and

community amongst the bene�ciaries- institutional mechanisms at

the village level have been put in place. Gram Panchayats, water user

groups, self-help groups and women are key stakeholder groups

which have been involved. We continued stakeholder engagement in

our community water projects, and trained more than 1,000

community stakeholders across sites in Nelamangala, Wahegaon,

Panipat and Sangareddy on water resources management, drip

irrigation, sustainable agricultural practices and alternate livelihood.

Training modules and exposure visits have been �nalized by working

with communities.

Page 22

BEST PRACTICE SHARING

We have been sharing our learnings and best practices at international and domestic forums, university and academic institutions. In 2011, we participated in the IRRI conference at Vietnam. We also held sessions at the Punjab University to share our learnings from DSR.

To save one year on oats’ seed multiplication in the main season, we partnered with IARI Wellington, Tamil Naidu, where we multiplied the selected oats varieties during the o�-season. We successfully completed the multiplication program and saved one complete season for giving seeds for farmer �eld trials.

To increase farmer’s income by improving potato yield and quality, we are evaluating potato varieties suitable to di�erent geographies in the country. We have identi�ed two varieties that are high on quality, storability and yield. These varieties are also being evaluated by the Central Potato Research Institute under “All India Co-ordinated Research Improvement Project”.

Further, to bring improvement in potato seed quality, we have evaluated performance of various “Field Diagnostic Kits” for instant virus identi�cation. Through our evaluation, we found the most handy, suitable and portable kit, which can be used in the �eld and gives instant results for testing virus infection.

Page 23

TALENT ENGAGEMENT

We continue to provide a structured talent engagement model that focuses on people development. We provide a supportive and empowering workplace by giving employees the opportunity to learn and grow professionally through regular training and proven career development tools, as well as the transfer of best practices, skills, knowledge and technology across the businesses.

SKILL BUILDING

Employees are o�ered speci�c job training as required, including the opportunity to attend professional conferences to enhance their skills. Our global PepsiCo University program provides employees with intellectual capacity to systematically develop and assimilate skills and knowledge for personal and professional development.

PERFORMANCE MANAGEMENT

Our year-long performance process includes objective-setting, performance and development reviews, development action plans and appraisals — supported by coaching literature, training and materials. All employees are included in the performance management process across PepsiCo India.

EMPLOYEE ENGAGEMENT

Our biennial Organizational Health Survey helps foster a workplace in which associates can speak with truth and candour, which are core values of PepsiCo. The data we collect helps PepsiCo identify pathways for improvement.

LEARNING & DEVELOPMENT

In 2011/12, we leveraged our solid base of existing training programs and strengthened them through targeted developmental interventions. Our leadership and behavioral training resulted in 1.7 and 3.1 training person days per employee in 2011 and 2012 respectively. We conduct training for employees, from the frontline to senior management, to make sure they have the knowledge and skills they need to achieve performance goals in a changing world. For example, LearnSmart is our one stop shop for learning o�ers courses based on individual / organization need gaps in a blended mix of classroom and online course and resources. In 2011/12, we sustained our employee capability journey by ensuring that all targeted employees must go through need based courses under WorkSmart, ManageSmart and LeadSmart series.

Page 24Page 24

Talent Sustainability Talent Sustainability means providing a safe andinclusive workplace globally and respecting,supporting and investing in the local communities where we operate.

Page 24

Our commitment to talent sustainability means we're continually working to attract, develop and retain exceptional people. Our people are our greatest strength. They are the ambassador of our culture and living examples of our values and commitment to deliver Performance with Purpose.

Our talent sustainability promise is to invest in our employees to help them succeed and develop the skills needed to drive the company’s growth, while creating employment opportunities in the communities we serve. We owe our success to the work of our people in India, who drive our business by nourishing and delighting our consumers every day.

We believe in nurturing and inspiring our employees by giving them opportunities to further strengthen their skills through focused training and learning interventions. We continue to foster an inclusive environment where individuals feel they can bring their whole self to work, and that all their contributions and past experiences are valued. Our employer branding aims to capture and convey the excitement of being part of a dynamic, result-oriented company, with a powerful brand portfolio and top talent.

OUR PEOPLE

GOAL: Create a safe, healthy, diverse and inclusive workplace that reflects the global communities in which we operate.

SAFETY

In 2010, we implemented standardized measurement tools to track safety performance of our foods and beverage plants and analyse the same at a national level. In 2011/12, we built on this progress and reduced our lost time injury rates.

The health and safety of our employees is of paramount importance to PepsiCo India. We are continually working across our businesses to prevent occupational injuries and illnesses, and striving for an incident-free workplace. Areas of focus include machinery safety, �eet safety, activities requiring a permit to work and sales security. The safety performance is tracked in terms of injury rates and injury severity rates (lost days). In 2012 we achieved safety training hours of 110,597.

Our health and safety mission is to achieve sustainable growth by ensuring the safety of all employees and physical assets, by integrating health and safety into our business model, driving ownership, implementing systems, and availing the resources needed to

deliver a safe work environment. Our aim is to ensure that every employee who comes to work goes back home safely. Aligned to our safety philosophy, we have embedded enabling structures and processes. We have consciously transformed our way of thinking – to move from a reactive approach, to a proactive and preventive approach. This has been buttressed by robust training mechanisms – improving our training materials, literature and investing in training our trainers. We have invested in our infrastructure with a particular focus on electrical and �re-�ghting infrastructure. This is complemented by periodical hazard risk assessment, enforcing corrective and preventive actions, monitoring machine safety standards and contractor management. Twelve of our plants have OHSAS 18,001 certifications.

We have also reorganized our organizational governance of safety – with clearly de�ned roles and responsibilities. We have set up safety organization for PepsiCo India during 2012 and appointed 19 safety managers with approved safety quali�cations and experience to manage our people and risk. Our plants have safety managers, and we have a central team to govern safety aspects across all business units (foods and beverage). Our Safety Policy articulates our commitment to implant a culture of safety, which is also re�ected in the inclusion of safety KPIs for our leadership team. Our target is to provide 8 hours of safety training per employee annually and 1 near miss to be reported by employee annually.

Safety Indicators 2011 2012

Lost Time Injury Rates / 200,000 man-hours 0.20 0.18

Lost Time Injury Severity Rates / 200,000 man-hours 5.20 4.07

Training Hours / E�ective Employee 4.00 5.87

Near Misses 3,742 12,847

Near Misses / E�ective Employee 0.40 0.68

We realized that safety was perceived to be an “operational” responsibility. We have managed to create organization-wide ownership for this – extended to our frontline sta�, warehouses partners and o�ce facilities. Our safety initiatives have been extended to our supply chain universe. In 2011/12, we started with our warehouse transformation drive, in which safety and security was a key project outcome. This included transport safety, infrastructure, personnel protective equipment, security, material handling and �re safety dimensions. Standard operating procedures and KPIs were established at our warehouses, and capacity building of warehouse partners conducted. For our company owned operations at an India level, there has been improvement of 10 percent safety KPIs at the warehouse level.

We conducted a specialised third-party audit on human elements, �re, equipment, natural and occupancy hazards across all our plants (conducted by FM Global) in 2011. This was a thorough survey which gave us an insight on gaps and areas of improvement. It highlighted the imminent need for interventions that enhance safety, such as installation of hydrant systems and human-element-based interventions. In 2012, we started addressing the recommendations with the objective of enhancing the safety situation at our plants. We implemented a national safety campaign across our facilities in March 2012, to coincide with the National Safety Day of India on March 4, 2012 Further, we also accomplished the following:-

• We rolled out Big 6 Core Safety program which included metrics around working at height, contractor safety, con�ned space, �eet safety program, hazardous energy, machine guarding, etc.

• We initiated a policy which does not allow anyone inside the plant without wearing crash helmets, in case they travel to the plant on 2-wheeled vehicles.

• In order to develop a positive safety culture, we launched a campaign to report one near miss by one employee and an 8 hour safety lead indicators training for every employee.

• Through a Safety Alert and Safety Connect, we continuously issue safety alert to �eld teams on emerging learning from any incident to create immediate sensitization.

• We trained more than 1000 sales employees on defensive driving along with Hubert Ebner, an Indo-Austrian venture set up to address road safety in India.

HEALTH & WELLNESS

At PepsiCo we recognize the health and wellbeing of our employees as our �rst priority. As such, we provide competitive pay and a full range of bene�ts to help employees live healthier, balance work and family, and build a secure �nancial future.

Bene�ts Program: Our “Total Rewards” seek to optimally reward our associates for their e�orts and skills. Total Rewards is everything received as an employee–pay, health-care bene�ts, wellness programs, retirement plans and work-life bene�ts. We have adopted global standards designed to ensure all employee receive at least basic medical, disability, life insurance and retirement bene�ts, regardless of location.

Workplace Wellness Strategy: Our wellness and work-life quality programs are a key component of our employees’ total rewards. Our workplace wellness strategy is designed to engage employees and their families in developing and sustaining healthy behaviors to improve their overall quality of life. Our workplace policies enable work life quality and provide �exibility both professionally and personally. Some of these policies include sabbaticals, �exible timing, and maternity leave.

My Healthy Living: We o�er several on-site health and wellness services to raise health awareness and coach employees as part of our “My Healthy Living” program. These programs vary by locations. In the year 2011, we conducted an awareness-raising session on various themes. Health checkups were provided to employees to sensitize them on personal health management with individualized data sets. These included metabolic parameters, blood pressure, weight measurement, body mass and waist -hip ratios. We encourage employees to undergo periodic health scans based on their age groups.

As part of holistic healthy behaviors – exercise and sports assume signi�cant importance. Health and wellness are a combination of appropriate nutrition and physical activity. Various sporting events were conducted across locations with activities such as table tennis tournaments, cricket and football.

We centralized the Group term life and Group Personal accident insurance for plant employees and have strategized to centralize Group medical policy for 3,300 plant workmen by 2012-13.

Being Heart Healthy: As part of our Mission to Make India Heart Healthy, under the aegis of Quaker brand, we conducted Heart Health Days at various corporates across

�ve metro cities of Delhi, Mumbai, Bangalore, Chennai and Hyderabad. We reached out to over 100 corporates touching nearly 150,000 employees.

DIVERSITY & INCLUSION

Our diversity agenda is focused on hiring and nurturing our female talent. To mainstream the diversity agenda, we seek employee feedback on this parameter as part of our biennial Organizational Health Survey across levels. Women comprise 10.4 percent of our workforce. We track a variety of diversity indicators such as diversity by business, by function and diversity hiring by business. While we are proud of the progress we have made, we remain focused on supporting the advancement of women at PepsiCo to achieve even greater gains.

Our Women’s Business Council (WBC) works towards facilitating better inclusion of our female talent in the organization. The WBC engaged in a process of identifying unique needs and issues of women employees and crafting possible support and infrastructure. WBC has strategically intervened across our beverage and foods businesses through a range of initiatives whether it is safety audits, providing safety and counseling support through Sakhi – 24x7 helpline and celebrating International Women’s Day. The WBC participated in and led sessions for women returning to work after a career break – a unique intervention to build con�dence amongst women that organizations like ours are keen to enable the second curve of their careers.

In 2011/12, a 360-degree empowerment program “Fortifying the Fortitude of Women” was rolled out across locations covering 44 percent of women population. This comprised a series of unique workshops for women with the target of helping them develop “Fortitude” or the courage to face their daily challenges. The workshops are customized to the di�erent needs faced by women at di�erent stages of their career. Modules covered include networking, work life balance, guilt management, working with the opposite gender, etc. Our women colleagues have lauded the workshops with a positive feedback score of over 90 percent.

Two extensive safety audits have been conducted in 2010 and 2011, covering all of our locations and facilities, extending to over 50 cities. These audits are geared towards assessing safety of women employees of PepsiCo. The improvement areas identi�ed post audits have been built into KPIs for infrastructure corrections. Sensitization workshops for male members of the workforce on women-centric concerns have been conducted. In 2011, we also made it mandatory for all employees to attend Anti Sexual Harassment Training.

The work of our WBC has been recognized by the external world. We won the IIGBI 2012 award for ‘PepsiCo’s Fortitude Initiative’ under the Best Employer for Women’s Development category.

BUILDING CAREERS

A career at PepsiCo is intended to be an accumulation of challenging experiences across diverse businesses, with the objective of matching great talent with opportunities to build the business. Providing all our employees opportunities for career enhancement and further growth is an imperative that we always work towards. Our Career Growth Model outlines the foundation for building a successful career at PepsiCo. Career development plans are tailored to individuals and re�ect personal interests, ambitions and abilities. Employees are empowered to make choices, be it with regard to their training or career development by creating their Development Action Plan for the year. At the heart of our career progression approach lie our employees – and how we can maximize their growth in tandem with accomplishing organizational objectives. We o�er exciting work to push the envelope without compromising on elements of fun and work life balance. We have sound processes to identify potential leaders. The focus on quality of talent compels us to index on leadership competencies even before our potential graduates join us.

In 2011, PepsiCo India was ranked third in the “Best Companies in Hiring Practices” category and fourth in the “Best Companies in Leadership Development” category by the Great Place to Work Institute

BUILDING OUTSTANDING LEADERS FOR TOMORROW (BOLT)

The PepsiCo Leadership and Individual E�ectiveness Model de�ne competencies and behaviors for success. It communicates what is important for individuals at all levels of the organization, regardless of division or function. Our Building Outstanding Leaders for tomorrow (BOLT) framework is a structured approach to capability building of our employees that supports the business growth agenda by impacting two key business imperatives: Creating headroom in today’s workspace and creating leaders for tomorrow. Within this framework of engagement model each employee undergoes a host of programs based on their individual potential.

