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PepsiCo

Working at watershed level


Company Information

PepsiCo is a leading global food and beverage company with brands that are respected
household names throughout the world. PepsiCo entered India in 1989 and in a short
period, has grown into one of the largest food and beverage business in the country.
PepsiCo India’s diverse portfolio includes iconic brands like Pepsi, Lay’s, Kurkure,
Tropicana 100%, Gatorade and Quaker. Presently PepsiCo India provides direct and
indirect employment to more than 200,000 people. The Company’s growth has been
guided by PepsiCo’s global vision of “Performance with Purpose”. This means that while
businesses maximize shareholder value, they have a responsibility to all the stakeholders,
including the communities in which they operate, the consumers they serve and the
environment whose resources they use. The Company has pioneered and established a
model of partnership with farmers and now works with over 24,000 happy farmers across
nine states. PepsiCo India’s award-winning Waste to Wealth recycling program benefits
nearly 500,000 people. PepsiCo India emphasizes “Winning with Diversity and Inclusion”
and has a significant number of women in the leadership team in India. The Company has
won the prestigious Helen Keller Award from the National Centre for Promotion of
Employment for Disabled People (NCPEDP).

In 2009, PepsiCo India achieved a significant milestone, by becoming the first business to
achieve a ‘Positive Water Balance’ (PWB) status in the beverage world, as independently
assured by Deloitte Touché Tohmatsu India Pvt. Ltd. The Company has been Water
Positive since then. In 2012, PepsiCo India achieved a PWB of 8258 million liters — giving
back more water to the community than our facilities consumed. This was made possible
through innovative agricultural interventions such as direct seeding of paddy and drip
irrigated potato cultivation, water efficiencies across operations, rainwater harvesting and
community water recharge.

The business case for good water management


PepsiCo is aware of its responsibility around good water management as water is both
fundamental to its ability to operate efficiently and vital to the communities it serves. Water
stewardship is thus a central part of PepsiCo’s Performance with Purpose – its mission to
deliver sustainable growth. With this approach, in May 2009, PepsiCo formally and publicly
acknowledged water as a human right, making it one of the first companies of its size to do
so. PepsiCo respects the human rights recognized by the countries in which it operates
and will not take any action that would undermine a state’s obligation to its citizens to
protect and fulfill the Human Right to Water. In the absence of a country’s Human Right to
Water Policy, PepsiCo is committed to operate within the principles of the Human Right to
Water Policy as defined by the United Nations. Specifically, the United Nations CEO Water
Mandate, signed by PepsiCo Chairman and CEO Indra Nooyi in 2007, has been a key
driver of PepsiCo’s efforts to improve both internal accounting and external transparency
related to water use. The Mandate obligates all its signatories, including PepsiCo, to adhere
to a holistic approach to water stewardship in six areas: direct operations, supply chain and
watershed management, collective action, public policy, community engagement and
transparency.
The issue
The availability of water varies greatly from place to place as it is mostly dependent on the
topography and hydro-geology of local watersheds. This means that the ecological and
social impacts associated with unsustainable water use are of a highly localized nature. It
is very difficult to predict where such impacts may arise without understanding the water
balance of local watersheds. For this reason, PepsiCo’s approach towards water resource
development is to focus on local watersheds in which it operates. The company embraces
its responsibility to help ensure that stakeholders inhabiting the villages within the shared
watershed have sufficient water to meet their basic human needs, with the understanding
that everyone holds a right to water.

One of PepsiCo India’s bottling units is located in the village of Pothireddypalli, near
Sangareddy in the southern state of Andhra Pradesh. This facility receives water from the
municipal authority, the Hyderabad Metropolitan Water Supply and Sewerage Board. The
plant is being operated since 2006 by PepsiCo India. In 2008, following the identification of
a need by the community, PepsiCo India carried out an initial water resource mapping and
planning exercise. The study revealed that, for the village communities around the plant,
groundwater formed an important source of water for both agriculture and domestic
purposes. Extensive use of groundwater to grow water-intensive crops like paddy was
lowering the overall groundwater levels in the area. Further, traditional water bodies
(Cheruvu) were silted up, adversely impacting the natural recharge process. Moreover,
disconnect with the watershed and broken spillways were unable to hold the water in these
water bodies. The primary source of income for the community was agriculture with only
one rainfed seasonal crop grown in the region. It was evident that if no action was taken,
the groundwater levels would continue to drop and water would become unavailable for
the communities near the Sangareddy facility, leading to adverse impact on their
livelihoods.

