Coke Must Boost Efforts to Improve Water Supplies in India, Report Says
Wall Street Journal
January 14, 2008

ATLANTA -- A new report assessing Coca-Cola Co.'s water-management practices in India says the beverage giant is generally in compliance with government standards, but concludes that it needs to do more to help improve local water supplies, particularly in areas suffering from chronic shortages.

The report also said that testing failed to detect pesticides in the water at six Coke bottling plants, despite charges from some groups that Coke drinks have been found to contain levels of pesticides exceeding government standards.

The report, released Monday in New Delhi by the Energy and Resources Institute, an organization that researches and promotes sustainable development, comes as activists and student groups are accusing Coke of draining water from poor communities and urging colleges to ban the company's products from their campuses.

The TERI report is the result of an inquiry launched by the University of Michigan in 2004 after students there filed a complaint arguing that the company's water management practices violated the university's code of conduct for vendors.

After the university halted sales of Coke products, it agreed together with Coke to commission TERI to conduct a third-party assessment of Coke's practices. Coke paid for the $2 million, 16-month study, and communicated with TERI through an outside facilitator.

TERI conducted its assessment of Coke's water management practices through testing at six of the company's approximately 54 bottling plants in India. While the study found the plants to be complying overall with government regulations, it said Coke needs to take overall community water needs more fully into account when deciding where to locate and operate bottling plants.

For example, a watershed in Kaladera, where one of the six plants is located, has been so "overexploited" that Coke should consider either transporting water from another aquifer to that plant, using stored water, relocating the plant, or shutting it down, the report said.

Coke "should try to be net water positive with respect to its own operations from a watershed perspective, especially in stressed areas," the report concluded.

TERI also recommended that Coke improve its standards for treating effluent from its plants, after testing at some plants detected excess levels of some bacteria and other pollutants.

Coke said it is making changes to its practices to address the report's concerns. "We take this report very seriously," said Atul Singh, president of Coca-Cola's India operations. "We need to go beyond compliance and continuously improve our management practices and standards."

In a Jan. 11 letter to the University of Michigan's executive vice president and chief financial officer, Timothy P. Slottow, Coke said it is improving its wastewater treatment standards, setting global guidelines for plants operating in areas with chronic water shortages, investing $10 million to support sustainable development in India, and plans to reach a "zero water balance" in India by 2009.

The India Resource Center, a critic of Coke's water use in India, has questioned whether the TERI assessment can be considered independent, because the organization once accepted funds from Coke. Mr. Singh said Coke donations have been small and ceased once the assessment began.

Coke has invested more than $1 billion in India over the past decade, and recently said it plans to invest another $250 million over the next three years.

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