The U.S. Environmental Protection Agency has awarded PepsiCo a 2011 ENERGY STAR "Sustained Excellence" Award (for the fourth year in a row) in recognition of its continued leadership in protecting our environment through energy efficiency.

Through 2010, we have achieved an average combined reduction of 12 percent in per-unit use of thermal energy in our food and beverage plants and nearly an 8 percent reduction in electrical energy consumption, compared with a 2006 baseline.

Resource Conservation System (ReCon)

A key tool to help us achieve these improvements is our ReCon system, a customized, online site audit and diagnostics program developed to facilitate the rapid transfer of best practices around the world.

The diagnostic component contains nearly 500 questions about best practices for water, energy, waste and GHG reduction, making ReCon relevant to all manufacturing platforms. Since the ReCon diagnostic went online in April 2009, we have had 235 different sites across all divisions of PepsiCo conduct diagnostics, including franchises, company-owned facilities and co-packers.

PepsiCo is committed to achieving an absolute reduction in GHG emissions across global operations as well as goals to improve electricity and fuel-use efficiency by 20 percent and 25 percent, respectively, by 2015. Through the Environmental Sustainability Council, we are working with global operations leaders to develop tactics that will ensure that these goals are met. Here are just a few examples of how we demonstrate our commitment to reducing energy use in our operations:

• A cogeneration system at the Frito-Lay manufacturing facility in Killingly, Connecticut, generates almost 100 percent of the site's electrical requirements. To maximize the system, the facility utilizes waste heat, which is a by-product of steam production. This system helps the facility reduce its greenhouse gas footprint and alleviates the significant load on the heavily congested power grid in the northeastern U.S.
• The Gatorade manufacturing facility in Guadalajara, Mexico, has a heat recovery project that uses heat from thermally processed beverages to preheat the cool product coming into the pasteurizer. This energy recovery system helps save 73,000 liters of fuel, 105,000 KWh of electricity and 2 million liters of water per year, preventing more than 200,000 tons of carbon dioxide from being sent to the atmosphere annually.
• Our Quaker Oats facility in Bridgeview, Illinois, installed two high-efficiency gas-fired steam boilers that have reduced the facility's natural gas use by 16 percent in 2010, compared with previous technologies, a savings of approximately $60,000 a year.
• A Tropicana manufacturing facility improved the efficiency of its anaerobic wastewater treatment plant in Bradenton, Florida. As a result, the facility was able to shut down motors used in the aerobic process and save more than 5,833 MWh of electricity a year.

Planting Seeds for the Future

The traditional process for producing nixtamalized (soaked and cooked in alkaline solution, and hulled) corn masa remains the same as in ancient times, but a new process produces masa directly from ground raw grains without the traditional cooking and steeping steps. The combined action of water, gelatinization agents and temperature produces a cooked masa suitable for the production of Doritos, Tostitos and other corn products—a novel process that will be applicable to other ingredients such as legumes and cereals.

As a result, this technology has the potential to reduce energy consumption by 10 percent, reduce the time to make masa from 16 hours (for soaking and steeping) to 15 minutes, and eliminate the operating cost of cooking corn one day before it's needed. It also has the potential to use 90 percent less water for corn cooking and processing than the original methodology. Additionally, the new technology uses only one-tenth of the actual equipment footprint to make masa, while raising production yield by at least 6 percent.

In 2003, we began working with the Carbon Trust, an independent, not-for-profit company set up by the U.K. government to help businesses address the growing threat of global climate change and to pioneer carbon footprinting methodology and standards. The Carbon Trust believes that to effectively reduce a company's carbon footprint, it must first know how to accurately measure it.

We began the work with our leading crisp brand in the U.K., Walkers. Following months of intense research, Walkers became the first consumer brand to pilot the original method for assessing product carbon footprints and the first major food brand to display a carbon footprint/reduction label on its packs in 2008. Since then, Walkers has become the first company to meet the reduction commitments, reducing its footprint by 7 percent.

We then shared our work from the Carbon Trust with the Columbia University Lenfest Center for Sustainable Energy, and commissioned them to develop an algorithm through which we can evaluate carbon life-cycle assessment. Recognizing that this is not a competitive area, we shared the work from the Lenfest Center with our peers across the beverage industry through the Beverage Industry Environmental Roundtable (BIER).

The collaborative work continued and, most recently, Tropicana Pure Premium Orange Juice became the first consumer brand in North America to be independently certified by the Carbon Trust. The results found that almost 40 percent of the carbon footprint came from the growing of oranges—in particular, the manufacture of standard fertilizers used on crops.