We created the headroom through a mix of classroom, experiential and coaching interventions. Our programs series WorkSmart, ManageSmart and LeadSmart caters to the development needs of the individual and organization at large. Our leadership programs support career advancement and talent development of our employees:

• Our Management Trainees and Future Leader Program provides an opportunity to hire 'top of the line' management graduates from top business schools and build a general management pipeline, with speci�c focus on senior sales and marketing roles.

• Graduate Engineers Trainees and Future Leaders

Program is a means to build the Operations Leadership at PepsiCo. We recruit fresh engineering graduates from the best regional engineering colleges and groom them for handling managerial roles in our plants.

• Our Leadership Lateral Program helps us build a bench ahead of the curve for critical positions and also provides headroom to the search teams to identify and recruit the best talent.

• Leadership Academies for Key Talent: Our Leadership pipeline is built through structured leadership academies at every leadership transition level from Assistant Managers to CEOs coupled with live projects and transformational coaching program. These academies also provide our key talent challenging experiences, helping them succeed and grow in PepsiCo while sustaining the business growth agenda. Our senior leadership is instrumental in grooming talent and building the future leadership pipeline. So, from actively going out to recruit at campuses, to coaching and mentoring, they are involved in each milestone of our employees’ career pathways.

Our leadership development e�orts have been recognized by the external world. We have earned ourselves the badge of being a “talent factory”.

TALENT ENGAGEMENT


SKILL BUILDING




EMPLOYEE ENGAGEMENT




Page 25




OUR PEOPLE


SAFETY













HEALTH & WELLNESS















BUILDING CAREERS












TALENT ENGAGEMENT


SKILL BUILDING




EMPLOYEE ENGAGEMENT




Page 26




OUR PEOPLE


SAFETY






Page 04








HEALTH & WELLNESS















BUILDING CAREERS


EMPOWERING WOMEN AT REMOTELOCATIONS TO REACH OUT

As a pilot, a women’s group at Palakkad Plant, a remote location in southern India, was started comprising 7 Women Executives and 17 Women Associates (factory workers). The group acts as a forum for addressing any special concerns pertaining to women and also as a platform to extend help to women in the external community. The group recently reached out to Attappallam village and partnered with a women’s old age home to provide emotional support, lunch and other facilities to senior women.











TALENT ENGAGEMENT


SKILL BUILDING




EMPLOYEE ENGAGEMENT




Page 27




OUR PEOPLE


SAFETY













HEALTH & WELLNESS















BUILDING CAREERS












CEO FACTORY

Our tradition of cross-pollination of PepsiCo

honed talent continues. In 2012, PepsiCo

India Holdings CEO, Sanjeev Chadha, moved

on to lead the company’s operations for Asia,

Middle East and Africa (AMEA) region. In

2011, Deepak Iyer, GM of the north market at

PepsiCo India, was relocated as the senior

franchise director of PepsiCo in Middle East

Africa.

We also support our global o�ces through

knowledge sharing and technology transfer.

Our India R&D centre seeks to transform into

a world-class R&D powerhouse by 2015 that

brings great ideas to life in big and pro�table

innovations. The team also helps AMEA R&D

build stronger di�erentiating technology

capabilities for Beverages and Foods by

leveraging the India R&D centre’s

capabilities. The tradition of cross-pollination

is not limited intra-PepsiCo movements. Our

former executives are now in strategic roles

at Indian and multinational companies as

well.

Source:

http://www.hindustantimes.com/business-n

ews/CorporateNews/CEO-factories/Article1-

694287.aspx

TALENT ENGAGEMENT


SKILL BUILDING




EMPLOYEE ENGAGEMENT




Page 28

Page 29

TALENT ENGAGEMENT


SKILL BUILDING




EMPLOYEE ENGAGEMENT




We have instituted Leadership Academies for key talent. There are four “Academies of Excellence” to complement the ongoing training frameworks. These Academies are for our key talent pool. They are conducted at every leadership transition level - from Assistant Manager to CEO complemented by transformational coaching programs. Our senior leadership and our academic partners collaborate to deliver the trainings in these academies. The Academies are designed to be a well-rounded leadership experience for the participants, and therefore, have drawn on a mix of approaches - “boot camps”, executive mentoring sessions, theatre workshops, NGO interaction, management guru sessions, outbound programs and interaction with international business leaders and academia from premier international business schools.

In 2011, we launched IMPACT, a 52 week leadership academy for our high-performing talent based on experiential learning through simulations and experiences provided to individuals in groups. The pedagogy is supported by interaction opportunities with NGO leaders, sports personalities and senior organization leaders; thereby providing participants perspectives from multiple angles.

of our academy participants have taken on larger roles 67%

67%

15%

4.5%

of the Region President’s Leadership Academy (designed for Directors) participants are in international roles today

All leadership interventions and organization capability programs have received a feedback score in excess of 4.5 on 5

The Manager Quality scores have shown a remarkable improvement in our Organization Health Survey - increasing from 60% in 2006 to 67% in 2011

TALENT ENGAGEMENT


SKILL BUILDING




EMPLOYEE ENGAGEMENT




HUMAN RIGHTS

Goal: Respect human rights in the workplace and across the supply chain.

PepsiCo respects the dignity of our employees in the workplace, and we are accountable to ensure our employees’ rights to personal security, a safe, clean and healthful workplace, and freedom from harassment or abuse of any kind. We deal fairly and honestly with our employees regarding wages, bene�ts and other conditions of employment, and recognize their right to freedom of association. We do not use compulsory or child labor. We do not tolerate discrimination and work to ensure equal opportunity for all employees. We comply with all applicable laws, regulations and other employment standards, wherever we operate or work.

We encourage our partners, suppliers, contractors and vendors to support these policies, and we place substantial value on working with others who share our commitment to human rights. We go beyond our operational boundary and have mandated our supply chain partners to comply with the PepsiCo Code of Conduct. All our partners are required to sign o� on the terms and conditions of our business, which include complying with necessary laws and regulations of the land.

We are fully committed to compliance with applicable laws and regulations and doing the right thing consistently, without compromise. To ensure ethical and legal compliance, we provide annual training on our Code of Conduct to salaried employees, who must certify that they have read and understood the Code and agree to abide by it. Each employee has to re-a�rm their commitment to the Code of Conduct annually through online training. Additionally, we conduct classroom training once in two years for all employees.

SPEAK UP

At PepsiCo, our Speak Up hotline provides employees, as well as consumers, business partners and others with a means to report potential violations of the PepsiCo Code of Conduct, our policies or of applicable law.

We expect employees to take an active role in identifying situations that may a�ect our reputation for ethical excellence and high integrity. Our Speak Up hotline can be used

to raise concerns about any business situation that may be inconsistent with our Code of Conduct, our values, our policies or applicable law. The calls to Speak Up may be made anonymously. PepsiCo handles these reports con�dentially.

The Speak Up line is an important part of our culture of ethics and compliance at PepsiCo. All employees have an obligation to report suspected Code of Conduct violations, and to ask questions, raise issues and seek guidance when a course of action is unclear. The Speak Up line is widely used and a key component of conducting business ethically and with integrity at PepsiCo.

PepsiCo is committed to protecting the rights of those individuals who report issues to PepsiCo. We prohibit retaliation against any individual who, in good faith, reports a suspected violation of the law or the Code of Conduct. Any instance of retaliation against an employee for reporting a concern in good faith is itself a serious violation of our Code of Conduct, and should be reported. Any employee found to have engaged in such retaliation will be subject to appropriate discipline.

TALENT & COMMUNITY

Our work is spread across diverse communities and we have that rare opportunity to make a positive impact across these communities. We have invested in empowering our surrounding communities to become self-sustaining income generating units, and encouraging our associates to be a bigger piece of that story. Being part of the community fabric, we achieve our Talent Sustainability agenda by transferring unique skills and knowledge to the community members, and creating livelihood opportunities for them.

Today, several of our ongoing initiatives with our long-term, strategic, non-pro�t partners are creating measurable impact. By increasing our marketplace competitiveness in India, building �nancial resilience, and creating products that nourish and delight our consumers – we are helping grow employment opportunities in India since the last two decades. As of 31st December 2012, our total direct employee strength is 6,374.

PROJECT FUNNEL

Our ambitions of growth in India need to be empowered with a robust talent pipeline particularly at the frontline level. In view of the constraints on the availability of skilled manpower, we initiated “Project Funnel”. This is a skill development and recruitment

drive targeted at economically disadvantaged sections of the society. The intent is to create the right talent pipeline for our sales and operations teams, thereby supporting sustainable livelihood for people at the bottom of pyramid and to ensure sustainable business. Project Funnel is an initiative to leverage the Indian National Skills Mission which aims to proactively bridge the skill gap in the Indian Workforce. This project involves working through the government and non-government agencies in India in mobilizing talent at the grass root level and making them PepsiCo India ready. These agencies work with us aligned with Government of India’s charter of creating employability, and mobilizing and training youth from disadvantaged sections. 22 agencies having pan-India reach were identi�ed as part of the project and candidates have been hired by us through this program. Project Funnel has huge potential in unlocking talent bottleneck at the entry level and providing inclusive growth in line with our purpose agenda. This will not only address our growing need for skilled manpower, but also bene�t the community at large by providing employment and a source of livelihood to the bottom of the pyramid.

HIV/AIDS AWARENESS

In 2011/12 we reached out to over 3 million people through our HIV/AIDS awareness program, compared with 1.2 million people in 2010. We accomplished this through associate volunteerism and strengthened our HIV/AIDS Master Trainers pool by 50 percent. We run this initiative with our company volunteers in association with the International Labor Organization. Through 2012 we have impacted more than 3 million people through awareness sessions that eliminate stigma, save lives and help mainstream HIV positive people. Our employees volunteer as trainers to impart awareness to community members and other trainers. We use the platform of religious festivals and other big community forums and events to conduct these sessions. Our Kolkata Foods plant team collaborated with the West Bengal State AIDS Prevention and Control Society (WBSAPCS) and with People Living with HIV/AIDS (PLWHA) volunteers to raise awareness. Our Kolkata Plant has been working with a local NGO on HIV/AIDS in for the last four years on building awareness among people including employees, contract labor, drivers, farmers, vendors, villagers, etc. The locality has more than 300 HIV+ population. We extended our support to 30 HIV+ a�ected families (64 children and 48 Adults) a�ected people. Our local assessment re�ected a need for nutrition, education and skill building for the family.

Page 30

TALENT ENGAGEMENT


SKILL BUILDING




EMPLOYEE ENGAGEMENT




HUMAN RIGHTS

Goal: Respect human rights in the workplace and across the supply chain.

PepsiCo respects the dignity of our employees in the workplace, and we are accountable to ensure our employees’ rights to personal security, a safe, clean and healthful workplace, and freedom from harassment or abuse of any kind. We deal fairly and honestly with our employees regarding wages, bene�ts and other conditions of employment, and recognize their right to freedom of association. We do not use compulsory or child labor. We do not tolerate discrimination and work to ensure equal opportunity for all employees. We comply with all applicable laws, regulations and other employment standards, wherever we operate or work.

We encourage our partners, suppliers, contractors and vendors to support these policies, and we place substantial value on working with others who share our commitment to human rights. We go beyond our operational boundary and have mandated our supply chain partners to comply with the PepsiCo Code of Conduct. All our partners are required to sign o� on the terms and conditions of our business, which include complying with necessary laws and regulations of the land.

We are fully committed to compliance with applicable laws and regulations and doing the right thing consistently, without compromise. To ensure ethical and legal compliance, we provide annual training on our Code of Conduct to salaried employees, who must certify that they have read and understood the Code and agree to abide by it. Each employee has to re-a�rm their commitment to the Code of Conduct annually through online training. Additionally, we conduct classroom training once in two years for all employees.

SPEAK UP

At PepsiCo, our Speak Up hotline provides employees, as well as consumers, business partners and others with a means to report potential violations of the PepsiCo Code of Conduct, our policies or of applicable law.

We expect employees to take an active role in identifying situations that may a�ect our reputation for ethical excellence and high integrity. Our Speak Up hotline can be used

to raise concerns about any business situation that may be inconsistent with our Code of Conduct, our values, our policies or applicable law. The calls to Speak Up may be made anonymously. PepsiCo handles these reports con�dentially.

The Speak Up line is an important part of our culture of ethics and compliance at PepsiCo. All employees have an obligation to report suspected Code of Conduct violations, and to ask questions, raise issues and seek guidance when a course of action is unclear. The Speak Up line is widely used and a key component of conducting business ethically and with integrity at PepsiCo.

PepsiCo is committed to protecting the rights of those individuals who report issues to PepsiCo. We prohibit retaliation against any individual who, in good faith, reports a suspected violation of the law or the Code of Conduct. Any instance of retaliation against an employee for reporting a concern in good faith is itself a serious violation of our Code of Conduct, and should be reported. Any employee found to have engaged in such retaliation will be subject to appropriate discipline.

