Pepsi 2015 Annual Report Download - page 41

Table of Contents
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The increasing concern over climate change may result in new or increased regional, federal and/or global
legal and regulatory requirements to reduce or mitigate the effects of greenhouse gases, or to limit or impose
additional costs on commercial water use due to local water scarcity concerns. In the event that such regulation
is more stringent than current regulatory obligations or the measures that we are currently undertaking to
monitor and improve our energy efficiency and water conservation, we may experience disruptions in, or
significant increases in our costs of, operation and delivery and we may be required to make additional
investments in facilities and equipment. In particular, increasing regulation of fuel emissions could
substantially increase the cost of energy, including fuel, required to operate our facilities or transport and
distribute our products, thereby substantially increasing the distribution and supply chain costs associated
with our products. As a result, the effects of climate change or water scarcity could negatively affect our
business and operations.
In addition, any perception (whether or not valid) of our failure to effectively respond to new, or changes in,
legal or regulatory requirements concerning climate change or water scarcity could result in adverse publicity
and could adversely affect our business, financial condition or results of operations.
There is also increased public focus, including by governmental and non-governmental organizations, on
these and other environmental sustainability matters, including deforestation and land use. Our reputation
could be damaged if we or others in our industry do not act, or are perceived not to act, responsibly with
respect to our impact on the environment.
A portion of our workforce belongs to unions. Failure to successfully negotiate collective bargaining
agreements, or strikes or work stoppages, could cause our business to suffer.
Many of our employees are covered by collective bargaining agreements and other employees may seek to
be covered by collective bargaining agreements. Strikes or work stoppages or other business interruptions
could occur if we are unable to renew these agreements on satisfactory terms or enter into new agreements
on satisfactory terms, which could impair manufacturing and distribution of our products or result in a loss
of sales, which could adversely impact our business, financial condition or results of operations. The terms
and conditions of existing, renegotiated or new collective bargaining agreements could also increase our
costs or otherwise affect our ability to fully implement future operational changes to enhance our efficiency
or to adapt to changing business needs or strategy.
If we are not able to adequately protect our intellectual property rights or if we are found to infringe the
intellectual property rights of others, the value of our products or brands could be reduced, which could
have an adverse impact on our business, financial condition or results of operations.
We possess intellectual property rights that are important to our business. These intellectual property rights
include ingredient formulas, trademarks, copyrights, patents, business processes and other trade secrets that
are important to our business and relate to a variety of our products, their packaging, the processes for their
production and the design and operation of various equipment used in our businesses. We protect our
intellectual property rights globally through a combination of trademark, copyright, patent and trade secret
laws, third-party assignment and nondisclosure agreements and monitoring of third-party misuses of our
intellectual property. If we fail to obtain or adequately protect our ingredient formulas, trademarks, copyrights,
patents, business processes and other trade secrets, or if there is a change in law that limits or removes the
current legal protections of our intellectual property, the value of our products and brands could be reduced
and there could be an adverse impact on our business, financial condition or results of operations. In addition,
if, in the course of developing new products or improving the quality of existing products, we are found to
have infringed the intellectual property rights of others, directly or indirectly, such finding could have an
adverse impact on our business, financial condition or results of operations and may limit our ability to
introduce new products or improve the quality of existing products.