To reduce the carbon footprint of this product, PepsiCo launched a three-year, 7,200-tree pilot project in Florida in 2010, which is designed to compare low-carbon fertilizers with standard fertilizer, and measure the impact on tree and soil health and juice quality. As a result of this work, Tropicana plans to deploy the best fertilizer solutions across its Florida supply base, and globally to citrus and other crop production.

PepsiCo will shortly have results of its trials in Bradenton, Florida, in which low-carbon fertilizer is being used to grow oranges for Tropicana, a story initially shared by Time Magazine in 2010. If successful, the greener fertilizers could lower the carbon footprint of PepsiCo's citrus growers by as much as 50 percent and reduce the total carbon footprint of Tropicana Pure Premium Orange Juice by up to 20 percent. PepsiCo is also experimenting with the use of low-carbon fertilizer on potatoes, which will not only reduce the company's footprint, but may also produce potatoes that are more uniform in size and yield more chips per acre.

More than 20 additional PepsiCo products, representing a true market basket of our consumer offerings, are currently being evaluated for a carbon footprint. This work will determine the factors that contribute the most to our carbon output and identify opportunities for reduction.

As part of our climate change strategy, we constantly find ways to increase the efficiency of our beverage coolers. Because cooling equipment significantly consumes energy—more than two times the electricity used annually in all Pepsi plants combined—we continue to improve the energy efficiency of these units while also investing in sustainable refrigerants worldwide.

Point-of-sale equipment, such as coolers and vending machines, affects the environment through the use of electricity and refrigerants. That's why 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—up to 45 to 50 percent more efficient compared with 2004 standards.

PepsiCo was part of a public-private partnership conceived and supported by the United Nations Environment Program's (UNEP) OzonAction team that recently received the prestigious Roy Family Award given by Harvard University's John F. Kennedy School of Government.

The award, celebrating an outstanding public-private partnership project that enhances the environment through creative approaches, was presented at a Harvard Kennedy School event in May 2011.

The winning project, Refrigerants, Naturally!, tackled the problem of persistent fluorinated gases (also known as F-gases) such as CFCs, HCFCs and HFCs in the atmosphere. The judging team cited the project as an effective example of corporations and environmental organizations working together to reduce severe threats to the global environment. The project exemplified PepsiCo and other partners' commitment to combating climate change and ozone layer depletion by eliminating F-gases and substituting them with natural refrigerants (ammonia, carbon dioxide and hydrocarbons). Greenpeace and UNEP have supported this partnership from the beginning by providing advice, information and linkages to their own activities.

Recent scientific studies cited by UNEP indicate F-gases' increasing piece of the global warming pie—up to between 9 and 19 percent of global greenhouse gas emissions by 2050. Refrigerants, Naturally! aims to skip over their deployment in developing countries as the next billion people get their refrigeration and cooling. This will prove to be a major wedge in preventing further global warming.

Since 2009, when we introduced the first CO₂ vendor to the U.S. market, standards have changed significantly to allow domestic use of HC refrigerants. In February 2010, we introduced the first UL-listed HydroCarbon-based (HC) cooler to the U.S. marketplace with 35 innovative new machines. Our Turkey operations converted to 100 percent HC refrigerant for all new cooler purchases in 2009 and beyond. By the end of 2010, we had deployed 61,419 HC and 277 CO₂ units globally, for a total of nearly 62,000.

As part of PepsiCo's mission to deploy more sustainable refrigeration equipment, PepsiCo Beverages Turkey introduced its Green Cooler initiative—the first company in the world to invest in a Green Cooling system for 100 percent of new cooler purchases. The new refrigerator technology decreases CO₂ emissions, providing an overall energy savings of 51 percent.

This year, 53 percent of PepsiCo Beverages Turkey's total cooler base will be converted into Green Coolers, driving energy savings of $18 million per year and an environmental balancing impact of 365,000 trees. The company in Turkey aims to convert all of the coolers to Green Coolers within five years, generating a $52 million per year savings and an environmental benefit equivalent to one million trees.

Turkey is the first country where PepsiCo will implement 100 percent HC-based refrigeration systems. The model will be used to expand sustainability efforts to other PepsiCo regions around the world.

In 2011, the majority of coolers in Europe will be HFC-free coolers, and in countries such as China, India and the countries of Latin America, field tests and expansions will occur. As of January 1, 2011, we became the first company to make ENERGY STAR compliance mandatory for all coolers sold in the U.S. and Canada.

As part of our effort to conserve energy and lower our carbon footprint, we continuously look for new ways to reduce emissions from our delivery vehicles.