TALENT & COMMUNITY

Our work is spread across diverse communities and we have that rare opportunity to make a positive impact across these communities. We have invested in empowering our surrounding communities to become self-sustaining income generating units, and encouraging our associates to be a bigger piece of that story. Being part of the community fabric, we achieve our Talent Sustainability agenda by transferring unique skills and knowledge to the community members, and creating livelihood opportunities for them.

Today, several of our ongoing initiatives with our long-term, strategic, non-pro�t partners are creating measurable impact. By increasing our marketplace competitiveness in India, building �nancial resilience, and creating products that nourish and delight our consumers – we are helping grow employment opportunities in India since the last two decades. As of 31st December 2012, our total direct employee strength is 6,374.

PROJECT FUNNEL

Our ambitions of growth in India need to be empowered with a robust talent pipeline particularly at the frontline level. In view of the constraints on the availability of skilled manpower, we initiated “Project Funnel”. This is a skill development and recruitment

drive targeted at economically disadvantaged sections of the society. The intent is to create the right talent pipeline for our sales and operations teams, thereby supporting sustainable livelihood for people at the bottom of pyramid and to ensure sustainable business. Project Funnel is an initiative to leverage the Indian National Skills Mission which aims to proactively bridge the skill gap in the Indian Workforce. This project involves working through the government and non-government agencies in India in mobilizing talent at the grass root level and making them PepsiCo India ready. These agencies work with us aligned with Government of India’s charter of creating employability, and mobilizing and training youth from disadvantaged sections. 22 agencies having pan-India reach were identi�ed as part of the project and candidates have been hired by us through this program. Project Funnel has huge potential in unlocking talent bottleneck at the entry level and providing inclusive growth in line with our purpose agenda. This will not only address our growing need for skilled manpower, but also bene�t the community at large by providing employment and a source of livelihood to the bottom of the pyramid.

HIV/AIDS AWARENESS

In 2011/12 we reached out to over 3 million people through our HIV/AIDS awareness program, compared with 1.2 million people in 2010. We accomplished this through associate volunteerism and strengthened our HIV/AIDS Master Trainers pool by 50 percent. We run this initiative with our company volunteers in association with the International Labor Organization. Through 2012 we have impacted more than 3 million people through awareness sessions that eliminate stigma, save lives and help mainstream HIV positive people. Our employees volunteer as trainers to impart awareness to community members and other trainers. We use the platform of religious festivals and other big community forums and events to conduct these sessions. Our Kolkata Foods plant team collaborated with the West Bengal State AIDS Prevention and Control Society (WBSAPCS) and with People Living with HIV/AIDS (PLWHA) volunteers to raise awareness. Our Kolkata Plant has been working with a local NGO on HIV/AIDS in for the last four years on building awareness among people including employees, contract labor, drivers, farmers, vendors, villagers, etc. The locality has more than 300 HIV+ population. We extended our support to 30 HIV+ a�ected families (64 children and 48 Adults) a�ected people. Our local assessment re�ected a need for nutrition, education and skill building for the family.

NUTRITION

• Baseline of BMI calculated and monitored in every quarter (80 percent population improved/sustained BMI status)

• Food materials distributed by introducing daily packaging system

• Regular home visits by Field Assistants to monitor food consumption and give relevant feed back

EDUCATION

• Children receiving coaching support centrally (41 percent students improved academic performance over previous year)

• Monitoring the students’ school attendance and use of educational materials provided

• Conducting routine tests

SKILL BUILDING

• Tailoring training provided based on the interest of bene�ciaries (10 persons received skill development program on tailoring)

• Developed training curriculum • Running tailoring training twice a week

Page 31

TALENT ENGAGEMENT


SKILL BUILDING




EMPLOYEE ENGAGEMENT




Annexure

Page 32

TALENT ENGAGEMENT


SKILL BUILDING




EMPLOYEE ENGAGEMENT




ABOUT THIS REPORT: REPORT PROFILE, BOUNDARY AND SCOPE

PepsiCo has been communicating the progress made on its sustainability performance through its global citizenship report since 2006. Performance with Purpose is PepsiCo’s global goal to deliver sustained value by providing a wide range of foods and beverages, from treats to healthy eats; �nding innovative ways to minimize our impact on the environment and lower our costs through energy and water conservation, as well as reduced use of packaging material; providing a safe and inclusive workplace for our employees globally; and respecting, supporting and investing in the local communities in which we operate. It guides our strategy and operations, with a focus on Human Sustainability, Environmental Sustainability and Talent Sustainability.

Sustainability Report details the ways in which PepsiCo India Region delivers Performance with Purpose. In this Report, we share the sustainability performance in India Region based on the GRI G3.1 guidelines for the period January 2011 to December 2012 within the framework of Performance with Purpose. This is the India Region’s third Sustainability Report. Throughout the report, references to “our” and “”we” allude to PepsiCo India Region, unless stated otherwise which refer to PepsiCo Global (“PepsiCo”, “PepsiCo Inc.”, “globally”, “our global”). The Report re�ects our continued intent to disclose our sustainability performance, and incrementally build on it. For this period, our reporting boundary includes all functional foods and beverage operations in India that are wholly owned and operated by PepsiCo. It does not cover franchise or co-packing operations that produce PepsiCo products and, in many instances, carry the “Pepsi” name, as these are not owned or operationally controlled by PepsiCo. The reporting boundary also excludes our corporate o�ce, sales, distribution and administration facilities where we are currently in the process of establishing the requisite reporting systems.

We have used GRI G3.1 principles to determine report content and assessed key issues for stakeholder inclusiveness, sustainability context and completeness. While based on the GRI framework, The Report has been prepared to achieve alignment with how we manage sustainability-related issues within our global Performance with Purpose framework.

The information within this report has been compiled by a dedicated team, with representatives from di�erent functional areas within PepsiCo India Region. Consultations with key stakeholders were undertaken to obtain insights and stakeholder preferences on sustainability aspects surrounding initiatives, projects and business processes.

The environmental sustainability data reported covers the reporting boundary outlined above. For reporting on positive water balance, we have expanded our boundary to include our franchise operations as well as our community and agricultural interventions with respect to water replenishment and conservation projects.

Our reporting on human sustainability and talent sustainability covers our products, services and employees in India. Our economic indicators are reported globally through PepsiCo Annual Report on a calendar year basis. Our �nancial year ended December 29, 2012.

Globally, PepsiCo follows a well-de�ned set of procedures for data and management systems to run the business and measure performance. We have adopted enterprise-wide IT system functionalities for all our facilities and o�ces, and have a set of global benchmark measures to collate, analyse and communicate the key measures at least once a month.

We strive to continuously improve our reporting and disclosure standards. We have obtained limited assurance from Deloitte based on ISAE 3000 and AA1000AS (2008) assurance standards for this Report. The assurance statement is appended to this report. This report is intended to be part of our on-going dialogue with our stakeholders, including but not restricted to, employees, customers, consumers, shareholders, government bodies, non-governmental (NGO) groups, analysts and others interested in our sustainability performance. PepsiCo India seeks to develop and continuously improve on its reporting process and welcomes your feedback.

Our headquarters and registered address is;

PepsiCo India Holdings Private Limited, 3B DLF Corporate Park, 'S' Block, Qutab Enclave, Phase-III, Gurgaon – 122002, Haryana, India.Tel: 0124-2880613;Mail: [email protected]

Page 33

Page 34

PEPSICO INDIA REGION

Leadership through Performance with Purpose

ABOUT PEPSICO

PepsiCo is a global food and beverage leader with net revenues of more than $65 billion and a product portfolio that includes 22 brands that generate more than $1 billion each in annual retail sales. Our main businesses – Quaker, Tropicana, Gatorade, Frito-Lay and Pepsi-Cola – make hundreds of enjoyable foods and beverages that are loved throughout the world. PepsiCo’s people are united by our unique commitment to sustainable growth by investing in a healthier future for people and our planet, which we believe also, means a more successful future for PepsiCo. We call this commitment Performance with Purpose. For more information, please visit www.pepsico.com

ABOUT PEPSICO INDIA

PepsiCo entered India in 1989 and in a short period, has grown into one of the largest and fastest growing food and beverage businesses in the country. PepsiCo India’s growth has been guided by PepsiCo’s global vision of “Performance with Purpose”. It is our global goal to deliver sustained value by providing a wide range of foods and beverages, from treats to healthy eats; �nding innovative ways to minimize our impact on the environment and lower our costs through energy and water conservation as well as reduce use of packaging material; providing a safe and inclusive workplace for our employees globally; and respecting, supporting and investing in the local communities in which we operate.

One of the largest food and beverage businesses in india: PepsiCo India’s diverse portfolio includes iconic brands like Pepsi, Lay’s, Kurkure, Tropicana 100percent, Gatorade, Quaker and young, but immensely popular and fast growing brands, such as Nimbooz. PepsiCo India has grown to become one of the country’s largest food and beverage businesses.

A growing portfolio of enjoyable and wholesome snacks and beverages: PepsiCo’s portfolio re�ects its commitment to delight consumers with a diverse range of products, from treats to healthy eats. The portfolio includes new o�erings that meet consumer needs for both nutrition as well as convenience such as like Quaker Wholegrain Oats, Tropicana juices, rehydrator Gatorade, Tata Water Plus, Lay’s baked range and Lehar Iron Chusti forti�ed extruded snack with superior quality iron and B-vitamins.

Model partnership with over 24,000 farmers: PepsiCo India has pioneered and established a model of partnership with farmers and now works with over 24,000 happy farmers across twelve states. More than 45 percent of these are small and marginal farmers with a land holding of one acre or less. PepsiCo India provides 360-degree support to the farmer through assured buy back of their produce at pre-agreed prices, quality seeds, extension services, disease control packages, bank loans, weather insurance, and the latest technological practices.

Global leader in water conservation: In 2009, PepsiCo India achieved a signi�cant milestone, by becoming the �rst business to achieve ‘Positive Water Balance’ in the beverage world, a fact veri�ed by Deloitte Touché Tohmatsu India Pvt. Ltd and has been Water Positive since then. The company made this possible through innovative agronomic practices like direct seeding of rice and drip irrigation of potato, through community water interventions and by reducing the consumption of water in its manufacturing facilities. PepsiCo is lauded for its e�orts for water conservation, and the Stockholm Water Prize 2012 is a testament to this fact.

Care for the environment: PepsiCo India is focused on reducing its carbon footprint. Nearly 30 percent of its energy generated in 2012 was from renewable sources such as rice husk boilers and wind turbines. Initiatives such as reduction of use of chemicals, eco-friendly packaging initiatives and e�cient waste management help reduce load on the environment. PepsiCo India’s award-winning Waste to Wealth recycling program reaches 465,000 people.

Exemplary employment practices: PepsiCo India presently employs 6,374 people and provides indirect employment to more than 200,000 people. The company believes in providing employment and growth opportunities to local talent. Its ‘College of Leadership’, ensures early identi�cation of talent, and employees’ focused development through critical experiences. The company emphasizes “Winning with Diversity and Inclusion” and has a signi�cant number of women in the leadership team in India. PepsiCo India has won the prestigious Hellen Keller Award from the National Centre for Promotion of Employment for Disabled People (NCPEDP).

Page 37

WHAT IT MEANSSustained Growth

Sustained growth is fundamental to motivating and measuring our success. Our quest for sustained growth stimulates innovation, places a value on results, and helps us understand whether today's actions will contribute to our future. It is about the growth of people and company performance. It prioritizes both making a di�erence and getting things done.

Empowered People

Empowered people means we have the freedom to act and think in ways that we feel will get the job done, while adhering to processes that ensure proper governance and being mindful of company needs beyond our own.

Responsibility and Trust

Responsibility and trust form the foundation for healthy growth. We hold ourselves both personally and corporately accountable for everything we do. We must earn the con�dence others place in us as individuals and as a company. By acting as good stewards of the resources entrusted to us, we strengthen that trust by walking the talk and following through on our commitment to succeeding together.

Guiding Principles

We uphold our commitment with six guiding principles. We must always strive to:

• Care for our customers, our consumers and the world we live in.

We are driven by the intense, competitive spirit of the marketplace, but we direct this spirit toward solutions that bene�t both our company and our constituents. Our success depends on a thorough understanding of our customers, consumers and communities. To foster this spirit of generosity, we go the extra mile to show we care.

• Sell only products we can be proud of.

The true test of our standards is our own ability to consume and personally endorse the products we sell. Without reservation. Our con�dence helps ensure the quality of our products, from the moment we purchase ingredients to the moment it reaches the consumer's hand.

PEPSICO VALUES & PHILOSOPHY

Our Values & Philosophy are a re�ection of the socially and environmentally responsible company we aspire to be. They are the foundation for every business decision we make.

OUR COMMITMENT

We are committed to delivering sustained growth through empowered people acting responsibly and building trust.

PERFORMANCE WITH PURPOSEPerformance with Purpose is our goal to deliver sustained value by providing a wide range of foods and beverages, from treats to healthy eats; finding innovative ways to minimize our impact on the environment and lower our costs through energy and water conservation as well as reduce use of packaging material; providing a safe and inclusive workplace for our employees globally; and respecting, supporting and investing in the local communities in which we operate.

OUR MISSIONOur mission is to be the world's premier consumer products company

focused on convenient foods and beverages. We seek to produce

financial rewards to investors as we provide opportunities for growth

and enrichment to our employees, our business partners and the

communities in which we operate. And in everything we do, we strive for

honesty, fairness and integrity.

