How PepsiCo is tackling the global water crisis

by Rahim Kanani | rahimkanani | Rahim Kanani Media Group, Inc
Thursday, 15 January 2015 02:36 GMT

“PepsiCo associate in Wisconsin using a soil moisture probe to simultaneously reduce water use while improving crop yield. Photo by Janet Jarman.

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“We’re very proud that we were able to reach our 2015 goal of improving water-use efficiency by 20 percent per unit of production well ahead of schedule,” explained Liese Dallbauman, Director of Water Stewardship for PepsiCo’s global food and beverage businesses. In an interview, we discussed critical trends related to global water scarcity, the role of business in addressing these kinds of global challenges, unique partnerships that accelerate progress, and much more.

PepsiCo is one of the world's leading food and beverage companies with over $66 billion in net revenue in 2013 and a global portfolio of diverse and beloved brands. Liese Dallbauman is Director of Water Stewardship for PepsiCo’s global food and beverage businesses. Her responsibilities include in-plant water conservation training, water use analysis and global water risk assessment and mitigation. These programs have made major contributions to PepsiCo’s success in reducing its operational water use ratio by 20 percent from a 2006 baseline – four years ahead of the 2015 schedule. The company was honored to receive the 2012 Stockholm Industry Water Award in recognition of this achievement and its comprehensive approach to water stewardship. 

Today, when you look at the issue of global water scarcity, what are the top 3 or 4 trendlines that you're most concerned about?

The demand for water is increasing and will continue to do so. This is due partly to population growth, but improved living standards also are a driver – as disposable income increases, direct water use increases and so does use of water intensive products.

At the same time that demand is increasing, supply is becoming less reliable. Dramatic storms, flooding, drought and other climate events are making the old saying, “Water: Too much, too little, too bad,” more true than ever.

The last bit of that phrase – “too bad” – refers to the fact that often the water that’s available is of poor quality due to pollution or ‘natural’ contamination like arsenic. That’s another worrying trend – contamination of water sources. Agricultural runoff is a major source of groundwater pollution, so increased farming to provide more food can lead to more water pollution unless sustainable practices are introduced and adopted.

What do these challenges mean to you from a business perspective, and how does PepsiCo need to reorient itself to deal with such a fragile situation? 

We need to understand the water-related risks that our businesses face around the world. Since water is an inherently local commodity, our first step is learning what local conditions we face. We begin by using mapping tools like World Resource Institute’s (WRI) Aqueduct and World Business Council for Sustainable Development’s (BCSD) Global Water Tool to do an initial screening. This helps us prioritize and focuses our attention, but we realize that local, on-the-ground information is critical. We’ve developed an in-house water stress assessment, which is a short survey that asks about local trends in water quantity and quality, water economics and community concerns. In parts of the world that are most exposed to water stress, we’re piloting a more detailed survey that will help us track changes over time and identify trends.

The PepsiCo Foundation has supported the Inter-American Development Bank’s development of Hydro-BID, which is a water resource data management and modeling tool that estimates water availability in Latin America and the Caribbean. Hydro-BID allows decision-makers to consider potential variations in climate, population and land use when determining their “water budgets.”

With respect to water quality, the environmental pillar of PepsiCo’s Sustainable Farming Initiative includes programs that help our suppliers use less water and replace synthetic fertilizers – both actions that reduce the impact of runoff on groundwater quality.

As you've implemented water stewardship policies and sustainable agricultural practices in different parts of the world, what kind of impact are you having on the ground?

From a manufacturing perspective, we’ve used our ReCon (Resource Conservation) Water program to reduce the amount of water that we use to make our products. We’re very proud that we were able to reach our 2015 goal of improving water-use efficiency by 20 percent per unit of production well ahead of schedule, and we continue to improve by identifying and prioritizing water-saving opportunities. Some solutions, like leak detection and repair programs, are broadly applicable; others, like rainwater harvesting, make sense in some locations but not in others. The key is understanding that a one size approach doesn’t fit all. 

Our agriculture success stories include collaborating with Cambridge University in the development of i-crop™, a precision farming technology. By allowing farmers to provide the right amount of water at the right time in the growing cycle, i-crop™ can simultaneously reduce water use while improving crop yield. By the end of 2013, we cut our carbon footprint by 38 percent and water usage in water stressed areas by 31 percent in the U.K. 

Another great example is from the PepsiCo Foundation, our company’s philanthropic arm, which has supported the development of low-cost tensiometers. These devices are low-tech, easy-to-use tools that measure soil moisture content and help reduce overwatering. 

Water scarcity and sustainable agriculture are tied to other, major concerns such as food security and climate change. How are you thinking about the intersection of these topics as it relates to working with partners and other allies to accelerate your impact?

By working with other companies through partnerships like the UN CEO Water Mandate (“Mandate”), World Business Council for Sustainable Development (WBCSD), the Beverage Industry Environmental Roundtable (BIER) and International Finance Corporation’s 2030 Water Resources Group, we’re able to contribute our perspective and expertise to the collective business approach to water stewardship. The Mandate and WBCSD each encompass a variety of industries, ranging from manufacturing to construction to retail to mining; by definition, each challenge is viewed differently by the different players. This diversity results in solutions and approaches that are broader than those developed by BIER’s water working group, which is populated entirely from one sector. Both perspectives are important.

In addition to working with other businesses, we collaborate with external stakeholders; among these, I’d like to highlight The Nature Conservancy (TNC). Our partnership with TNC allows us to combine business knowledge with scientific rigor, resulting in conservation and protection strategies that are economically feasible and environmentally sound.

In 2011, we co-authored a publication called “Striving for Positive Water Impact,” which provided insight on the importance of local context – ecological, social and economic – in identifying, designing and evaluating watershed remediation strategies. In 2014, we launched the Recycle for Nature program, which will simultaneously encourage recycling and protect drinking water sources that provide water for 11 percent of the U.S. population.

Looking ahead 5 or 10 years, how do you envision PepsiCo's work in this space evolving, and what kind of example do you want to set for the industry at large when it comes to addressing global development challenges?

We strive to be responsible water users everywhere. We realize that this doesn’t mean the same thing in all places and that, in order to reach the right meaning in specific locations, we need to understand local context. For example, what businesses, communities and ecosystems share water with us? By understanding this context, we can better grasp the impact of what we do, the synergies that exist and the opportunities for partnerships that will benefit all. I’d like to point out the specific example of PepsiCo India’s partnership with Alternative Development Initiatives. They’re following a sustainable water development model that combines community interventions for water resource development with livelihood enhancement. I’ve visited several of these projects and seen positive outcomes for community, environment and business.

In 2009, we were among one of the first global companies to publicly recognize water as a basic human right in the context of the World Health Organization’s and the United Nations’ Joint Declaration on the

Human Right to Water. We continue to work toward incorporating the five elements of this right (safety, sufficiency, acceptability, accessibility and affordability) into our business. I hope that, before five or 10 years have passed, a Human Right to Water Impact Assessment will have been developed that will allow us to track and address challenges related to each of these elements.