Pepsi 2015 Annual Report Download - page 25

Table of Contents
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global water supplies especially in water-stressed areas (including conserving water within our operations
and promoting the reduction of water use in our agricultural supply chain), and by incorporating into our
operations improvements in the sustainability and resources of our agricultural supply chain; efforts to reduce
waste generated by our operations and disposed of in landfills; efforts to recycle containers; efforts to use
renewable resources; and efforts to optimize package technology and design to make our packaging
increasingly sustainable with lower environmental impact.
Research and development costs were $754 million, $718 million and $665 million in 2015, 2014 and 2013,
respectively, and are reported within selling, general and administrative expenses. Consumer research is
excluded from such research and development costs and included in other marketing costs.
Regulatory Environment and Environmental Compliance
The conduct of our businesses, including the production, storage, distribution, sale, display, advertising,
marketing, labeling, content, quality and safety of our products, occupational health and safety practices,
transportation and use of many of our products, are subject to various laws and regulations administered by
federal, state and local governmental agencies in the United States, as well as to laws and regulations
administered by government entities and agencies outside the United States in markets in which our products
are made, manufactured, distributed or sold. It is our policy to abide by the laws and regulations around the
world that apply to our businesses.
We are required to comply with a variety of U.S. laws and regulations, including but not limited to: the
Federal Food, Drug and Cosmetic Act and various state laws governing food safety; the Food Safety
Modernization Act; the Occupational Safety and Health Act; the Clean Air Act; the Clean Water Act; the
Resource Conservation and Recovery Act; the Comprehensive Environmental Response, Compensation and
Liability Act; the Federal Motor Carrier Safety Act; the Lanham Act; various federal and state laws and
regulations governing competition and trade practices; various federal and state laws and regulations
governing our employment practices, including those related to equal employment opportunity, such as the
Equal Employment Opportunity Act and the National Labor Relations Act; customs and foreign trade laws
and regulations; and laws regulating the sale of certain of our products in schools. In our business dealings,
we are also required to comply with the Foreign Corrupt Practices Act, the U.K. Bribery Act and the Trade
Sanctions Reform and Export Enhancement Act. We are also subject to various state and local statutes and
regulations, including state consumer protection laws such as Proposition 65 in California, which requires
that, unless a safe harbor level exists and has been met, a specific warning appear on any product that contains
a substance listed by the State of California as having been found to cause cancer or birth defects.
We are also subject to numerous similar and other laws and regulations outside the United States, including
but not limited to laws and regulations governing food safety, occupational health and safety, competition,
anti-corruption and data privacy. In many jurisdictions, compliance with competition laws is of special
importance to us due to our competitive position in those jurisdictions, as is compliance with anti-corruption
laws. We rely on legal and operational compliance programs, as well as in-house and outside counsel, to
guide our businesses in complying with the laws and regulations around the world that apply to our businesses.
Certain jurisdictions in which our products are sold have either imposed, or are considering imposing, taxes,
labeling requirements or other limitations on, or regulations pertaining to, the sale of certain of our products,
ingredients or substances contained in, or attributes of, our products or commodities used in the production
of our products, including certain of our products that contain added sugars, sodium or saturated fat, exceed
a specified caloric content, or include specified ingredients such as caffeine. For example, taxes on sugar-
sweetened beverages were imposed in Mexico and Berkeley, California; the U.S. Food and Drug
Administration is considering requiring nutrition labels to include information about added sugars; and Brazil
and Vermont have enacted legislation requiring labeling of products that contain genetically modified