OUR VISIONOur vision is put into action through programs and a focus on

environmental stewardship, activities to benefit society, and a

commitment to build shareholder value by making PepsiCo a truly

sustainable company.

Page 35

• Speak with truth and candour

We tell the whole story, not just what's convenient to our individual goals. In addition to being clear, honest and accurate, we are responsible for ensuring our communications are understood.

• Win with diversity and inclusion

We embrace people with diverse backgrounds, traits and ways of thinking. Our diversity brings new perspectives into the workplace and encourages innovation, as well as the ability to identify new market opportunities.

• Balance short-term and long-term

In every decision, we weigh both short-term and long-term risks and bene�ts. Maintaining this balance helps sustain our growth and ensures our ideas and solutions are relevant both now and in the future.

• Respect others and succeed together

Our mutual success depends on mutual respect, inside and outside the company. It requires people who are capable of working together as part of a team or informal collaboration. While our company is built on individual excellence, we also recognize the importance and value of teamwork in turning our goals into accomplishments.

Our Worldwide Code of Conduct

At PepsiCo, we believe acting ethically and responsibly is not only the right thing to do, but also the right thing to do for our business. Our Global Codeof Conduct is our road map and compass for doing business the right way. Simply put, we believe that you do business the right way when you act ethically and consistently with our values, our Code, our policies and the law. The Code is organized around four pillars that reinforce our values and govern our day-to-day decisions and actions:

• Respect in the workplace

• Integrity in the marketplace

• Ethics in our business activities

• Responsibility for our shareholders

The Code can be accessed at http://pepsico.com/Company/Global-Code-Of-Conduct

Our Human Rights Workplace Policy

PepsiCo’s Human Rights Workplace Policy is guided by the Universal Declaration of Human Rights and related international covenants. The principles underlying our Human Rights Workplace Policy, available in 44 languages, are broadly communicated as part of the Code of Conduct training. It includes the expectation to:

• Provide fair and equitable wages, bene�ts and other conditions of employment in accordance with local laws

• Recognize employees’ right to freedom of association

• Provide humane and safe working conditions

• Prohibit forced or child labor

• Promote a workplace free of discrimination and harassment

The policy can be accessed at http://pepsico.com/Company/Policies

The Code can be accessed at http://pepsico.com/Company/Global-Code-Of-Conduct

Page 36

OUR CORPORATE GOVERNANCE AND RISK MANAGEMENT SYSTEMS

PEPSICO INDIA EXECUTIVE COMMITTEE Our Executive Committee in India comprises a cross-functional, senior management group that identi�es, assesses, prioritizes and addresses strategic and reputational risk and is chaired by the CEO and Chairman of PepsiCo India. The Executive Committee meets at regular intervals on all areas of the business.

Sustainability Governance

Human Sustainability in India is led by the research and development (R&D) and innovation function. Environmental Sustainability in our operations is led by respective Heads of Operations at Foods and Beverages in India, who are responsible for implementing the Environmental Sustainability initiatives and for advising and informing the CEO and leadership team on matters related to Environmental Sustainability. Talent Sustainability in India is led by Chief Personnel O�cer, and a team responsible for organization capability, talent acquisition and compensation and bene�t initiatives.

Sustainability is central to delivering our business strategy and is increasingly becoming a driver for innovation and growth in a rapidly changing marketplace. We have always embraced sound corporate governance and aspire to go beyond legal requirements to become an innovations-driven organization, with an ambition for sustainability leadership. Our corporate governance philosophy is focused on maintaining strong controls over �nancial reporting, exerting rigorous oversight of the business and engaging in strong and e�ective corporate governance.

As part of PepsiCo’s commitment to protecting our employees and the environment, as well as complying with environmental, health and safety (EHS) regulations, PepsiCo has created My EHS, a software tool used globally to monitor risks, track reports, calculate, share good practices and store, environmental, health and safety data. This Tool facilitates compliance management, improves visibility to management, provides a single location for PepsiCo information, improves quality and integrity of compliance data, facilitates learnings and best practice sharing and optimizes use of personnel/resources time by adopting a common electronic management system. The Compliance, Incident Reporting and Audit Modules in the My EHS Tool helps PepsiCo create an e�ective compliance system to minimize risks, by ensuring preventive and timely corrective actions.

During the reporting period there were no incidents of signi�cant monetary �nes or of non-monetary sanctions of a permanent nature for non-compliance with environmental laws and regulations.

STRATEGY AND ANALYSISWe are guided by our Performance with Purpose vision and its goals while formulating our sustainability strategy.

Performance with Purpose is our goal to deliver sustained value. It guides our strategy and operations, with a focus on Human Sustainability, Environmental Sustainability and Talent Sustainability.

• Human Sustainability means providing a wide range of foods and beverages, from treats to healthy eats.

• Environmental Sustainability means �nding innovative ways to minimize our impact on the environment and lower our costs through energy and water conservation, as well as reduced use of packaging material.

• Talent Sustainability means providing a safe and inclusive workplace globally and respecting, supporting and investing in the local communities where we operate.

Because we believe in the power of continuous improvement, our goals may further evolve as we learn from our day-to-day operations, pursue and adopt new technologies and other innovations, and adjust to changes in the external environment in which we operate. We believe these goals help position PepsiCo for long-term, sustainablesuccess by aligning what is good for our business with what is good for society and the planet.

1. Strive to deliver superior long-term financial performance and sustained shareholder value.

2. Continue to refine our food and beverage choices to meet changing consumer needs by reducing sodium, added sugars and saturated fat, and developing a broader portfolio of product choices.

3. Continue to provide clear nutrition information on our products, and sell and market them appropriately to our consumers, including children, in line with our global policies and accepted global standards.

4. Help protect and conserve global water supplies, especially in water-stressed areas, and provide access to safe water.

5. Innovate our packaging to make it increasingly sustainable, minimizing our impact on the environment.

6. Work to eliminate solid waste to landfills from our production facilities.

7. Work to achieve an absolute reduction in greenhouse gas (GHG) emissions

across our global businesses.

8. Continue to support sustainable agriculture by expanding best practices with

our growers and suppliers.

9. Create a safe, healthy, diverse and inclusive workplace that reflects the global

communities in which we operate.

10. Respect human rights in the workplace and across the supply chain.

These goals lead us as we develop our strategic framework.We internalise sustainability risks and opportunities, and deploy resources to achieve our targets. Engagement with our key stakeholders allows us to sharpen our strategy making process, and provides inputs for three-year rolling strategic plans. Through this process, we reinforce our existing initiatives and innovate in areas such as maintaining and improving our water positive status, mitigating climate and other risks, increased use of renewable energy, new health and wellness initiatives and increased partnership with farmers to grow potatoes, oats, paddy and other crops.

Strategically addressing corporate responsibility issues requires an understanding of the range of issues that impact the PepsiCo India value chain and that are most relevant to the company and its stakeholders. To better understand these issues, and as a �rst step in our strategy development, we conducted a materiality analysis. We have identi�ed stakeholder concerns and expectations and included inputs from key PepsiCo India business leaders in the areas of Operations, Packaging, CSR, Marketing, Innovations, Finance, Legal, Corporate A�airs and Agriculture to identify key corporate responsibility business risks and opportunities. Our strategy and commitments are focused at three areas of in�uence: Environment, Human and Talent Sustainability.

DEFINING REPORT CONTENT: THE PROCESSWe are committed to continue engagement with our stakeholders, whose insights have helped shape our thinking and actions. As a starting point, this report addresses the sustainability-related topics most relevant to PepsiCo. Additionally, we strongly believe in the value of engaging our stakeholders and soliciting feedback to ensure continued progress. Topics of particular interest to PepsiCo stakeholders were identi�ed through a series of engagement sessions with Ceres (http://www.ceres.org). In addition, we

Page 37

monitor how consumers and customers perceive our business and sustainability programs through multiple global surveys conducted by GlobeScan and others. Lastly, this report was informed by the GRI framework, www.globalreporting.org

OUR CORPORATE GOVERNANCE AND RISK MANAGEMENT SYSTEMS

PEPSICO INDIA EXECUTIVE COMMITTEE Our Executive Committee in India comprises a cross-functional, senior management group that identi�es, assesses, prioritizes and addresses strategic and reputational risk and is chaired by the CEO and Chairman of PepsiCo India. The Executive Committee meets at regular intervals on all areas of the business.

Sustainability Governance

Human Sustainability in India is led by the research and development (R&D) and innovation function. Environmental Sustainability in our operations is led by respective Heads of Operations at Foods and Beverages in India, who are responsible for implementing the Environmental Sustainability initiatives and for advising and informing the CEO and leadership team on matters related to Environmental Sustainability. Talent Sustainability in India is led by Chief Personnel O�cer, and a team responsible for organization capability, talent acquisition and compensation and bene�t initiatives.

Sustainability is central to delivering our business strategy and is increasingly becoming a driver for innovation and growth in a rapidly changing marketplace. We have always embraced sound corporate governance and aspire to go beyond legal requirements to become an innovations-driven organization, with an ambition for sustainability leadership. Our corporate governance philosophy is focused on maintaining strong controls over �nancial reporting, exerting rigorous oversight of the business and engaging in strong and e�ective corporate governance.

As part of PepsiCo’s commitment to protecting our employees and the environment, as well as complying with environmental, health and safety (EHS) regulations, PepsiCo has created My EHS, a software tool used globally to monitor risks, track reports, calculate, share good practices and store, environmental, health and safety data. This Tool facilitates compliance management, improves visibility to management, provides a single location for PepsiCo information, improves quality and integrity of compliance data, facilitates learnings and best practice sharing and optimizes use of personnel/resources time by adopting a common electronic management system. The Compliance, Incident Reporting and Audit Modules in the My EHS Tool helps PepsiCo create an e�ective compliance system to minimize risks, by ensuring preventive and timely corrective actions.

During the reporting period there were no incidents of signi�cant monetary �nes or of non-monetary sanctions of a permanent nature for non-compliance with environmental laws and regulations.

STRATEGY AND ANALYSISWe are guided by our Performance with Purpose vision and its goals while formulating our sustainability strategy.

Performance with Purpose is our goal to deliver sustained value. It guides our strategy and operations, with a focus on Human Sustainability, Environmental Sustainability and Talent Sustainability.

• Human Sustainability means providing a wide range of foods and beverages, from treats to healthy eats.

• Environmental Sustainability means �nding innovative ways to minimize our impact on the environment and lower our costs through energy and water conservation, as well as reduced use of packaging material.

• Talent Sustainability means providing a safe and inclusive workplace globally and respecting, supporting and investing in the local communities where we operate.

Because we believe in the power of continuous improvement, our goals may further evolve as we learn from our day-to-day operations, pursue and adopt new technologies and other innovations, and adjust to changes in the external environment in which we operate. We believe these goals help position PepsiCo for long-term, sustainablesuccess by aligning what is good for our business with what is good for society and the planet.

1. Strive to deliver superior long-term financial performance and sustained shareholder value.

2. Continue to refine our food and beverage choices to meet changing consumer needs by reducing sodium, added sugars and saturated fat, and developing a broader portfolio of product choices.

3. Continue to provide clear nutrition information on our products, and sell and market them appropriately to our consumers, including children, in line with our global policies and accepted global standards.

4. Help protect and conserve global water supplies, especially in water-stressed areas, and provide access to safe water.

5. Innovate our packaging to make it increasingly sustainable, minimizing our impact on the environment.

6. Work to eliminate solid waste to landfills from our production facilities.

7. Work to achieve an absolute reduction in greenhouse gas (GHG) emissions

across our global businesses.

8. Continue to support sustainable agriculture by expanding best practices with

our growers and suppliers.

9. Create a safe, healthy, diverse and inclusive workplace that reflects the global

communities in which we operate.

10. Respect human rights in the workplace and across the supply chain.

These goals lead us as we develop our strategic framework.We internalise sustainability risks and opportunities, and deploy resources to achieve our targets. Engagement with our key stakeholders allows us to sharpen our strategy making process, and provides inputs for three-year rolling strategic plans. Through this process, we reinforce our existing initiatives and innovate in areas such as maintaining and improving our water positive status, mitigating climate and other risks, increased use of renewable energy, new health and wellness initiatives and increased partnership with farmers to grow potatoes, oats, paddy and other crops.

Strategically addressing corporate responsibility issues requires an understanding of the range of issues that impact the PepsiCo India value chain and that are most relevant to the company and its stakeholders. To better understand these issues, and as a �rst step in our strategy development, we conducted a materiality analysis. We have identi�ed stakeholder concerns and expectations and included inputs from key PepsiCo India business leaders in the areas of Operations, Packaging, CSR, Marketing, Innovations, Finance, Legal, Corporate A�airs and Agriculture to identify key corporate responsibility business risks and opportunities. Our strategy and commitments are focused at three areas of in�uence: Environment, Human and Talent Sustainability.

DEFINING REPORT CONTENT: THE PROCESSWe are committed to continue engagement with our stakeholders, whose insights have helped shape our thinking and actions. As a starting point, this report addresses the sustainability-related topics most relevant to PepsiCo. Additionally, we strongly believe in the value of engaging our stakeholders and soliciting feedback to ensure continued progress. Topics of particular interest to PepsiCo stakeholders were identi�ed through a series of engagement sessions with Ceres (http://www.ceres.org). In addition, we

Page 38

monitor how consumers and customers perceive our business and sustainability programs through multiple global surveys conducted by GlobeScan and others. Lastly, this report was informed by the GRI framework, www.globalreporting.org

OUR STAKEHOLDERSWe touch the lives of millions of people through our businesses and welcome honest discussion with individuals, groups and advocates who represent community, environmental and social interests. Issues of concern brought to the attention of PepsiCo India in reviewed in the context of our businesses and our sphere of influence. We have identified our stakeholders and their correspondent material issues. The immediate next step was formalising the engagement strategy, objective and scope of engaging with the stakeholder, and have a formal and regular engagement strategy with diverse stakeholders on a range of sustainability issues.

