Water Stewardship and PepsiCo’s Water+ journey
pep+ has been developed as a North Star. How important is water stewardship in the company’s strategy? We speak to David Grant to find out.
Water Stewardship and PepsiCo’s Water+ journey
In 2021, PepsiCo introduced what its chairman and CEO, Ramon Laguarta, called ‘a new North Star to guide our work’. He described pep+ (PepsiCo Positive) as more than a business strategy, ‘it’s a transformative journey across our operations, from production to marketing to distribution. It’s our vision to deliver a more sustainable, people-centric future, driving growth and value, for everyone.’ pep+ will guide our business ¬– ‘how we operate within planetary boundaries and inspire positive change for the planet and people’.
pep+ established a set of environmental and sustainability goals with 2025 and 2030 targets against which the company’s progress would be measured. Within pep+ lie the company’s goals for becoming net water positive.
In this article, we talk to David Grant, senior director of Climate and Water Solutions at PepsiCo to find out what being water positive means, and what progress has been made towards the goals set within pep+.
PepsiCo’s water strategy
Credit: Franklin/Pixabay
PepsiCo’s water strategy sits within the wider pep+ sustainability strategy. The intent behind the strategy is to have an end-to-end transformation of the business in terms of how it integrates sustainability into their business as a core strategy as opposed to something separate.
Beneath the top-level strategy there are a number of pillars that reflect the company’s value chain work. While water and climate are standalone pillars, with their own strategies, they are also interlinked.
There are four elements to PepsiCo’s water strategy:
One part of the strategy involves driving down water use in the company’s facilities: there are ‘best in class’ efficiency goals for high-risk operations, and ‘world class’ goals for non-high-risk operations. Previous company goals had only focused on high-risk facilities, but the company has now turned its attention as much to prevention as cure.
David Grant explains to Water United: “The intent behind that is that even where water is not stressed, you still need to manage it properly, because if you don’t then it can become stressed. So, this is an acknowledgement that water needs to be managed properly whether you are in a high-risk area or not. It’s just that our high-risk goals are more aggressive than our non-high-risk goals.”
"We also started to focus on work around watershed health in our high-water risk agriculture growing regions."
Another part of the strategy focuses on watershed health. Specifically looking at how the company can support improving watershed health by activating base level projects. Within this lies the supply of water to its facilities, communities, growers, etc.
Grant adds: “There are two parts to that: one is our replenishment strategy, which very much talks to our operations. And then we also started to focus on work around watershed health in our high-water risk agriculture growing regions.”
PepsiCo’s water strategy also focuses on governance and advocacy. For example, the company is in the processing of adopting the Alliance for Water Stewardship standard at all its high-risk water facilities.
Key to this part of the strategy is engagement and advocacy, as Grant explains: “So really making sure that our operations are able to engage with local policymakers and local stakeholders, from the point of view of understanding what their issues and concerns are, but also, importantly, advocating for change in stressed watersheds.”
"Even where water is not stressed, you still need to manage it properly"
The final element of the water strategy focuses on ‘access’ to water with a goal of reaching 100 million people by 2030.
“The PepsiCo Foundation is the principal driver behind that goal, and we’re making really good progress against that,” adds Grant.
Measuring progress
Each of the water strategy elements is tracked in different ways to allow progress to be measured against targets:
- Water-use efficiency is tracked daily on a site level, and monthly on a global corporate level. Then, at the end of every year, the measurements are evaluated to determine progress against PepsiCo’s global 2025 and 2030 goals.
- Watershed and replenishment projects are validated by an external third party.
- PepsiCo assesses itself against the criteria of the Alliance for Water Stewardship (AWS) standard.
- Water access is tracked through various implementation partners, such as Water Aid.
PepsiCo also conducts a forward-looking review of its planned performance against its respective pep+ goals on an annual basis, including planned investments against these goals.
How is PepsiCo replenishing water?
The company has set a target of replenishing 100% of water by 2025 and more than 100% by 2030. It is currently replenishing 69% of water using a broad array of activities.
“We principally approach it from a nature-based solutions point of view,” Grant explains. “This has been our preference, but it’s not necessarily the only option. We also look at other projects like water transmission pipe leak reduction, which is a perfectly viable approach. The key is ensuring we are implementing a solution that is going to have an impact.”
In high-risk areas, the company has projects looking at reforestation, alternative crop production, irrigation efficiency, and invasive plant species removal. To identify the best solutions for each watershed, the company works with local implementation partners, some of which are big NGOs like Nature Conservancy and WWF, while some are very local.
"We principally approach it from a nature-based solutions point of view"
Case study: Cape Town
In 2018, Cape Town in South African came very close to Day Zero. Working with The Nature Conservancy, PepsiCo identified that by removing an invasive plant species – for example pines – they could release additional water into the watershed. By replacing pine with local native vegetation, the company estimates that approximately two billion liters of water are being released back into the local water system every year.
This project has also created around 700 local jobs using local unemployed community members, nearly half of whom are women.
Case study: US and alfalfa
With the Verde River in Arizona under pressure from a water availability point of view, the company has been working with local farmers to replace alfalfa crops with barley. Alfalfa is an intense water consumer, especially during the summer months when the river it as its most stressed.
Barley, as well as being less water intensive, is also a winter crop, which spreads demand throughout the year. In addition, the barley being grown is a ‘malting’ grade. Not only can the farmers sell this to local brewers, a local malting facility has been established which means the farmers can also sell their barley there.
