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Coca-Cola Tries to Turn Tide of Water Risk
Company looking ahead as availability could lessen
By Jeremiah McWilliams
The Atlanta Journal-Constitution
November 18, 2010
Three sentences inserted into Coca-Cola Co.'s 113-page annual report
carried a prescient warning.
"Water represents another issue that will increasingly require our
company's attention and collaboration with the beverage industry,"
the 2004 document stated. "Water is the main ingredient in every product
our industry offers. It is also a limited resource facing unprecedented
challenges from over-exploitation, increasing pollution and poor management."
The warning was not just legal boilerplate. Water availability is
potentially one of Coca-Cola's most pressing risks. Two and a half
years into Muhtar Kent's term as CEO, water has become one of his
signature issues.
Water "is essential to the future viability of The Coca-Cola Co. and
our system of bottling partners around the world," Kent said in a
speech last year in Istanbul.
But critics say Coke needs to stop causing water problems before it
starts offering solutions. Earlier this decade, a bitter dispute erupted
in India over Coke's use of water, in part because of the sheer volume
of water the company requires to make its products. In a country where
water already is in short supply, the years-old controversy has not
entirely gone away, as vociferous critics say Coke's water campaigns
are a thinly veiled attempt to distract the public from ongoing problems.
From southern Europe to parts of India and China, Mexico and the U.S.,
many of Coca-Cola's territories are facing or could face water stress.
According to the United Nations, almost 900 million people worldwide
to not have access to clean water. In a decade, two-thirds of the
projected population of 8 billion could live in water-stressed areas.
"Let's put Coca-Cola to one side," Kent said in an interview with
the AJC. "Water faces serious challenges around the world."
In one $20 million project, Coke is working with the World Wildlife
Fund to conserve seven of the world's biggest freshwater river basins,
including the Yangtze in China, the Mekong in southeast Asia, the
Rio Grande and Rio Bravo, and the Danube in Europe.
"I see our role not only as what we do for Coca-Cola, but leading
the way to raise awareness in the world," Kent said. "We're not doing
this to impact consumer behavior. We're doing this to make sure we
can be a meaningful part of this debate."
Coca-Cola uses 309 billion liters of water annually to produce its
beverages. That's about what Atlanta uses in five months, according
to the city's Department of Watershed Management.
In 2008, the company said, Coca-Cola used 2.43 liters of water to
produce an average one-liter beverage. One liter goes into the beverage
itself, and 1.43 liters are used for manufacturing processes such
as rinsing, cleaning and cooling. The company says its global system
of about 1,000 bottling plants is on track to improve water efficiency
by 20 percent between 2004 and 2012.
According to a goal announced by former CEO Neville Isdell in June
2007, Coca-Cola by 2020 will offset the water it uses in production
by using water more efficiently, returning clean water to the environment,
protecting watersheds, harvesting rain water and helping farmers use
water more efficiently.
"Overnight, that announcement jolted a lot companies that had not
been thinking about it yet," said Linda Hwang, manager of research
and innovation at corporate responsibility group BSR.
Kent said Coca-Cola's role as the world's best-recognized brand should
be to spur businesses, governments and non-governmental organizations
to come together and collaborate on difficult water issues.
"We are a communicating organization," he said.
But the controversy over water refuses to go away in India, one of
Coke's most important developing markets.
A panel convened this year by the government of the state of Kerala
recommended that Coca-Cola be held liable for at least $47 million
in damages for alleged pollution from a local bottling plant. Coca-Cola
stopped production at the plant in 2004 as protests and boycotts raged
over pollution and groundwater depletion.
Coca-Cola says the committee appears to have been set up with a pre-determined
conclusion. It argues that scientific studies have shown that Coca-Cola's
bottler did not cause local watershed problems.
"This is indicative of the arrogance of the company as it operates
in India with impunity," said Amit Srivastava of the India Resource
Center. "If Coca-Cola does not agree with the rules and decisions
of such a body [the committee], it is time for the company to get
out of India. It cannot operate on its own rules and regulations,
and dismiss the rules and regulations of the state."