OUR CONSUMERS

Through our Human Sustainability initiatives, we o�er our consumers a wide range of products that deliver great taste, nutritional value, convenience and a�ordability. We are committed to playing a responsible role in health and wellness by encouraging consumers to adopt healthy, active lifestyles, beginning with the products we o�er. Each year, we invest in innovation to better serve consumer wants and needs through new products and packaging. We continuously expand our distribution network to make our enjoyable and wholesome products more widely available. And we work relentlessly to improve productivity so that we can o�er a�ordable products to a broad range of consumers.

At PepsiCo India, we conduct regular qualitative and quantitative research to understand our consumers’ needs. Consumer insight is translated into product improvements, innovations, new product ideas and communications. Consumer satisfaction is monitored with a dedicated 24-hour toll-free number for consumer inquiries, complaints and feedback. Consumers have a range of options for providing feedback to PepsiCo regarding product quality and service. All products are marked with a toll-free number to our communication centres.

Ongoing performance standards at our consumer response centres are measured each period and include service levels, response rate, �rst-time resolution and turn around time. In most of the cases, we meet the service levels and turn-around times.

“Very impressed by the quick responses of PepsiCo on the matter I shared some time ago on Sunday. I wrote to PepsiCo about my complaint, and guess what? I received the reply within 5 minutes. Amazing Customer Service” – Satis�ed Consumer on Twitter”

Consumer Privacy

PepsiCo respects consumer privacy. Our consumers may provide personal information to us for various reasons, including participation in programs or promotions on our corporate or brand websites, or through Facebook,YouTube and other social networks.We utilize both consumer feedback and research to better understand evolving consumer needs. PepsiCo makes every e�ort to comply with all applicable laws, rules and regulations regarding our websites and the collection of consumer data. Wherever a website is hosted by PepsiCo, a privacy policy is conspicuously posted that outlines the type of information collected on that site and how the information is used. To maintain the security of consumer information, we implement technical, administrative and physical safeguards to protect personal data.

OUR COMMUNITIES

We recognize our responsibility to be a contributing member of the community at both the national and local level. We operate our businesses responsibly, support our communities by partnering with not-for-pro�t groups and working with organizations dedicated to improving the lives of people. We also work to be good stewards of the environment.

We believe that our business is intrinsically connected to the community that surrounds it. While our key focus is on communities surrounding our manufacturing plants, many of our initiatives go beyond the boundary of our plant communities. Our community water initiatives are focused on ensuring that every PepsiCo plant neighborhood has access to adequate water. We engage our community stakeholders through our sustainable community water resources management initiatives that improve their access to water. We partner with not-for-pro�t groups such as Alternative Development Initiatives (ADI), TERI, ExnoraGreen Pammal and Akshaya Patra to execute community development projects.

For our local community-based water interventions, we work with the local administration and engage the community in planning and executing the project. One of the key success elements of the interventions is that the local administration andcommunity members, including women, assume co-ownership and long-term maintenance of the implemented projects. We work with community members creating user groups were training them to ensure their participation in the maintenance of projects and physical structures such as check dams. Awareness sessions are conducted to help the community understand the long-term advantages of initiatives.

PepsiCo India has partnered with farmers for over two decades. We currently work with over 24,000 farmers across twelve states to improve crop yields and share sustainable agricultural practices.

OUR EMPLOYEES

Our employees are our greatest strength. Their hard work, dedication and resourcefulness enable PepsiCo India to compete e�ectively, serve the needs of our retail customers and consumers, and deliver the results our investors expect. Our Talent Sustainability principles re�ect our commitment to providing a work environment that allows our employees to achieve professional growth and personal ful�lment. We obtain structured feedback from our employees every other year through an organizational heath survey on topics related to bene�ts, working conditions, diversity and inclusion initiatives, and career development. We share the survey results with the employees and develop action plans to address issues that are identi�ed. These plans are then rolled out as part of our organization and employees’ performance goals.

OUR RETAIL CUSTOMERS

Our retail customers are supermarkets, grocery stores, mass merchandisers, convenience stores, restaurants, food service outlets, vending machine operations and others that carry our products and make them directly available to consumers. We provide them with not only our products but also marketing support that contributes to their growth, pro�t and positive cash �ow. Retail consolidation and the current economic environment continue to increase the importance of major customers. Dedicated customer teams - sta�ed with �nance, supply chain, customer service/sales and insights resources - work across our divisions to provide the highest level of service to our major customers. These individuals work closely to assure all customer feedback is understood and addressed as quickly as possible. In addition to the day-to-day management of customer feedback, PepsiCo India has established forums to solicit feedback. One such forum is PepsiCo’s annual Innovation Summit held with major customers. These summits preview innovation for the following year and beyond. Customers are shown PepsiCo’s proposed new products and are asked to provide verbal and written feedback. In addition to Innovation Summits, PepsiCo conducts supply chain summits with our top retail customers to build a strategic agenda around in-store conditions, cost optimization and sustainability.

OUR INVESTORSWe strive to provide investors a reasonable return on their investment, based on

consistent �nancial growth in the marketplace and consistent �nancial results. We take a long-term view and make appropriate investments to strengthen our brands, develop our capabilities and pursue new opportunities. We seek healthy year-over-year growth and report honest, transparent and timely �nancial results.

PepsiCo India is an operating unit within PepsiCo’s AMEA sector. We communicate annually on our performance and obtain regular feedback on our performance with purpose agenda.

OUR PARTNERS

Our partners include franchisee bottlers and packaging units. We have a common reporting and feedback platform for our partners, which is the same as what we use for our own operations. We provide certain essential ingredients and supplies for manufacturing our products, as well as quality assurance and technical assistance. We conduct our business to allow both our partners and PepsiCo to earn a reasonable return and grow together. We work with our partners on our sustainability initiatives.

OUR SUPPLIERS

Our suppliers provide us with the goods and services needed to run our business. We buy goods and services at competitive prices, with the goal of allowing both our suppliers and PepsiCo India to make a reasonable pro�t. We seek e�cient suppliers with whom we can work and grow as long-term partners. We engage our suppliers to understand their expectations and communicate with them our expectations about compliance with the PepsiCo Code of Conduct, implementation of PepsiCo’s sustainable packaging policy, sustainable agriculture practices and other key issues. We engage extensively with our suppliers through our capacity building exercises to encourage innovations in product and packaging. Quality assurance and meeting our speci�cations on raw materials and input requirements is another area where we work closely with our suppliers through a feedback process. We have been interacting with our entire suppliers on a regular basis to get their feedback and apprise them of our sustainability initiatives.

ASSOCIATIONS AND MEMBERSHIPS

CORPORATE MEMBERSHIPS

PepsiCo India is member of Confederation of Indian Industry, Federation of Indian Chambers of Commerce and Industry, All India Food Processors Association, American Chamber of Commerce in India, PHD Chamber of Commerce and Industry, Confederation of Indian Food Trade & Industry, Associated Chambers of Commerce and Industry of India, Indo-American Chamber of Commerce, Indian Beverage Association, Society for Urban Regeneration of Gurgaon, FICCI Research & Analysis Centre and Gurgaon Chamber of Commerce & Industry. PepsiCo is also involved in funding annual corporate subscription and sponsorship for various conferences and events.

PepsiCo India is signatory to the CII-Code for Ecologically Sustainable Business Growth. Globally, PepsiCo is signatory to the CEO Water Mandate., a public -private initiative formally launched in July 2007. By signing the CEO Water Mandate, PepsiCo has indicated its commitment to adhere to a comprehensive approach to water management. PepsiCo reports its greenhouse gas emissions and other climate change information from across its operations to the Carbon Disclosure Project (CDP).

AWARDS RECEIVED IN 2011/20121. 2011 – Lays won the Gold in the campaign category for ‘Flavors World Cup’ at the

prestigious “EFFIE India Awards 2011”

2. 2011 – Pepsi’s “Change the Game” bagged three awards at the prestigious “EFFIE India Awards 2011”

3. 2011 – Lays won the Campaign Asia Bronze for the Best Digital Campaign to build loyalty in Digital Media Awards for its “Give us your Dillogical Flavor” campaign

4. 2011 - PepsiCo India wins Innovator of Year Supply Chain Award from KPMG-SCLC Food Retail & SCM & Agro Logistics Summit 2011.

5. 2011 – PepsiCo India’s Panipat plant wins “The Excellent Water E�cient Unit – Within the Fence” award at the 8th National Award for Excellence in Water Management 2011 organized by CII.

6. 2011 – PepsiCo India wins Ad Campaign of the Year award at the CNBC consumer awards 2011 for Pepsi’s ad campaign “Change the Game”

7. 2011 – Lays wins ‘Campaign Asia Bronze’ for Best Digital Campaign for ‘GUYDF’

8. 2011 – PepsiCo India wins ‘Innovator of the year Supply Chain Award at KPMG-SCLC Food Retail & SCM and Agro Logistics Summit’2011 for Dynamic Route Optimization Initiatives in 2011.

9. 2011 – Water Digest Award to Pallakkad Plant - “Commendable Water Conserver – Waste Water Management”

10. 2012 – Best Employer for Women Development award held at ‘Women Leaders Awards’ in Mumbai for the initiative ‘Fortifying Your Future’

11. 2012 – EFFIE Awards - Lays won the in the campaign category for “Flavors World Cup” campaign

12. 2012 – Gold Award for Project Asha in the category ‘Rural Engagement program of the Year’ awarded by Eventfaqs.

13. 2012 – PepsiCo India ranked No. 3 in ‘Best Companies in Hiring Practices as part of Great Place to Work study.

14. 2012 – Project Asha won Silver Trophy in RMAI awards under social development health initiative category.

15. 2012 – Water Digest Award to Sangareddy plant - “Distinguished Water Conserver – Waste Water Management”

16. 2012 – Dukes plant was in the 5th position for Vasundhra Award – MPCB

17. 2012 – Nelamangla plant won the Water Digest Award for Corporate Social Responsibility for water practices

DISCLOSURES ON MANAGEMENTAPPROACH

OUR APPROACH TO HUMAN RIGHTS

Overview and Strategy: Our commitment to respect the fundamental human rights of our employees, people working for our suppliers and the communities in which we operate is at the core of Performance with Purpose and the way we do business. This commitment is guided by the United Nation’s Universal Declaration of Human Rights and related international covenants.

While governments are responsible for protecting human rights through legal frameworks, businesses have a corporate responsibility to respect all human rights through their policies and practices. As a signatory to the United Nations Global Compact we are visibly committed to aligning our policies, operations and strategies with its ten universally accepted principles, which include human rights and labor standards.

PepsiCo has a well-de�ned policy on the notice period in each and every employment contract as well as in the works and goods contract. The notice period re�ects the grade and importance of the function and is tailored to organizational needs and market requirements. This ensures that proper hand-holding on the activity is done and smooth switchover is carried out for business operations to continue.

PepsiCo strongly adheres to the concept of equal remuneration for workers irrespective of gender for work of equal value. This is ensured through our human rights policy and implemented through management systems for recruitment, compensation and annual appraisal.

Our Code of Conduct compliance ensures that there are no occurrence of child labor or forced or compulsory labor involvement in our operations and supply chain. The Code of Conduct training is mandatory and an annual exercise for 100 percent compliance is carried out.

Percentage and total number of business units analyzed for risks related to corruption

PepsiCo India has a well-de�ned internal audit system based on a robust risk assessment framework. PepsiCo India regularly updates the various standard operating procedures to be in line with de�ned policies and latest business environment

requirements. These systems along with training on PepsiCo value and Code of Conduct to all employees prevent any acts of corruption.

PepsiCo India’s stand on corruption and ethics

We are committed to refrain ourselves from all forms of corruption which are embedded in the Company’s business principles and personally endorsed by our CEO. Top management emphasizes that compliance with our code of conduct is non-negotiable. Every employee is bound to comply with the Company’s policies and is personally responsible to abstain from any form of corruption and bribery and this continues to be reinforced through regular trainings.

MANAGEMENT APPROACH ON ENVIRONMENTAL SUSTAINABILITY

Overview and Strategy: The PepsiCo Environmental Health and Safety (EHS) Policy forms the foundation of our commitment to environmental stewardship at every level within PepsiCo globally. This includes the responsibility of implementing and maintaining an Environmental Management System (EMS) to help us identify and manage environmental risks. We apply formal governance and auditing processes to our environmental programs to ensure we are in compliance with both environmental regulations and company standards.

All our Policies can be accessed from http://pepsico.com/Company/Policies

Organizational Responsibility: It is the overall responsibility of the foods and business unit heads, through the members of their management team, general managers, lead plant managers and plant managers to work towards the goals and ensure implementation of the set policies and corporate standards on Environment Health and Safety (EHS), including formation of various committees and designating individuals for speci�c responsibilities in respect of their business unit. With regards to packaging we have a team of experts who work with suppliers and internal teams to carry out the sustainable packaging objectives. Agriculture is also led by a team of experts who interact with farmers and help ful�l the sustainable agricultural policy objectives and promises.