Co-benefits of water positive goals
In both these projects, the environmental and water-based targets are providing economic benefits to the local communities.
“That’s the thing with a lot of these nature-based solutions, you have these co-benefits,” says Grant.
“Yes, we are targeting water as the primary driver, but then you have all these associated benefits that come along with it. Whether they are biodiversity benefits in terms of improving ecosystem health, or economic benefits associated with job creation.”
"We are targeting water as the primary driver, but then you have all these associated benefits that come along with it"
Grant believes that this an area in which water professionals could improve. “If you look at the sustainable agriculture community, they’re really good at trying to figure out how they bring in different partners into their work, looking at the benefits of regenerative agriculture, for example. Bringing people that are looking at it from the social angle, they’ll bring people with a carbon angle, a soil health angle.”
Water partnerships, he argues, can better focus on the mutual benefits that come with nature-based solutions.
Working with communities
As well as partnerships at organizational and global level, The PepsiCo Foundation is working with communities in areas where water access is an issue. While some of these involve NGOs, like Water Aid, the foundation is working within watersheds to address local issues, addressing both quantity and quality of water, for example putting down new wells or rehabilitating wells that have gone into disrepair.
“One of the advantages of working through our implementation partners is that they know this stuff backwards,” Grant explains. “So, before any work gets done, there are stakeholder consultations and meaningful dialogue, to ensure local communities needs are being met.”
Water risk: Getting ahead of the curve
From a water risk standpoint, PepsiCo operates on a three-year cycle where all company-owned operations as well as third-party manufacturing facilities are assessed by a third-party consultancy.
The third-party uses a combination of external databases like the World Resources Institute (WRI) product, taking feedback from PepsiCo’s facilities, in terms of what they are experiencing locally, and use an extensive network of the consultancy in different regions to bring together what that water risk looks like for each facility.
Each site is assessed for both short-term and long-term risks. This identifies which sites are high-risk and which are non-high-risk so that relevant goals can be assigned accordingly.
Water risk as continuity planning
PepsiCo integrates its water risk assessments into its broader business continuity planning process for both its food and beverage businesses.
“We believe our goals are world class at this point,” Grant states. “Our goals for food facilities [in high-risk areas] are to use 0.4 liters of water per kilogram of food product. Some of our facilities are really going above and beyond that, so we’ve got a couple of operations in Latin America which are in theory at 0 liters per kilogram.”
To get to that point, the sites take process water from other companies, treat it, and use it in their own facility which avoids the need to draw fresh water.
The risk from climate change is also constantly reviewed from a business continuity perspective. “We look at how climatic conditions are likely to change in the future; we undertake climate-risk assessments on top of water risk assessments. We’ve got a very clear view of what those different trajectories look like under different climate scenarios. And that all plays into an overall business risk management approach to that we take.”
The landscape of 2025 and beyond
Credit: Bob/Pixabay
The company plans its new facilities and upgrade works on existing ones using its Sustainable from the Start standard. Any new facility or upgrade needs to be built to meet the standard from the start. For example, for a food facility, it would need to hit 0.4 liters of water per kilogram of product from the start.
In terms of governance and advocacy, the company’s public policy team ensures that all regulations, whether local, national, or broader, such as CSRD are assessed so that any necessary changes to processes can be met.
With 2030 ‘just around the corner’, PepsiCo’s water positive journey looks set to see more integration between water, climate, nature, and food.
“A lot of thinking now is in terms of ‘how do all these systems integrate’?” begins Grant. “I could certainly see a ‘landscape’ approach going forward.”
"There are still a number of data gaps when it comes to water, in particular groundwater"
As Grant explains, seeing all these systems as integrated is an ‘evolving journey’ and companies like PepsiCo are, in some part, learning as they go along. But for this to be effective there are certain challenges that need to be addressed.
“I think one of the challenges for us all is data,” Grant explains. “There are still a number of data gaps when it comes to water, in particular groundwater, and [collectively] we need to figure out how we solve that because unless you’ve got really good, robust data, it’s difficult to address the problems.”
It’s one thing to intuitively know what the issues are, and that can still lead to investment to help address challenges, but to really ensure the right issues are being addressed in the right place at the right time requires ‘decent data’. Which as Grant states: “Is still an Achilles heel,” in many areas.
However, this should not, and does not, stop companies like PepsiCo from taking action.
“We have seen a significant step up by the private sector in addressing water issues globally and working collectively toward a more sustainable water future,” Grant says.
KEY 2023 ESG Performance Metrics (accurate to June 2024)
PepsiCo reached two of its 2025 goals two years ahead of schedule:
- It recorded a 25% improvement in water-use efficiency at high water-risk company-owned locations when compared to a 2015 baseline, meeting its goal of 25% improvement by 2025
- Surpassed its goal to achieve a 15% improvement in Agricultural water-use efficiency in high water-risk watersheds where they directly source their crops by 2025, achieving 23% in 2023.
- Replenished approximately 69% of the water used in company-owned manufacturing facilities in high-risk watersheds, the equivalent of more than 12 billion liters of water, with a goal of reaching 100% by 2030.
- Continued efforts to strive toward best-in-class and world-class water-use efficiency by 2030.
- Completed the adoption of the AWS Standard at 27 facilities and had 59 facilities in the process of adopting at the end of 2023.
- Helped more than 91 million people since 2006 gain access to safe water, with a target to reach 100 million people by 2030.
Learn more from PepsiCo’s ESG Summary.