Meanwhile, critics accuse Coca-Cola of exacerbating water stress in
the village of Kaladera. The area is water-scarce and drought-prone,
according to a January 2008 report by the Energy and Resources Institute.
Kaladera's groundwater levels fell 17.3 meters in the decade leading
up to 2009, according to the state government of Rajasthan. The pre-monsoon
water levels were more than 30 meters below ground level in 2009.
Coca-Cola says it has reduced its water usage ratio in Kaladera by
more than 55 percent between 2004 and 2009, cutting its water use
from 4.7 liters to 2.11 liters of water for each liter of finished
beverage.
The company has launched initiatives to replenish groundwater by capturing
rainfall, and says groundwater depletion would have been even worse
otherwise. Coke says it uses less than 1 percent of the area's available
water.
Still, "Coca-Cola has no business operating a bottling plant in such
dire conditions and we are not sure why they opened the factory in
the first place," said Srivastava.
Although it disputes many of the accusations, Coca-Cola says it has
set ambitious goals to improve water usage around the world. Here
are some of the key changes.
Agriculture
Agriculture accounts for about 65 percent of freshwater usage around
the world, according to UNESCO. "When we talk about challenges related
to water availability, if we don't deal with agriculture, we're missing
a huge segment," said Denise Knight, water and sustainable agriculture
director at Coca-Cola.
Coca-Cola buys vast quantities of sugar cane, a notoriously thirsty
crop that serves as the raw ingredient for sweetener in many of its
drinks. Sugar cane production occurs in tropical nations including
Brazil, India, Thailand and El Salvador, where water stress can be
serious.
The company says it plans to help cane farmers use water more efficiently.
The acreage in a pilot project aimed at cutting nitrogen runoff from
Australian farms will grow by 150 percent.
Water recycling
By the end of this year, Coca-Cola wanted to return all water it uses
for manufacturing processes to the environment at a level that supports
aquatic life and agriculture.
The company will fall a bit short, with 96 or 97 percent of its plants
abiding by the standards by year-end. Coca-Cola expects its lagging
plants in rough places like Albania and the Congo to come into compliance
next year. Coca-Cola says its plants abide by local regulations, and
that the 3 or 4 percent non-compliance rate refers to the internal
standards, which are tougher than government regulations in some areas.
"All of our plants have started projects," said Greg Koch, Coca-Cola's
director of global water stewardship. "They are all under way, and
it's a matter of delays and timing."
Coca-Cola is also trying to reduce water use. Its bottling plants
have instituted relatively simple fixes like plugging leaks and turning
off the water to bottle rinsers when the bottling line is shut down.
Some Coke plants also use waste water, once it's been filtered and
cleaned, to rinse bottles, irrigate vegetation, wash trucks and floors,
and cool refrigeration systems.
In many cases, Coca-Cola's bottlers are coming up with improvements,
rather than just implementing directives from North Avenue. "That
is something I'm both personally and professionally proud of -- the
level of collaboration with the bottlers," said Koch. "We have done
things almost exclusively without edict."
Water replenishment
In addition to its work around freshwater basins, the companyhas committed
to spending $30 million by 2015 to provide access to safe drinking
water in Africa. The Replenish Africa Initiative aims to provide at
least two million Africans with clean water and sanitation.
According to the World Health Organization, more than 300 million
Africans lack access to safe drinking water, and millions die each
year from waterborne illnesses. Coca-Cola's cash will go toward technology
such as rainwater harvesting, hand pumps, pipe systems and chlorine
treatment systems.
Kent said bringing clean water to African towns is a crucial step
in spurring economic development and relates to Coca-Cola's goal of
doubling the number of women in its global supply chain by 2020. Since
rural African women often have to carry water for miles, the introduction
of water capture-technologies will free them to work on small businesses
such as micro-distribution of Coke products, he said.
"It's all connected back to the water," Kent said. "You bring the
water, you emancipate the women."
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