PepsiCo India Environment, Health and Safety Management System (EHSMS) framework is built along the lines of ISO 14001 and OHSAS 18001 and the key features include:

• A risk-based management approach

• Documented systems that capture and maintain institutional knowledge

• Objectives and targets for continuous improvement

• Integration of environment, health and safety considerations into core business processes

• Routine performance monitoring and internal management reporting

Additionally we are also certi�ed under HACCP and other food safety norms.

Training and awareness: Achieving our goals requires organization wide involvement and ownership and training helps build skills, impart knowledge and best practice. Training on environment, health and safety aspects as well as e�cient use of input resources (Energy, Water, and Materials) and other aspects (waste, e�uents, air emissions) is provided to concerned employees in our operating locations. We also impart training to community on agricultural practices, community projects on water and waste. We have taken up Total Productive Maintenance, a systematic approach to improvement through participation of employees at our foods plants. In 2011, we introduced a global sustainability tool to help our operational personnel become more sensitive to resource conservation. “ReCon” is a sustainability tool that is focussed on water and energy reductions. It is granular in nature – building up from daily best practices to world class interventions.

Monitoring and follow up: Globally, PepsiCo Environmental Sustainability Metrics Protocol has been published and is used as a corporate-wide guide to ensure consistency in reporting.PepsiCo operations collect “Data Elements” from the facilities each month in accordance with the protocol. The sites are responsible for ensuring that thecorrect data are reported and subject matter experts in each division reviewdata input on a monthly basis, review all reports for reasonableness, and follow up on discrepancies. PepsiCo India internal audit carries out the periodic veri�cation of data and management practices and engages third party experts to carry audits on specialized areas such as EHS management systems, �re and safety, sustainability data management, food safety, etc.

MANAGEMENT OF PRODUCT SAFETY

Overview and Strategy: The Global Food Safety team leads the development of programs to ensure that our associates understand and have the tools to execute the requirements of the PepsiCo Food Safety Policy. This protocol minimizesfood safety risk, embeds food safety into innovation design for new products and processes, assesses

related risks in mergers and acquisitions, builds expertise to meet the needs of innovation and operationalizes food safety-related regulations. In India, our food and beverage plants have sound management systems to handle product safety and health issues. We also conduct regular external audits and certi�cations from various external agencies to review and improve our management systems, and remain best-in-class. Some of these are:

• HACCP (Hazard Analysis and Critical Control Point)

• Certi�cation by TQCSI (Australia), which con�rms that products are manufactured in food safety environment and manufacturing has adequate controls to ensure products tracking.

• AIB International: an auditing body which con�rms process and product safety.

Our foods plants are also certi�ed to ensure that product, process, environment and people safety is maintained at very high level and certi�ed against globally accepted standards on occupational health and safety (OHSAS 18001).

MANAGEMENT APPROACH ON HUMAN

SUSTAINABILITY

Overview and Strategy: PepsiCo, either independently, or through third-party partners, makes, markets, sells and distributes a wide variety of convenient, enjoyable and wholesome foods and beverages in over 200 countries and territories. We develop and maintain robust food safety programs to provide for safety for every package, every day in every market.

As one of the world’s leading food and beverage companies, PepsiCo plays an important role in helping people lead healthier lives. We are focused on providing new o�erings that meet consumer needs for both nutrition as well as convenience, and are responsive to the concerns of governments and non-governmental organizations, as they broaden their focus on health and wellness.

Organizational Responsibility:The responsibility for product innovation and o�ering consumers healthy choices is led by R&D and innovations and supported by manufacturing operations. Responsibility towards compliance with product safety norms is also managed by R&D Compliance and Operations. The Chief Marketing O�cer is responsible for ensuring marketing and communication compliance with

respective statutory and voluntary agreed marketing codes.

Training and Awareness: Each of the areas under human sustainability i.e. product innovation, responsible marketing and communications, and addressing global nutrition challenges in communities have a training component to ensure the organization is aligned with consumer needs. Focused trainings, discussions, participation in workshops, reaching out to external experts are a part of the training agenda on human sustainability. We also take guidance from PepsiCo global bodies such as Global Nutrition Council as part of the process.

Monitoring and follow up: PepsiCo India takes all precautionary steps before making any nutritional claims which include testing in NABL accredited testing labs and conducting nutrition pro�ling based on internationally accepted test methods. The data is compiled to examine the possibility of arriving at a nutritional claim for the relevant positive ingredient and/or negative nutrient as de�ned in PepsiCo guidelines.

MANAGEMENT APPROACH ON TALENT

SUSTAINABILITY

Overview and Strategy: PepsiCo has a long-standing history of delivering leadership excellence supported by our best practice people-development tools and processes. We also draw on a curriculum of leadership development programs led by our most senior executives. To ensure a supportive and empowering workplace, we regularly conduct performance reviews and surveys. PepsiCo also ensures that associates have clear lines of communication to report potential issues.

PepsiCo is committed to hiring, developing and retaining employees from diverse backgrounds. We aim to continuously provide an inclusive culture and environment for our associates. Furthermore, we have a competitive global compensation structure, comprehensive bene�ts and ongoing wellness programs. PepsiCo o�ers wellness plans to help associates and their family members achieve and sustain healthy behaviors to improve their overall quality of life.

For occupational health and safety, each PepsiCo business is sta�ed with health and safety professionals, and safety committees or coordinators are present and active in all company-owned manufacturing plants. We set annual health and safety strategic plans and targets for improvement in all our individual businesses.

Policies: Our values and Code of Conduct are the re�ection of the socially and environmentally responsible company we aspire to be. They are the foundation for every business decision we make. We are committed to making diversity and inclusion a way of life at PepsiCo and �rmly believe that encouraging diversity means encouraging policies and systems that respect special needs.

Organizational Responsibility: Talent Sustainability in India is led by Chief Personnel O�cer with a team of HR professionals in the area of organization capability, talent acquisition compensation and bene�t. Business units are involved in ensuring application of sound Occupational Health and Safety Management practices and complying with applicable legal and regulatory requirements and company standards.

Training and Awareness: Conducting training for employees from the frontline to the senior management is a stated goal and we work towards that by providing a training curriculum which also driven by the employee.

Monitoring and follow-up: We conduct an organization health survey (once in two years) to seek feedback from our employees on a variety of topics concerning associate engagement. The HR resources of the business units regularly monitor progress to ensure proper implementation of processes and policies.

Page 39

Page 40


OUR CONSUMERS





Consumer Privacy


OUR COMMUNITIES





OUR EMPLOYEES







OUR PARTNERS


OUR SUPPLIERS

























































SUSTAINABILITY








SUSTAINABILITY








Page 41


OUR CONSUMERS





Consumer Privacy


OUR COMMUNITIES





OUR EMPLOYEES







OUR PARTNERS


OUR SUPPLIERS

























































SUSTAINABILITY








SUSTAINABILITY








Page 42


OUR CONSUMERS





Consumer Privacy


OUR COMMUNITIES





OUR EMPLOYEES







OUR PARTNERS


OUR SUPPLIERS

























































SUSTAINABILITY








SUSTAINABILITY








Page 43


































SUSTAINABILITY








SUSTAINABILITY









OUR CONSUMERS





Consumer Privacy


OUR COMMUNITIES





OUR EMPLOYEES







OUR PARTNERS


OUR SUPPLIERS

























































SUSTAINABILITY








SUSTAINABILITY








Page 44


OUR CONSUMERS





Consumer Privacy


OUR COMMUNITIES





OUR EMPLOYEES







OUR PARTNERS


OUR SUPPLIERS

























































SUSTAINABILITY








SUSTAINABILITY








ABBREVIATIONSADI – Alternative Development Initiatives

BOLT - Building Outstanding Leaders for Tomorrow

CDP - Carbon Disclosure Project

CII - Confederation of Indian Industry

COBO – Company-Owned Bottling Operations

CO2 - Carbon dioxide

CWC - Columbia Water Center

DSR - Direct Seeding of Rice

EHS – Environment, Health and Safety

EMS - Environmental Management System

ETP – E�uent Treatment Plant

FICCI - Federation of Indian Chambers of Commerce and Industry

FOBO - Franchisee-Owned Bottling Operations

FSSAI - Food Safety and Standards Authority of India

GHG – Green House Gas

GRI – Global Reporting Initiative

GWP - Global Warming Potential

HACCP - Hazard Analysis and Critical Control Points

IARI - Indian Agricultural Research Institute

IDA - Iron-De�ciency Anaemia

ISAE - International Standard on Assurance Engagements

ISO - International Organization for Standardization

kWh – kilowatt-hour

ML – Millilitre

MT – Metric tonne

NaEDTA – Disodium Ethylene Diamine Tetra Acetate

NABL - National Accreditation Board for Testing and Calibration Laboratories

NCPEDP - National Centre for Promotion of Employment for Disabled People

NGO – Non-Governmental Organization

OHSAS - Occupational Health and Safety Assessment Series

PET - Poly Ethylene Terephthalate

PLWHA - People Living with HIV/AIDS

RDA - Recommended Dietary Allowance

SCM – Supply Chain Management

SWRDM - Sustainable Water Resource Development and Management

TQCSI - Total Quality Certi�cation Services International

US FDA – United States Food and Drug Administration

WBC - Women’s Business Council

WBSAPCS - West Bengal State AIDS Prevention and Control Society

WHO – World Health Organization

WUGs – Water User Groups

ZLD - Zero Liquid Discharge

Page 45


OUR CONSUMERS





Consumer Privacy


OUR COMMUNITIES





OUR EMPLOYEES







OUR PARTNERS


OUR SUPPLIERS

























































SUSTAINABILITY








SUSTAINABILITY








Page 46


OUR CONSUMERS





Consumer Privacy


OUR COMMUNITIES





OUR EMPLOYEES







OUR PARTNERS


OUR SUPPLIERS

























































SUSTAINABILITY








SUSTAINABILITY








Page 47

Page 48

Profile Disclosure

Disclosure Level of Reporting

Location of disclosure Reason for omission

Explanation for the reason for omission

1. Strategy and Analysis

1.1 Statement from the most senior decision-maker of the organization. Fully Statement from Indra Nooyi, Chairperson and CEO, PepsiCo, Statement from CEO, PepsiCo India

1.2 Description of key impacts, risks, and opportunities. Fully "Performance with Purpose" Annexure: Strategy and Analysis"

2. Organizational Profile

2.1 Name of the organization. Fully PepsiCo India Holdings Private Limited

2.2 Primary brands, products, and/or services. Fully "About PepsiCo India", Human Sustainability - Products"

2.3 Operational structure of the organization, including main divisions, operating companies, subsidiaries, and joint ventures.

Fully PepsiCo 2012 Annual Report, (Page 37-40)

2.4 Location of organization's headquarters. Fully About this report

2.5 Number of countries where the organization operates, and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report.

Fully "About this report. About PepsiCo India. PepsiCo 2012 Annual Report, (Page 37-40)"

2.6 Nature of ownership and legal form. Fully About PepsiCo India

2.7 Markets served (including geographic breakdown, sectors served, and types of customers/beneficiaries).

Fully About PepsiCo India

2.8 Scale of the reporting organization. Fully "In our India region, total employees are 3,143 among which 288 are women employees and 2,855 are male employees. Other information is available at PepsiCo 2012 Annual Report, (Page 10-11)"

2.9 Significant changes during the reporting period regarding size, structure, or ownership.

Fully No major changes during the reporting period

2.10 Awards received in the reporting period. Fully Annexure - Awards received in 2011/2012

3. Report Parameters

3.1 Reporting period (e.g., fiscal/calendar year) for information provided. Fully 1st Jan 2011 to 31st Dec 2012

3.2 Date of most recent previous report (if any). Fully PepsiCo India Sustainability Report 2010

3.3 Reporting cycle (annual, biennial, etc.) Fully Bi-Annual

G3.1 CONTENT INDEX - GRI APPLICATION LEVEL B

Application Level B Assured by DELOITTE

STANDARD DISCLOSURES PART I: Profile Disclosures

Page 49

Profile Disclosure




3.4 Contact point for questions regarding the report or its contents. Fully About this report

3.5 Process for defining report content. Fully "About this report, Annexure- Defining Report Content -The process"

3.6 Boundary of the report (e.g., countries, divisions, subsidiaries, leased facilities, joint ventures, suppliers). See GRI Boundary Protocol for further guidance.

Fully About this report

3.7 State any specific limitations on the scope or boundary of the report (see completeness principle for explanation of scope).


3.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities that can significantly affect comparability from period to period and/or between organizations.


3.9 Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimations applied to the compilation of the Indicators and other information in the report. Explain any decisions not to apply, or to substantially diverge from, the GRI Indicator Protocols.


3.10 Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such re-statement (e.g.,mergers/acquisitions, change of base years/periods, nature of business, measurement methods).

Fully None

3.11 Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report.

Fully No significant change

3.12 Table identifying the location of the Standard Disclosures in the report. Fully Page 47

3.13 Policy and current practice with regard to seeking external assurance for the report.

Fully "About this report Independent Assurance statement by Deloitte Touche Tohmatsu"

4. Governance, Commitments, and Engagement

4.1 Governance structure of the organization, including committees under the highest governance body responsible for specific tasks, such as setting strategy or organizational oversight.