PepsiCo response

The Main Objective


The key objectives of the intervention were the following three:
 Facilitate sufficiency of water resources in the watershed;
 Develop a strategy to engage with the community to collectively address
sustainability of the watershed and long-term access to water by it;
 Provide access to improved livelihood options through exposure to better agricultural
techniques and non-agricultural skill-based training.

Actions Taken

To address the issue, PepsiCo India engaged an NGO, Alternative Development Initiatives
(ADI), for establishing SWRDM (sustainable water resource development model). This
model combines community interventions for water resource development with livelihood
enhancement. As part of this initiative, a detailed hydro-geological study, based on the
watershed, was conducted in and around the Sangareddy facility. Since the community
was the nucleus of this project, a deeply participatory approach was adopted right from the
start. PepsiCo conducted a household baseline survey to better understand the potential
stakeholders. Following the survey findings, PepsiCo reached out to the community to
jointly evaluate potential initiatives, and four key areas were identified. Accordingly, an
implementation strategy was developed to address the short-listed initiatives:

− Water recharge and conservation


PepsiCo/ADI team identified three existing surface water bodies, Cheruvus, with
their watersheds that could be rejuvenated to increase their water harvesting
potential and recharge the locally depressed aquifer. These water bodies, one
each in Cheriyal, Kotlapur and Kashipur villages, were thoroughly de-silted. The
excavated silt was effectively used to strengthen the embankments. The spillways
along with inlets/outlets associated with the three water bodies were repaired.
Community members were trained on water conservation, maintenance of the
water bodies, measurement of rainfall and groundwater through appropriate
instruments. This helped to build ownership amongst the community and provided
an incentive to contribute to the collective maintenance of the water bodies.

− Agriculture development
A series of issue based trainings were organized with farmers’ clubs. Focused
capacity building of the farmers was conducted by renowned institutions such as
ICRISAT (The International Crops Research Institute for the Semi-Arid Tropics).
Key training topics included good cropping practices, water and land conservation,
on-field water management, soil and plant testing for diseases, multi-cropping,
organic farming and sustainable agriculture. Farmer-to-farmer exposure visits
were organized to allow further sharing of experience with best agri-practices.

− Livelihood enhancement
Both farm and non-farm skill-based trainings on diverse topics were provided to
men and women in the community to help improve their livelihood opportunities so
they are less dependent on one annual agricultural crop. These included creating
a diversified farm package such as horticulture, vegetable gardening, oil seeds,
pulses along with agro-processing and fodder cropping, animal husbandry,
dairying and other related activities. Additionally, alignment between livelihood
interventions and related central / state Government and NABARD (National Bank
for Agriculture and Rural Development) schemes was made. This convergence
allowed the community to leverage funds from the above mentioned institutions to
further improve their income generation.
− Community and gender empowerment
PepsiCo India adopted an inclusive approach to engage with the community and
seek opportunities for their empowerment through establishment or strengthening
of local level institutions. It became clear at the outset that water resource
management is incomplete without integrating the gender dimension. For this
reason, women in the community were facilitated to form their Self-help Groups
(SHGs). These SHGs were encouraged for enrolment in Stree Nidhi Co-operative
Bank for micro-capital. This is the first bank for women in the state of Andhra
Pradesh. Moreover, the women SHGs were also assisted for enrolling in Aam
Admi Bima Yojana (Common Man’s Insurance Scheme) and internet mobile
banking. Other beneficiaries were supported in the formation of local level
institutions including Water Users’ Association (WUA) and Joint Farmers’ Club
(JFC). The groups so formed focused on different developmental aspects catering
to their member constitution.

People Involved

The key partners in this intervention were PepsiCo India and the three beneficiary village
communities. PepsiCo India has gained from the knowledge and experience in establishing
a robust SWRD model. The community was quick to grasp the link between water and
livelihood security and readily became both co-owners and active participants of the water
intervention. Thus, an inclusive engagement with the community through regular dialogue,
consultation, capacity building and co-ownership has made this model sustainable for the
stakeholders involved.

The results
Community water intervention by PepsiCo India near its Sangareddy beverage plant has
positively impacted water availability in the area with the water levels increasing by 4-5 m
in the areas neighboring the rejuvenated water bodies. Overall, more than 7,500
community members have benefitted since the start of the initiative, and about 500 million
liters of water was recharged in the calendar year 2012, nearly as much as water as the
Company used in its operations during the same period.

