Doing Business | Innovations

September 05, 2016

Coca-Cola says it's the first Fortune 500 company to 'balance' its water footprint

Coca-Cola Company says it has fully "replenished" all the water it uses globally to make billions of bottles of soft drinks, juices and purified H20.
Coca-Cola Company says it has fully "replenished" all the water it uses globally

Coca-Cola Company says it has fully "replenished" all the water it uses globally

The Atlanta-based beverage giant recently estimated it had returned roughly 192 billion liters of water to the communities and watersheds near hundreds of its bottling plants in 2015 — or about 115 percent of all the water used in Coca-Cola's beverages last year.

It did so by treating wastewater from its bottling facilities, building clean drinking water projects in impoverished areas, planting trees and native grasses to catch rainfall, and other initiatives to help offset Coca-Cola's massive water footprint.

"Water is the lifeblood of every single community, and for us, it's also our No. 1 most critical ingredient," Bea Perez, Coca-Cola's chief sustainability officer, told Mashable by phone last week from the World Water Week conference in Stockholm, Sweden.

Coca-Cola said it is the first Fortune 500 company to reach such an aggressive target for replenishing its water use.

Coca-Cola's achievement is part of a slow but growing push by food and beverage companies — steered largely by environmental groups — to make sure that ample water supplies still exist as climate change and population growth threaten the world's freshwater resources.

One of Coke's largest competitors, PepsiCo Inc., said it is making similar investments to protect the watersheds where it produces snacks and beverages and to provide safe drinking water for millions of people.

"PepsiCo believes that the ability to flourish long-term ultimately depends on the health of the communities we operate in and the natural resources we rely on," a spokesperson told Mashable in an email.

The United Nations estimates that withdrawals of freshwater supplies rose by at least 1 percent per year in the past three decades.

If communities and companies don't do more to limit their water usage, withdrawals could surge by a staggering 55 percent by 2050, the U.N.'s water agency said in a 2014 report. More than 40 percent of the global population would live in areas of severe water stress if that happens.

Consumer demand threatens water supplies

Higher living standards and rising demand for consumer goods — from Cokes and packaged foods to cars and mass-produced meat — are major reasons why the world is guzzling more freshwater, according to the U.N.

So manufacturers face a dilemma: They can meet the growing demand by expanding operations and producing more goods, but if they take a business-as-usual approach, they might deplete local freshwater resources — a risky business move and a surefire way to tarnish their brands.

Coca-Cola has experienced its own such debacle in India, where farmers and activists have voiced repeated concerns that the company's bottling plants could erode groundwater levels, undermine local agriculture and pollute neighboring water bodies.

PepsiCo was similarly accused of depleting groundwater and dumping pesticides into waterways near its bottling facilities in India, charges the company has refuted.

India is the world's second-most populous country and represents a massive market for snack and drink makers like Coca-Cola and PepsiCo. But the nation has suffered devastating droughts and deadly heat waves in recent years, putting an unprecedented strain on water supplies and boosting competition for the scare resources.

Coca-Cola in February closed a factory in the northern Indian city of Kaladera, citing a lack of demand. However, the plant had faced a decade of local opposition before its closure. The beverage giant last year shelved plans for a proposed $73 million plant in the southern state of Tamil Nadu, and in 2014, it dropped plans to expand an existing facility in the northern city of Uttar Pradesh.

Perez said a fight involving another one of Coca-Cola's plants in India gave the company a "wake-up call" that helped jumpstart its campaign to curb water consumption and invest in conservation and clean drinking water projects.

The Kerala state government accused the Indian unit of Coca-Cola of depleting groundwater and dumping toxic waste at its bottling plant in Palakkad around a decade ago. In 2010, state officials asked the unit to pay $47 million in compensation. Coca-Cola denied the allegations and was later cleared of wrongdoing.

"Although we were found not guilty of those allegations, our wake-up call was truly that that didn't matter, because the communities [in India] were in need," Perez recalled. "They turned to Coca-Cola to say, 'Well how are you going to help our community?'"

How Coca-Cola "replenishes" water

In 2007, Coca-Cola set a goal to take the equivalent amount of water used in its global sales volume and "return" the same amount back — or more — to nature and communities.

The company then approached The Nature Conservancy, a major U.S. environmental organization, and the water-focused consulting firm LimnoTech to figure out how to reach that target. The group created methodologies for calculating the benefits of each water conservation project, which were subject to a scientific peer review and are annually evaluated for accuracy.

"The goal is tied to our sales volume, so the more we sell — whether we grow our business organically or by acquisition — the more we have to do," Greg Koch, Coca-Cola's senior director of global water stewardship, told Mashable via phone..

So far, Coca-Cola has spent around $2 billion to develop nearly 250 community water projects in dozens of countries, Perez said.

In China, for instance, the soft drink behemoth is partnering with the World Wildlife Fund to restore ecosystems along the Yangtze River, the world's third-longest river and a severely polluted waterway. Pilot projects to improve flood protections, conserve wetlands and boost water conservation in nearby industrial parks helped replenish over 10 billion liters of water so far, Perez said.

In the San Francisco Bay Area, Coca-Cola is working with the U.S. Forest Service and other partners to prevent snowmelt from escaping into the ocean.

Because of overgrazing and agricultural use in the East Bay, snowmelt often slides down the mountains before it can be stored downstream near towns like Oakland and Berkeley. By planting willow trees and restructuring the landscape, the group is helping to capture snowmelt in the spring and summer to ensure a more steady supply of freshwater for residents in the area.

Those projects don't immediately produce liters of water that can instantly offset Coca-Cola's water consumption.

Instead, they create the infrastructure or systems for projects that will steadily replenish those volumes of water over time, said Hugo Contreras, who leads The Nature Conservancy's Latin American unit for water security and works on the partnership with Coca-Cola.

"All natural processes take a long time to consolidate," he said by phone last week from Stockholm, where he was also attending World Water Week.

Calculating the benefits of those projects is also an evolving process.

Contreras said when his organization and Coca-Cola first began working together on the replenishment initiative, they didn't have a proper way to collect data from the watersheds. Now they have protocols for measuring the projects' benefits based on three criteria: improving water quality, refilling underground aquifers and boosting flows of water into rivers and streams.

While the teams can measure benefits at the micro level, they're still figuring out how best to analyze the benefits to the entire watershed. "We have done some analysis so far, but not to the extent we envision should be done," Contreras said.

More companies could do this

Coca-Cola's push to essentially reimburse the planet for the water it uses has inspired other companies to follow suit.

Contreras said a handful of large corporations have approached The Nature Conservancy about launching programs like Coca-Cola's replenishment initiative, although Contreras declined to name those firms while talks are still underway.

"The work that Coca-Cola has been doing, and the ambition they have shown, has started to move other peers in the industry," Contreras said.

PepsiCo said it already has similar programs in the works.

In 2009, the New York-based manufacturer became the first beverage business in India to return more water locally than it used through agricultural initiatives, water efficiency in manufacturing and replenishing water supplies in local communities. Deloitte, the global consulting firm, independently verified that statement.

"The company has been 'water positive' since then [in India]," the PepsiCo spokesperson said by email.

Text by Mashable

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