Fully Annexure- Our Corporate Governance and Risk Management Systems

4.2 Indicate whether the Chair of the highest governance body is also an executive officer.


4.3 For organizations that have a unitary board structure, state the number and gender of members of the highest governance body that are independent and/or non-executive members.

Fully Not Applicable

Page 50

Profile Disclosure




4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body.

Fully Not Applicable

4.5 Linkage between compensation for members of the highest governance body, senior managers, and executives (including departure arrangements), and the organization's performance (including social and environmental performance).

Fully Annexure-Sustainability Governance

4.6 Processes in place for the highest governance body to ensure conflicts of interest are avoided.

Fully "Annexure-Our Corporate Governance and Risk Management Systems - Talent Sustainability- Human Rights"

4.7 Process for determining the composition, qualifications, and expertise of the members of the highest governance body and its committees, including any consideration of gender and other indicators of diversity.

Fully Annexure-Our Corporate Governance and Risk Management Systems

4.8 Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and the status of their implementation.

Fully Performance with Purpose Annexure-Our Mission and Vision

4.9 Procedures of the highest governance body for overseeing the organization's identification and management of economic, environmental, and social performance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct, and principles.


4.10 Processes for evaluating the highest governance body's own performance, particularly with respect to economic, environmental, and social performance.


4.11 Explanation of whether and how the precautionary approach or principle is addressed by the organization.


4.12 Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organization subscribes or endorses.

Fully "Human Sustainability – Responsible Marketing Environment Sustainability – Water Annexure- Associations and memberships"

4.13 Memberships in associations (such as industry associations) and/or national/international advocacy organizations in which the organization: * Has positions in governance bodies; * Participates in projects or committees; * Provides substantive funding beyond routine membership dues; or * Views membership as strategic.

Fully Annexure- Associations and memberships

4.14 List of stakeholder groups engaged by the organization. Fully Annexure - Our Stakeholders

4.15 Basis for identification and selection of stakeholders with whom to engage. Fully Annexure - Our Stakeholders

4.16 Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group.

Fully Annexure - Our Stakeholders

4.17 Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns, including through its reporting.

Fully Annexure - Our Stakeholders

Page 51

G3.1 DMAs Disclosure Level of Reporting

Location of disclosure Further comments

DMA EC Disclosure on Management Approach EC

Aspects Economic performance Fully PepsiCo 2012 Annual Report, (Page 10-11, 54-66)

Market presence Fully PepsiCo 2012 Annual Report, (Page 37-40)

Indirect economic impacts Fully PepsiCo 2012 Annual Report, (Page 37-40)

DMA EN Disclosure on Management Approach EN

Aspects Materials Fully Annexure-Management Approach on Environmental Sustainability

Energy Fully Annexure-Management Approach on Environmental Sustainability

Water Fully Annexure-Management Approach on Environmental Sustainability

Biodiversity Fully Annexure-Management Approach on Environmental Sustainability

Emissions, effluents and waste Fully Annexure-Management Approach on Environmental Sustainability

Products and services Fully Annexure-Management Approach on Environmental Sustainability

Compliance Fully Annexure-Management Approach on Environmental Sustainability

Transport Fully Annexure-Management Approach on Environmental Sustainability

Overall Fully Annexure-Management Approach on Environmental Sustainability

DMA LA Disclosure on Management Approach LA

Aspects Employment Fully Annexure-Management Approach on Talent Sustainability

Labor/management relations Fully Annexure-Management Approach on Talent Sustainability

Occupational health and safety Fully Annexure-Management Approach on Talent Sustainability

Training and education Fully Annexure-Management Approach on Talent Sustainability

Diversity and equal opportunity Fully Annexure-Management Approach on Talent Sustainability

Equal remuneration for women and men Fully Annexure-Management Approach on Talent Sustainability

STANDARD DISCLOSURES PART II: Disclosures on Management Approach (DMAs)

Page 52



DMA HR Disclosure on Management Approach HR

Aspects Investment and procurement practices Fully "Talent Sustainability - Human Rights Annexure-Our approach to human rights. http://pepsicoindia.co.in/purpose/human-sustainability/human-rights workplace-policy.html "

Non-discrimination Fully "Talent Sustainability - Human Rights Annexure-Our approach to human rights. http://pepsicoindia.co.in/purpose/human-sustainability/human-rights-workplace-policy.html "

Freedom of association and collective bargaining Fully "Talent Sustainability - Human Rights Annexure-Our approach to human rights. http://pepsicoindia.co.in/purpose/human-sustainability/human-rights-workplace-policy.html "

Child labor Fully "Talent Sustainability - Human Rights Annexure-Our approach to human rights. http://pepsicoindia.co.in/purpose/human-sustainability/human-rights-workplace-policy.html "

Prevention of forced and compulsory labor Fully "Talent Sustainability - Human Rights Annexure-Our approach to human rights. http://pepsicoindia.co.in/purpose/human-sustainability/human-rights-workplace-policy.html "

Security practices Fully "Talent Sustainability - Human Rights Annexure-Our approach to human rights. http://pepsicoindia.co.in/purpose/human-sustainability/human-rights-workplace-policy.html "

Indigenous rights Fully "Talent Sustainability - Human Rights Annexure-Our approach to human rights. http://pepsicoindia.co.in/purpose/human-sustainability/human-rights-workplace-policy.html "

Assessment Fully "Talent Sustainability - Human Rights Annexure-Our approach to human rights. http://pepsicoindia.co.in/purpose/human-sustainability/human-rights-workplace-policy.html "

Remediation Fully "Talent Sustainability - Human Rights Annexure-Our approach to human rights. http://pepsicoindia.co.in/purpose/human-sustainability/human-rights-workplace-policy.html "

DMA SO Disclosure on Management Approach SO

Aspects Local communities Fully Annexure-Our approach to human rights

Corruption Fully Annexure-Our approach to human rights

Public policy Fully Annexure-Our approach to human rights

Page 53



Anti-competitive behavior Fully Annexure-Our approach to human rights

Compliance Fully Annexure-Our approach to human rights

DMA PR Disclosure on Management Approach PR

Aspects Customer health and safety Fully Annexure-Management Approach on Human Sustainability, Management of Product Safety

Product and service labelling Fully Annexure-Management Approach on Human Sustainability

Marketing communications Fully Annexure-Management Approach on Human Sustainability

Customer privacy Fully Annexure-Management Approach on Human Sustainability

Compliance Fully Annexure-Management Approach on Human Sustainability

STANDARD DISCLOSURES PART III: Performance Indicators

Indicator Disclosure Level of Reporting

Location of disclosure

Economic

Economic performance

EC1 Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments.

Fully PepsiCo 2012 Annual Report, Financials Sections

EC2 Financial implications and other risks and opportunities for the organization's activities due to climate change.

Fully "We recognize that climate change may have serious impacts on our operations and value chain. PepsiCo has been incorporating the risks and opportunities that were identified into our strategic planning and risk management processes. By doing so, we aim to be better prepared to mitigate our impact and adapt to those factors beyond our control. Our Purformance with Purpose is premised its climate change commitments on this, and in turn actively seeks to manage GHG emissions For more details on this commitment, please refer to Environmental Sustainability - GHG Emissions"

Page 54



EC3 Coverage of the organization's defined benefit plan obligations. Partially "Our full time employees are compensated based on the ""Total Rewards"" programs. The

compensation program is intended to support the business strategy while delivering competitive

compensation. The components of the program are as follows:

• Base Salary which includes basic pay and special pay

• Car Related Benefits or Personal Pay (for managers and above)

• Conveyance Allowance or Vehicle Running & Maintenance (applicable basis level)

• Housing Related Benefits or Personal Pay (applicable basis level)

• Retirement Contributions which include statutory contributions to provident fund, gratuity, etc.

• Variable Pay

• Medical Benefits

• Long Term Incentive Plan (for senior leadership and above)

• Other Benefits like “Healthy Living” which are non-monetary in nature "

EC4 Significant financial assistance received from government. Not Not reported

Market presence

EC5 Range of ratios of standard entry level wage by gender compared to local minimum wage at

significant locations of operation.

Partially All salaries are benchmarked against other comparable compensation in local labour markets. Most of

our operations offer salaries at or above the market median. We comply with the Minimum Wages Act.

EC6 Policy, practices, and proportion of spending on locally-based suppliers at significant locations of

operation.

Partially For us, local means India. We source skills, products and services from suppliers across India. We adopt

a fair treatment policy of all suppliers, and award work based on skill, quality and ability to execute the

task. Being based in India, we use local suppliers as far as possible to fulfill our procurement needs. All our

suppliers are required to sign-off on the Supplier Code of Conduct that specifies standards for regulatory

compliance.

EC7 Procedures for local hiring and proportion of senior management hired from the local community

at significant locations of operation.

Not

Indirect economic impacts

EC8 Development and impact of infrastructure investments and services provided primarily for public

benefit through commercial, in-kind, or pro bono engagement.

Partially "Environment Sustainability-Water, Waste Human Sustainability-Community Talent Sustainability-Talent &

Community "

EC9 Understanding and describing significant indirect economic impacts, including the extent of

impacts.

Partially "Environment Sustainability-Water, Waste Human Sustainability-Community Talent Sustainability-

Community"

Environmental

Materials

EN1 Materials used by weight or volume. Not

EN2 Percentage of materials used that are recycled input materials. Not

Page 55



Energy

EN3 Direct energy consumption by primary energy source. Partially Environment Sustainability-GHG Emissions

EN4 Indirect energy consumption by primary source. Partially Environment Sustainability-GHG Emissions

EN5 Energy saved due to conservation and efficiency improvements. Partially Environment Sustainability-GHG Emissions

EN6 Initiatives to provide energy-efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives.

Partially Environment Sustainability-GHG Emissions

EN7 Initiatives to reduce indirect energy consumption and reductions achieved. Partially Environment Sustainability-GHG Emissions

Water

EN8 Total water withdrawal by source. Partially Environment Sustainability - Water

EN9 Water sources significantly affected by withdrawal of water. Not

EN10 Percentage and total volume of water recycled and reused. Fully Environment Sustainability - Water

Biodiversity

EN11 Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas.

Not

EN12 Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas.

Not

EN13 Habitats protected or restored. Not

EN14 Strategies, current actions, and future plans for managing impacts on biodiversity. Not

EN15 Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations, by level of extinction risk.

Not

Emissions, effluents and waste

EN16 Total direct and indirect greenhouse gas emissions by weight. Partially "Environment Sustainability - GHG Emissions. We also measure fugitive emissions at our manufacturing facilities. In 2012, our fugitive emissions at our beverage plants was 5,748 tonnes carbon dioxide equivalent; and at our foods plants was 1,576 tonnes carbon dioxide equivalent. In 2011, our fugitive emissions at our beverage plants was 8,288 tonnes carbon dioxide equivalent; and at our foods plants was 983 tonnes carbon dioxide equivalent."

EN17 Other relevant indirect greenhouse gas emissions by weight. Fully We measure fugitive emissions at our manufacturing facilities. In 2012, our fugitive emissions at our beverage plants was 5,748 tonnes carbon dioxide equivalent; and at our foods plants was 1,576 tonnes carbon dioxide equivalent. In 2011, our fugitive emissions at our beverage plants was 8,288 tonnes carbon dioxide equivalent; and at our foods plants was 983 tonnes carbon dioxide equivalent.

Page 56



EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved. Partially Environment Sustainability-GHG Emissions

EN19 Emissions of ozone-depleting substances by weight. Not We are not reporting on this as we are in a business that does not instrinsically emit significant ozone-depleting gases. Our distribution network relies on refrigeration, and globally, PepsiCo has joined with other multinational corporations and Greenpeace in a global initiative called "Refrigerants Naturally!", whose goal is to address climate change and ozone layer depletion caused by HFC gases in refrigeration equipment. We are working together to eliminate use of HFC in refrigerated point-of-sale equipment and to make the cooling equipment more energy efficient.

EN20 NOx, SOx, and other significant air emissions by type and weight. Not

EN21 Total water discharge by quality and destination. Partially For our outgoing effluents from our manufacturing plants which are company owned, we treat them to meet relevant state and central norms and limits on discharge quality, quantity and destination. In 2012, we launched our Zero Liquid Discharge (ZLD) intervention. This will enable us to produce double the quantity of beverage from the same quantum of input water. It will simultaneously reduce waste water to nearly one third of previous levels, translating to over 20% reduction in current levels water use.

EN22 Total weight of waste by type and disposal method. Partially Environment Sustainability - Waste

EN23 Total number and volume of significant spills. Fully There were no significant spills during the reporting year.

EN24 Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally.

Fully This is not applicable to us, as we not exporting, transporting or importing any treated waste deemed hazardous under the terms of the Basel Convestion

EN25 Identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the reporting organization's discharges of water and runoff.

Not We are not reporting on this, as we have not curretnly undertaken any assessments or reviews pertaining to this indicator.

Products and services

EN26 Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation.

Partially "Environmental Sustainability – Packaging Environmental Sustainability – GHG Emissions (Refrigeration) Environmental Sustainability - Water Environmental Sustainability - Waste"

EN27 Percentage of products sold and their packaging materials that are reclaimed by category. Partially "At PepsiCo, we continually think about new ways to package and deliver our products to minimize our impact on land. In this effort, we strive for the ""5 Rs""—to reduce, recycle, use renewable sources, remove environmentally sensitive materials and promote the reuse of packaging in the entire process of packaging selection, design and procurement. Our innovation teams are trying to develop and discover creative packaging solutions, which include the use of renewable or biodegradable packaging sources for our snacks, foods and beverages businesses. We are working to reduce the amount of environmentally sensitive materials that could potentially enter the waste stream. For further details, please refer to Environment Sustainability - Waste Environment Sustainability - Packaging"

Compliance

EN28 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations.

