Beverage Container Recycling

WHEREAS PepsiCo has repeatedly emphasized its commitment to environmental leadership, and its brand value depends on excellence;

Yet, the majority of Pepsi's beverage containers in the U.S. is being needlessly thrown in landfills, incinerated or littered and are therefore diverted from the national supply of recycled plastic and aluminum;

In 2001, PepsiCo announced a goal to incorporate 10% recycled content resin into its plastic beverage containers in North America. However, PepsiCo does not have a publicly stated, quantitative goal to increase beverage container recovery rates. We believe both goals are essential to an effective recycling strategy;

The U.S. recycling rate for beverage containers has declined significantly in recent years. The U.S. recycling rate for aluminum beverage cans declined from 61% in 1994 to 49% in 2001, while the recycling rate for plastic soft drink bottles declined from more than 50% in 1994 to 35% in 2001. Conversely, recycling rates of 72% and higher were achieved in the 10 U.S. states with container deposit legislation (or bottle bills). Significant container recovery rates are possible, as evidenced in these 10 states, and in countries like Norway and Sweden where companies have achieved beverage container recovery rates of more than 80%. In the U.S., states with beverage container deposit systems recover three times as many bottles as states without deposits. Nevertheless, PepsiCo actively opposes container deposit systems without putting forth a solution capable of achieving similar recovery rates; and,

WHEREAS setting public, quantitative goals for higher rates of beverage container recovery will complement PepsiCo's goals for higher rates of recycled content in beverage containers;

BE IT RESOLVED THAT Shareowners of PepsiCo request that the board of directors report to shareholders by September 1,2003, on its efforts to adopt a recycling strategy that includes a publicly stated, quantitative goal for a beverage container recovery rate in the U.S.

The report should detail the means and feasibility of achieving, as soon as practicable, a container recovery goal established by PepsiCo or the Pepsi system or by its trade associations. The report should:

- include a cost-benefit analysis of the different container recovery options available, such as curb side recycling, drop-off programs, container deposit systems, and voluntary company and industry programs; and

- explain what PepsiCo believes is an acceptable recycling rate goal for beverage containers, and how PepsiCo will help achieve that goal; and

- explain PepsiCo's position on beverage container deposit systems.

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