Setting a standard for the industry, PepsiCo in the U.S. uses EPA's SmartWay-certified carriers for 100 percent of its transportation needs. Meanwhile, fleet efficiencies throughout PepsiCo are driven by improved route planning and simple best practices, such as idling control, speed governance and preventive maintenance programs.

Rolling Out Efficient Electric Vehicles

In 2010, Frito-Lay continued rolling out its fully electric delivery trucks, bringing 10 trucks to Columbus, Ohio, in partnership with Clean Fuels Ohio, a statewide nonprofit organization. In total, Frito-Lay deployed 13 electric trucks in 2010 in the U.S. and Canada, and will roll out 163 additional trucks by 2011. These trucks will ultimately be part of the largest planned fleet of commercial all-electric trucks in North America.

The trucks generate zero tailpipe emissions and operate for up to 100 miles on a single charge. Once the planned 176 electric trucks are deployed, Frito-Lay will eliminate the need for 500,000 gallons of fuel annually. Each truck emits 75 percent less greenhouse gas than a conventional diesel truck and operates virtually silently.

With the seventh-largest privately owned fleet in the U.S., Frito-Lay has set a goal of becoming the most fuel-efficient fleet in the country, and these vehicles give us an opportunity to use the latest advances in transportation technology to reduce our environmental impact.

Innovations in Mexico

Also in 2010, Gamesa-Quaker became the first company in Mexico to use plastic materials in the manufacturing of shipment cases, which make the trucks lighter and more fuel efficient, and reduce raw material use by 8 percent, resulting in cost savings and lower carbon emissions.

During the year, Gamesa-Quaker introduced 1,000 new vans with the plastic shipment case technology, representing 20 percent of its total secondary fleet. These actions are part of Gamesa-Quaker's commitment to reduce carbon emissions by 25 percent by 2015. Earlier in the year, the business unit introduced a hybrid unit to its secondary fleet of trucks.

Green Stamp Program

In South America, the Green Stamp Program is optimizing vehicle efficiency through preventive maintenance and regular vehicle inspections, as well as through guidance on improving fuel-efficiency procedures for truck drivers and route salespeople. Approximately 80 percent of PepsiCo's fleet in Peru, Ecuador, Chile, Colombia, Argentina and Venezuela has participated in the program, with plans for further improvements under way.

PepsiCo's commitment to saving energy through green building worldwide continued in 2010, and is represented when our facilities meet the U.S. Green Building Council's (USGBC) Leadership in Energy and Environmental Design (LEED) standards—one of the most rigorous standards for green building design, construction and operation in the world.
So far, 27 facilities across PepsiCo now have LEED certification. In July of 2010, the Modesto plant achieved LEED Existing Buildings Gold certification.

Making It "Green" in China

A PepsiCo facility became the first green beverage plant in China, and the first Chinese manufacturing plant to be LEED Gold-certified. The Nanchang plant has reduced its water usage by 34 percent and energy by 51 percent versus the old facility. Benchmarked against our largest international competitor in China, the plant is 10 percent more efficient in water usage. As a result, PepsiCo is redefining beverage industry standards on sustainability for all food and beverage companies in China.

To save water, the plant utilizes a high-pressure cleaning system, water-free conveyor belt lubricant and water-saving fixtures. Plant associates reuse water for landscaping and general cleaning instead of using potable water. To save energy, 75 percent of the plant's indoor areas feature natural lighting, including a skylight in the packing area and warehouse. A roof garden insulates the office building and saves energy for cooling and heating.

We continuously look for ways to bring to scale the good ideas being implemented across our global business and to share best practices with our industry peers and suppliers.

In an industry-leading move, we developed global Sustainable Engineering Guidelines (SEG) based on LEED standards. We share these guidelines, which contain 135 solution sets and 18 training videos, with our suppliers to ensure our buildings are constructed to environmentally sustainable standards. The guidelines are applied to all new construction as well as major remodels of existing buildings globally, where practical.

The Sustainable Engineering Guidelines can be accessed through a website available to all PepsiCo engineers and key partners worldwide. This website provides guidelines for:

• Site selection
• Construction activity management
• Water-use reduction
• Building materials
• Building systems
• Plant process management
• Indoor air quality
• Site stewardship
• Lighting systems

In addition to evaluating the feasibility of LEED certification for new buildings, we apply PepsiCo's Sustainable Engineering Guidelines to make sure that project managers around the world have a common set of guidelines and approved solution sets to make sure they design and build in an environmentally responsible way.