The community is a proud joint owner and user of its Cheruvu. The Gram Panchayat (local
council), along with WUA, has taken up the ownership of the maintenance of the water
projects. Community members have not only learnt the importance and necessity of water
conservation but are also adept at measuring rainfall through rain gauges and will therefore
be well-equipped to foresee any future water issues as they arise. On the whole, community
members are now equipped to take key decisions related to water availability, cropping
pattern and irrigation keeping the larger development perspective in mind thereby creating
more sustainable livelihoods.

Increased water levels and availability have raised the productivity of paddy (rice crops) by
almost 1.5 times .Sufficiency in water now allows Sangareddy farmers, falling in the project
area, to take more than one crop per year as compared to only one rainfed, water intensive
crop earlier. More than 50 acres have been converted from single to year-round cropping
fields, growing vegetables such as tomato, brinjals (aubergine) and carrots. Together these
initiatives have led to an increase in farmer income levels by about 40%, from INR
12,000/hectare (~USD 210/ha) before the water intervention to about INR 20,000/ hectare
(~USD350/ha) after the establishment of the Cheruvus.

The linking of water security, livelihood security and women’s empowerment has reaped
significant results. Skill-based training to 135 women in the three villages has been found
to be both welcome and useful. Training related to tailoring was especially well-received
such that several women developed the confidence to start their own “home tailoring units”.
So far the women SHGs have been able to avail INR 660,000 in loans from Stree Nidhi
Co-operative Bank.

In sum, these activities have further augmented the income of the families in the
community, and increased resilience of the communities by ensuring they are no longer
dependent on one agricultural product / crop.

Thus, recharging of aquifers, intensification/extension of agriculture and improved


livelihood options in surrounding villages, have been the key achievements of PepsiCo
India’s community water interventions near Sangareddy.
Dried-up Cheruvu (pond) at Cheriyal
village, near Sangareddy (Medak
District)
Filled-up Cheruvu post intervention

Lessons learned

Water-related risks are intensifying across the world, creating both business and societal
pressures. India has about 16%of the world’s population as compared to only 4% of its
water resources. With the present population of over 1,000 million, the per capita water
availability is around 1.170 m3/person/year. However, while India is considered to be “water
stressed”, the per capita water availability does not include disparity in water allocation and
access or the social and economic disparities in water usage 1. Accordingly, the key lessons
learned from our water intervention near Sangareddy have been enunciated below:

1. PepsiCo India’s water intervention near Sangareddy has further reinforced


its understanding that social and environmental impacts due to water
scarcity can be highly local in nature and associated with the watershed.
PepsiCo India has adopted a long-term sustainable view to water resource
management which ensures sustained access to water. This requires undertaking
a holistic approach by looking beyond the fence and focusing at the watershed
level.

2. Water is a shared, finite resource and water interventions work best in


partnership with the local stakeholder constituencies around the watershed
that are inextricably linked with each other. Through this intervention, PepsiCo
India has been able to deeply engage with its community from the very start of the
intervention, building trust, collaboration and co-ownership in the process. In turn,
the community has demonstrated enthusiasm in contributing to the protection of
the watershed through collective management of the water bodies.

3. The intervention has been useful in demonstrating the success of public


private partnerships to the government authorities. The scale of intervention
and associated impacts can be significantly enhanced if public-private partnership
(PPP) model is adopted as it allows for collective action by the associated
stakeholders.

Further Information

1 Water in India: Situation and Prospects, UNICEF, FAO, SaciWATERs, 2013


Please contact: Dr. Muna Ali, Vice-President – CSR: muna.ali@pepsico.com

About the World Business Council for Sustainable Development (WBCSD)


The World Business Council for Sustainable Development is a CEO-led organization of
forward-thinking companies that galvanizes the global business community to create a
sustainable future for business, society and the environment. Together with its members,
the council applies its respected thought leadership and effective advocacy to generate
constructive solutions and take shared action. Leveraging its strong relationships with
stakeholders as the leading advocate for business, the council helps drive debate and
policy change in favor of sustainable development solutions.
The WBCSD provides a forum for its 200 member companies - who represent all business
sectors, all continents and combined revenue of more than $7 trillion - to share best
practices on sustainable development issues and to develop innovative tools that change
the status quo. The Council also benefits from a network of 60 national and regional
business councils and partner organizations, a majority of which are based in developing
countries. www.wbcsd.org

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