Examining the landscape of companies active in the water debate, The Coca-Cola Company (TCCC)–the world’s largest beverage group with more than 500 sparkling and still brands–stands out. You might say this is only natural given its vulnerability to water quality and quantity issues. And we have seen TCCC dragged royally through the streets in Kerala, India on the accusation that its local subsidiary, Hindustan Coca-Cola Beverages Pvt. Ltd, had polluted and overexploited groundwater supplies.
But what is perhaps remarkable and deserving of credit is that since the crisis in India, TCCC has jumped to the head of the pack leading with its “Reduce, Recycle, Replenish” campaign– a pledge made in 2008 that puts TCCC on the path towards “water neutrality”. TCCC is currently the only company to aim for “water neutrality”– a goal that involves returning to communities and nature the amount of water equivalent to what is used in TCCC’s beverages and their production. For more on this term, click here .
At this year’s Stockholm Water Week, TCCC in collaboration with The Nature Conservancy, an international environmental group, released a water footprint report, which documented three pilot studies that were conducted on Coca-Cola products and ingredients. Its findings though relevant were unsurprising: The farms and not the factories carried the heaviest footprint. Building on this, TCCC’s initial efforts will be focused on the sustainable sourcing of sugarcane, oranges and corn.
Greg Koch, who leads the company’s global water stewardship team, speaks to China Water Risk, on the challenges of managing TCCC’s water use globally and in China.
CWR:How do you see the water crisis affecting TCCC’s core business globally?
Greg Koch: Water is the main ingredient in all of TCCC’s products, and essential to our operations and the well-being of the communities and environments where we operate. Our commitment to protecting and managing water resources is driven by the very real and growing vulnerability of the fresh water that sustains us.
What is critical to understand from the above is threefold: (1) we are non-diversified, making only beverages, so our use of water is immediately understood by consumers. Unlike, perhaps, the semiconductor, paper, automobile industries, etc. whose embedded water is not seen and may not be understood; (2) in addition to water in our products and their manufacture, most of our ingredients require water as they are agriculturally based–sweeteners, teas, juices, etc. and (3) we are mainly non-export, meaning each plant serves the community around it.
As such, the health of our bottling plants and our business is wholly dependent on the health and sustainability of the community that we are a part of, the ecosystems and resources we share, and most especially, on water.
CWR: Analyzing numbers: what does 300 billion liters used annually in beverages and production mean?
Greg: This equals less than half of the water used by the city of Atlanta, Georgia, here in the USA where we are headquartered. Keep in mind that our use is spread out over 900+ bottling plants across the world. Though we are perceived to be a big water user, we are most likely a relatively small water user on a local basis. The largest water users in most places will be agriculture followed by energy production (cooling water), and petrochemical refining and manufacture.
CWR: How valuable is a water footprint?
Greg: Water footprints, like carbon footprints, need to be conducted for specific products. Water footprinting is a relatively new concept. TCCC helped form the Water Footprint Network and conducted one of the first product water footprints in the industry.
The water footprint of a 0.5-liter bottle of Coca-Cola produced in The Netherlands is approximately 35 liters. Most of that water is embedded in the sweetener from sugar beets– the water used to grow the beet and refine the sugar. Water footprints are a starting point. They tell you how much water is used but, more importantly, where that water is being used. From there, you can assess the impacts of water use, such as in the sugar beet farm.
But having a water footprint, or using water, is not a bad thing in and of itself. Life requires water. It is important to look for efficiencies in water use (and reduce water footprints where feasible), but the fact that one uses water is not an inherently environmentally unsustainable action.
CWR: What is your view on the water risks in China?
Greg: The growth and sustainability of any society is fundamentally dependent on water– enough, clean water when and where it is needed, for humans, ecosystems, agriculture and industry. China is obviously growing fast so it is imperative that water resources be planned for the near- and long-term and we see this happening in China. The challenges, in China and elsewhere, are not just enough water in terms of volume but also infrastructure to deliver water where it is needed, water storage, water quality, pricing, wastewater treatment, allocation, and policy.
CWR: How does TCCC manage these water related risks?
Greg: In 2005, we conducted global water risk assessments to gain a better understanding of the potential water risks facing our business and the impacts of these risks to local communities and ecosystems. In 2009, we updated our risk assessments and made a system-wide requirement that all Coca-Cola bottling plants determine the source of their process water and that of the surrounding community, assess the vulnerabilities to the quality and quantity of this water, and work with civil society and governments to develop and implement a source water protection plan. All plants are required to complete this process and be actively implementing their protection plan by 2013.
These source water protection plans address critical water challenges at a watershed level, from hydrological vulnerabilities to local government capacity. A better understanding of threats to local watersheds will increasingly drive community-water projects to more effectively protect and preserve water resources where there is the greatest need.
CWR: What are the challenges with managing the water issues of TCCC’s supply chain?
Greg: As confirmed in our recent report, many environmental impacts, especially water, occur at the farm level. A key challenge is the influence and control one has of a supply chain. However, for us and many other industries, our relationship is with a supplier who may purchase ingredients on an open, global market and be several steps from actual crop production. This does not mean that one does not act but it does present a challenge.
CWR:Who are the critical stakeholders in China that TCCC engages with?
Greg: In China, as elsewhere, stakeholders include the government, civil society, NGOs, communities, and other business including agribusiness. To help our business engage with stakeholders on water issues, we teamed with the Environmental Law Institute to develop a guidance document whose key elements include: stakeholder identification; engaging with stakeholders; information access and dissemination; stakeholder forums; and monitoring and evaluation of stakeholder engagement.
CWR: Are the investments to address water primarily a cost? Or do you see return on your investments?
Greg: As a company, we recognize that sustainable communities lead to a sustainable business, and nowhere is this more true than in the challenge of protecting freshwater resources. Water risks impact community, nature and our business. Water stewardship, for us, is aligning a positive, social engagement with a business imperative.