PERFORMANCE WITH 2025 AGENDA PURPOSE

1 pepsico Sustainability Report 2016 + 2025 AgendaPERFORMANCE WITH PURPOSE2025 AGENDASUSTAINABILITY REPORT 2016ON THE COVER:Quaker 3 Minutos, a whole-grain, oat-based product fortified with vitamins and minerals, is helping consumers in several countries across Latin America get the daily nutrition they IS WORKING TO CREATE A HEALTHIER FUTURE FOR PEOPLE AND OUR PERFORMANCE WITH PURPOSE 2025 AGENDA IS DESIGNED TO DELIVER NEEDED CHANGE ACROSS OUR COMPANY, VALUE CHAIN, INDUSTRY AND THIS REPORTI naugural progress on our 2025 AGENDA is reported in the following pages in the context of shared global challenges and coordinated industry action. We profile thought leaders and spotlight promising solutions around the world. We also high-light the primary United Nations Sustainable Development Goals to which our company s efforts are intended to information on our governance, management, programs, progress and next steps on sustainability issues of importance to our stakeholders, as well as additional 2016 PERFORMANCE data, is conveniently cataloged in our new, interactive A Z Topics on replacing a separate Global Reporting Initiative report.

2 This information is also summarized in our GRI Index on pages 71 76 of this This Report 1A Letter from Indra Nooyi 3 About pepsico 6 Global PERFORMANCE 8 Perspectives from Dr. Mehmood Khan 10 GRI Material Aspects 12 PwP PERFORMANCE Dashboard 14 PRODUCTS 20 PLANET 36 PEOPLE 54 Governance 70 GRI Index 71 CONTENTSAt a typical barbecue, Brazilians enjoy grilled entr es, salad, Elma Chips zero-added-salt potato chips that are often sprinkled on rice dishes and refreshing LETTER FROM INDRA NOOYIAs I sat down to write my letter for this year s Sustainability Report, I began reflecting on the meaning of sustainability. It s been used so often, and in so many contexts, that I wanted to start this year s report by returning to first principles and defining what sustainability means to me and all of us at root of the word sustain is defined as cause to continue for an extended period or without interruption.

3 2 | 3 pepsico Sustainabilit y Report 2016WE ARE ALL IN. SUSTAINABILITY IS WHO WE ARE. IT S WHAT FUELS OUR business . AND IT S WHY I BELIEVE pepsico S BEST DAYS ARE YET TO IS A BYWORD FOR LEADERSHIP IN THE 21ST definition informs how I think about sustainability:How can we keep ourselves, our planet and our communities healthy for an extended period of time?How can we ensure we re consuming the right foods and beverages, so that we thrive into our senior years?How can we ensure we re responsible stewards of our planet, so it will con-tinue to provide its bounty of resources for ourselves, our children and our grandchildren?How can we ensure we re growing in our careers, while also meeting our responsibilities as family members, friends and members of diverse commu-nities, so that the places we call home can continue to support generation after generation?These are big questions, and I don t claim to have any easy answers.

4 But I believe corporations, large and small, have a significant role to play in addressing the goods and services we produce, to the energy and natural resources we use, to the lives and livelihoods we support, corporations have a big impact on our communities. And when we act responsibly, we can contribute to the sustainability of our way of life around the ultimately fall short, it won t be for lack of research, or investment or collaboration. It won t be for lack of heart. Because we are committed to are all in. Sustainability is who we are. It s what fuels our business . And it s why I believe pepsico s best days are yet to from investors, to non-governmental organizations (NGOs), to governments are closely watching our progress to make sure we continue to lead, and in many cases, they re helping us along the way. Ultimately, however, we re taking the steps out-lined in these pages not simply because someone else wants us to take them, but because we know they re the right thing to do for our business and the right thing to do for our world.

5 We know that sustainability is a byword for leadership in the 21st we started on this journey in 2006, pepsico was among the first movers in our industry to embrace sustainability. Today, more and more businesses are joining us, lending their voices and acting more respon-sibly around the world. That s good news. Together, we can align around a common vision and work together to achieve it, bringing our world closer to the definition of sustainability I cited earlier, and creating a virtuous cycle that can sustain our way of life, without interruption, over the next generation and , INDRA K. NOOYICHAIRMAN AND CEOWhen it comes to our Products, we ll continue making great- tasting treats to be enjoyed in moderation as part of a balanced diet. At the same time, we need to continue finding new, innovative ways of offering more nutritious foods and beverages without compromis-ing it comes to our Planet, we ll need to continue investing in new solutions to curb emissions and cut water use especially in areas like agriculture while also taking steps to continue reducing packaging materials and waste without asking consum-ers and communities to sacrifice it comes to our People, we ll need to continue enhancing the skills and diversity of our workforce even as we navigate a period of unprecedented change and disruption from new tech-nologies and trends like I m absolutely confident that we can deliver on the PERFORMANCE with PURPOSE 2025 AGENDA we announced last year.