Fully There were no incidents of significant monetary fines or of non-monetary sanctions of a permanent nature for non-compliance with environmental laws and regulations.

Page 57



Transport

EN29 Significant environmental impacts of transporting products and other goods and materials used

for the organization's operations, and transporting members of the workforce.

Not

Overall

EN30 Total environmental protection expenditures and investments by type. Not

Social: Labor Practices and Decent Work

Employment

LA1 Total workforce by employment type, employment contract, and region, broken down by gender. Fully In our India region, total employees are 3,143 among which 288 are women employees and 2,855 are male

employees. The numbers of employees in Top Management, Senior Management, Middle Management,

Junior Management and Executives / Officers categories are 122, 137, 492, 506, 1886 respectively across

all the 4 regions East, West, North and South.

LA2 Total number and rate of new employee hires and employee turnover by age group, gender, and

region.

Partially In 2012 total number of new hires are 740 among which 65 are female, age group wise division is as

follows: <30 years - 477 new hires, 30-50 years - 259 new hires , >50 years - 4 new hires. PepsiCo has hired

people in all the 4 regions i.e. East, West, North and South.

LA3 Benefits provided to full-time employees that are not provided to temporary or part-time

employees, by major operations.

Fully "Our full time employees are compensated based on the ""Total Rewards"" programs. The compensation

program is intended to support the business strategy while delivering competitive compensation.

The components of the program are as follows:

• Base Salary which includes basic pay and special pay

• Car Related Benefits or Personal Pay (for managers and above)

• Conveyance Allowance or Vehicle Running & Maintenance (applicable basis level)

• Housing Related Benefits or Personal Pay (applicable basis level)

• Retirement Contributions which include statutory contributions to provident fund, gratuity, etc.

• Variable Pay

• Medical Benefits

• Long Term Incentive Plan (for senior leadership and above)

• Other Benefits like “Healthy Living” which are non-monetary in nature . Benefits to temporary

employees are provided by third party agencies. "

LA15 Return to work and retention rates after parental leave, by gender. Not

Labor/management relations

LA4 Percentage of employees covered by collective bargaining agreements. Fully All workmen of PepsiCo India Holdings working in our plants (except Panipat, Bharuch and Kolkata) are

covered under collective bargaining agreements. Workmen at Panipant and Bharuch plants have a yearly

appraisal as they are non-unioned.

Page 58



LA5 Minimum notice period(s) regarding significant operational changes, including whether it is

specified in collective agreements.

Partially We observe all regulatory requirements relating to notice period. We operate our operations in several

different states in India. Owing to this breadth of operations, there are different state-level requirements,

and there is no single notice period across our locations. The state-level requirements are complied with.

PepsiCo has a well-defined policy on the notice period in each and every employment contract as well as

in the works and goods contract. The notice period reflects the grade and importance of the function and

is tailored to organisational needs and market requirements. This ensures that proper hand-holding on the

activity is done and smooth switchover is carried out for business operations to continue.

Occupational health and safety

LA6 Percentage of total workforce represented in formal joint management-worker health and safety

committees that help monitor and advise on occupational health and safety programs.

Fully Each of our owned plants has an SHE committee. SHE committee is formed in a such way that all of our

workforce is represented in the committee by nominating committee members from each department. As

a practice, SHE committee members are identified based on consensus with union members, department

heads, plant manager of the respective plants.

LA7 Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related

fatalities by region and by gender.

Partially Talent Sustainability - Our People - Safety

LA8 Education, training, counseling, prevention, and risk-control programs in place to assist workforce

members, their families, or community members regarding serious diseases.

Partially "Talent Sustainability - Our People - Safety Talent Sustainability-Talent & Community"

LA9 Health and safety topics covered in formal agreements with trade unions. Fully We currently include policies pertaining to Personal Protective Equipment and Site Safety Policy in the

agreement.

Training and education

LA10 Average hours of training per year per employee by gender, and by employee category. Partially "Talent Sustainability - Our People - Safety Talent Sustainability - Learning & Development"

LA11 Programs for skills management and lifelong learning that support the continued employability of

employees and assist them in managing career endings.

Fully "Talent Sustainability - Building CareersTalent Sustainability - Learning & Development"

LA12 Percentage of employees receiving regular performance and career development reviews, by

gender.

Fully All of our permanent salaried employees undergo regular performance and career development reviews .

Diversity and equal opportunity

LA13 Composition of governance bodies and breakdown of employees per employee category

according to gender, age group, minority group membership, and other indicators of diversity.

Not

Equal remuneration for women and men

LA14 Ratio of basic salary and remuneration of women to men by employee category, by significant

locations of operation.

Partially Across all our operations, there is no salary differentiation based on employee demographics such as

gender. We recognize that our strength lies in the contributions of our diverse workforce. We do not

discriminate on gender or cultural lines in our hiring practices.

Page 59



Social: Human Rights

Investment and procurement practices

HR1 Percentage and total number of significant investment agreements and contracts that include clauses incorporating human rights concerns, or that have undergone human rights screening.

Not

HR2 Percentage of significant suppliers, contractors and other business partners that have undergone human rights screening, and actions taken.

Not

HR3 Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained.

Partially We broadly communicate our Human Rights Policy as a part of our enterprise-wide Global Code of Conduct training to enable our businesses to operate in the most ethical way possible. To ensure ethical and legal compliance, we provide annual training on our Code of Conduct to salaried employees, who must certify that they have read and understand the Code and agree to abide by it. Each employee has to re-affirm their commitment to the Code of Conduct annually through online training. Additionally, we conduct classroom training once in two years for all employees.

Non-discrimination

HR4 Total number of incidents of discrimination and actions taken. Not We respect the dignity of our employees in the workplace, and we are accountable to ensure our employees' rights to personal security, a safe, clean and healthful workplace, and freedom from harassment or abuse of any kind. We deal fairly and honesty regarding wages, benefits and other conditions of employment, and recognize our employees' right of freedom of association. We do not tolerate discrimination. We work to ensure equal opportunity for all employees. and comply with all applicable laws, regulations and other employment standards, wherever we operate or work. We broadly communicate our Human Rights Policy as a part of our enterprise-wide Global Code of Conduct training to enable our businesses to operate in the most ethical way possible.

Freedom of association and collective bargaining

HR5 Operations and significant suppliers identified in which the right to exercise freedom of association and collective bargaining may be violated or at significant risk, and actions taken to support these rights.

Partially "Annexure - Our approach to human rights,Talent Sustainability - Human rights http://pepsicoindia.co.in/purpose/human-sustainability/human-rights-workplace-policy.html "

Child labor

HR6 Operations and significant suppliers identified as having significant risk for incidents of child labor, and measures taken to contribute to the effective abolition of child labor.

Partially "Annexure - Our approach to human rights,Talent Sustainability - Human rights http://pepsicoindia.co.in/purpose/human-sustainability/human-rights-workplace-policy.html "

Forced and compulsory labor

HR7 Operations and significant suppliers identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of all forms of forced or compulsory labor.

Partially "Annexure - Our approach to human rights, Talent Sustainability - Human rights http://pepsicoindia.co.in/purpose/human-sustainability/human-rights-workplace-policy.html "

Security practices

HR8 Percentage of security personnel trained in the organization's policies or procedures concerning aspects of human rights that are relevant to operations.

Not

Page 60



Indigenous rights

HR9 Total number of incidents of violations involving rights of indigenous people and actions taken. Fully No such violations have been recorded.

Assessment

HR10 Percentage and total number of operations that have been subject to human rights reviews and/or impact assessments.

Partially We respect the dignity of our employees in the workplace, and we are accountable to ensure our employees' rights to personal security, a safe, clean and healthful workplace, and freedom from harassment or abuse of any kind. We deal fairly and honesty regarding wages, benefits and other conditions of employment, and recognize our employees' right of freedom of association. We do not tolerate discrimination. We work to ensure equal opportunity for all employees. and comply with all applicable laws, regulations and other employment standards, wherever we operate or work. We broadly communicate our Human Rights Policy as a part of our enterprise-wide Global Code of Conduct training to enable our businesses to operate in the most ethical way possible.

Remediation

HR11 "Number of grievances related to human rights filed, addressed and resolved through formal grievance mechanisms."

Partially We respect the dignity of our employees in the workplace, and we are accountable to ensure our employees' rights to personal security, a safe, clean and healthful workplace, and freedom from harassment or abuse of any kind. We deal fairly and honesty regarding wages, benefits and other conditions of employment, and recognize our employees' right of freedom of association. We do not tolerate discrimination. We work to ensure equal opportunity for all employees. and comply with all applicable laws, regulations and other employment standards, wherever we operate or work. We broadly communicate our Human Rights Policy as a part of our enterprise-wide Global Code of Conduct training to enable our businesses to operate in the most ethical way possible.

Social: Society

Local communities

SO1 Percentage of operations with implemented local community engagement, impact assessments, and development programs.

Partially "Environment Sustainability – Water, Waste Talent Sustainability – Community Human Sustainability – Community"

SO9 Operations with significant potential or actual negative impacts on local communities. Not

SO10 Prevention and mitigation measures implemented in operations with significant potential or actual negative impacts on local communities.

Not

Corruption

SO2 Percentage and total number of business units analyzed for risks-related to corruption. Fully Annexure - Percentage and total number of business units analyzed for risks related to corruption

SO3 Percentage of employees trained in organization's anti-corruption policies and procedures. Fully Talent Sustainability - Human Rights

SO4 Actions taken in response to incidents of corruption. Fully During 2011-12, our internal audit processes did not come up with any such incidents of corruption

Page 61



Public policy

SO5 Public policy positions and participation in public policy development and lobbying. Partially PepsiCo communicates its positions and opinions through its membership in various industry bodies and

associations. PepsiCo India is member of Confederation of Indian Industry, Federation of Indian Chambers

of Commerce and Industry, All India Food Processors Association, American Chamber of Commerce in

India, PHD Chamber of Commerce and Industry, Confederation of Indian Food Trade & Industry, Associated

Chambers of Commerce and Industry of India, Indo-American Chamber of Commerce, Indian Beverage

Association, Society for Urban Regeneration of Gurgaon, FICCI Research & Analysis Centre and Gurgaon

Chamber of Commerce & Industry. PepsiCo is also involved in funding annual corporate subscription and

sponsorship for various conferences and events.

SO6 Total value of financial and in-kind contributions to political parties, politicians, and related

institutions by country.

Not

Anti-competitive behavior

SO7 Total number of legal actions for anti-competitive behavior, anti-trust, and monopoly practices

and their outcomes.

Fully None

Compliance

SO8 Monetary value of significant fines and total number of non-monetary sanctions for non-

compliance with laws and regulations.

Fully There were no incidents of significant monetary fines or of non-monetary sanctions of a permanent nature

for non-compliance with laws and regulations.

Social: Product Responsibility

Customer health and safety

PR1 Life cycle stages in which health and safety impacts of products and services are assessed for

improvement, and percentage of significant products and services categories subject to such

procedures.

Partially "Human Sustainability – Product Choice, Human Sustainability – Responsible Marketing"

PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning

health and safety impacts of products and services during their life cycle, by type of outcomes.

Fully There were no incidents of significant monetary fines or of non-monetary sanctions for non-compliance

with regulations and voluntary codes concerning health and safety impacts of products and services

Product and service labelling

PR3 Type of product and service information required by procedures, and percentage of significant

products and services subject to such information requirements.

Partially Human Sustainability - Responsible Marketing

PR4 Total number of incidents of non-compliance with regulations and voluntary codes concerning

product and service information and labeling, by type of outcomes.

Fully There were no incidents of significant monetary fines or of non-monetary sanctions for non-compliance

with regulations and voluntary codes concerning product and service information and labeling

Page 62



PR5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction.

Fully "At PepsiCo India, we have procedures in place and conduct regular qualitative and quantitative researches to continually assess customer needs. Consumer insight is translated into product improvements, innovations, new product ideas and communications. Consumer satisfaction is monitored with a dedicated 24-hour toll-free number for consumer inquiries, complaints and feedback. Consumers have a range of options for providing feedback to PepsiCo regarding product quality and service. All products are marked with a toll-free number to our communication centres. In 2011-12, we introduced an email id on the product label for consumer feedback.Ongoing performance standards at our consumer response centers are measured regularly and modified to suit consumer needs. Human Sustainability – Product Choice Our Stakeholders – Our consumers, consumer privacy"

Marketing communications

PR6 Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship.

Fully Human Sustainability - Responsible Marketing

PR7 Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship by type of outcomes.

Fully There were no incidents of significant monetary fines or of non-monetary sanctions for non-compliance with regulations and voluntary codes concerning marketing communications

Customer privacy

PR8 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data.

Fully No such complaints were received

Compliance

PR9 Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services.

Fully There were no incidents of significant monetary fines or of non-monetary sanctions of a permanent nature for non-compliance with laws and regulations concerning the provision and use of products and services.

Page 24

Documents

Sustainability Report 2011 & 2012 - PepsiCo