6 The goals we ve set are not only ambitious and aspirational they re also achievable, so long as we re willing to work for them. And we re leveraging all of the know-how and tools at our disposal from developing new packaging technologies, to applying the science behind behavioral economics to nudge consumers toward healthier options, to investing $100 million to help millions more women and girls enter the workforce ready to pages that follow are a report card on our progress over the past year. I m proud of the strides we are making and the way we re harnessing the power of our global scale to drive meaningful change across countries and conti-nents. And if there are any goals where That belief in acting responsibly is what led all of us at pepsico to embark on our sustainability journey what we call PERFORMANCE with PURPOSE more than 10 years ago. It s what led us to reduce the added sugars, sodium and saturated fat and dial up the nutrition in many of our foods and beverages; curb our environmental footprint, saving more than $600 million between 2011 and 2015; and reinvest in our workforce, farmers and communi-ties, creating opportunities for people across the markets we , we re more dedicated to PERFORMANCE with PURPOSE than ever before.

7 Because we know that while our financial results will always be a critical measure of our success, the way we ll sustain our company, not only from year to year but decade to decade, is by offering our consumers the kinds of more nutritious choices they need to grow and way we ll sustain our business and maintain our license to operate in today s resource- strained world is by reducing and replenishing the water we use, while also cutting back on our energy use, carbon emissions, packag-ing and way we ll sustain a world-class workforce is by empowering all of our associates no matter what they look like, where they come from or who they love to build not only a career, but a course, doing all of this won t be easy. While we ve achieved some good progress, much work lies | 5 pepsico Sustainabilit y Report 2016 PEPSICOPRODUCTS ARE ENJOYED BY CONSUMERS >1 BILLION TIMES A DAYREACH >250,000 EMPLOYEESPEOPLEPRODUCTS ARE SOLD IN >200 COUNTRIES AND TERRITORIES AROUND THE WORLDSCALEWang Xuezheng works at our LEED -certified Quaker facility in Beijing, China, supporting the introduction of new and nutritious oatmeal products for Chinese consumers.

8 pepsico has a portfolio of 22 billion-dollar brands that generated more than $1 billion each in estimated annual retail sales in 2016, spanning Beverages, Snacks and with PURPOSE is pepsico s vision to deliver top-tier financial PERFORMANCE over the long term by integrating sustainability into our business | 7 pepsico Sustainabilit y Report 2016 LIFEW TR, a premium water pH- balanced with electrolytes added for taste, features the work of emerging artists on its labels including a series exclusively dedicated to women PERFORMANCENET REVENUES North America Beverages 34% Latin America 11% Asia, Middle East & North Africa 10% Quaker Foods North America 4% Europe Sub-Saharan Africa 16% Frito-Lay North America 25%MIX OF NET REVENUES Food 52% Beverage 48%MIX OF NET REVENUES 58% Outside 42%Return on pepsico stock investment (including dividends) and the S&P 500 CUMULATIVE TOTAL SHAREHOLDER RETURN* IN DOLLARS 12 /06 12 /07 12 /08 12 /09 12 /10 12 /11 12 /12 12 /13 12 /14 12 /15 12 /16 pepsico $ $ $ $ $ $ $ $ $ $ $ S&P 500 $ $ $ $ $ $ $ $ $ $ $ * $10 0 invested on 12 / 31/0 6 in stock or index, including reinvestment of dividends.

9 Fiscal year ending December charts reflect 2016 FINANCIAL HIGHLIGHTS*>$7 BILLIONCASH RETURNED TO SHAREHOLDERS>$1 BILLIONANNUAL PRODUCTIVITY SAVINGS$ BILLIONNET REVENUES* For additional information regarding our 2016 financial per formance, please refer to our 2016 Annual Repor t on Form 10-K .8 | 9 pepsico Sustainabilit y Report 2016 PERSPECTIVES FROM DR. MEHMOOD KHANA cross our own global operations, brands and network of business partners, pepsico is doing just that. We ve set specific goals as part of our PERFORMANCE with PURPOSE (PwP) 2025 AGENDA to guide the continued transformation of our products to better meet changing nutri-tion needs; safeguard natural resources; and support prosperity around the re using our global reach and deep expertise to accelerate progress in these areas continually learning, implement-ing strategy and improving our approach through lessons learned, as is the nature of progress.

10 Recognizing that systemic change will come only from action across value chains and collaboration across sectors to create and scale solutions, we convene partners and work to bring nascent technologies to larger past year, I ve been inspired to see pepsico increase our engagement with disruptive start-ups, cutting-edge academic institutions, innovative NGOs, competitors and governmental agencies around the world to address complex shared challenges some of which are described in this global food system is at an inflection point. Intensifying, interrelated challenges in public health and nutrition, climate change, resource scarcity, human rights and other areas require us to act. The vast network of farmers, traders, suppliers, processors, manufacturers and retailers that feed our world must embrace change to create a healthier future for people and our : SYSTEMIC CHANGEThe further expansion of our Sustainable Farming Initiative over the past year, for example, connects us with thou-sands more farmers and multi- sector partners.