Ambitious Sustainability Goals at Coca-Cola
Coca-Cola’s commitment to ambitious sustainability goals drive them to improve.
The food and beverage industry could be the most exposed to the impacts of climate change. Changes in weather patterns, water availability, and growing conditions for crops may have long term consequences on the business and supply chain of the companies in this industry. Currently, more than 2 billion people live in water stressed areas. That figure is projected to rise significantly over time due to population growth and climate change [1]. Executives at The Coca-Cola Company have taken notice. Water is the main ingredient in most of their products, making water quality and availability critical to the business [2]. Coca-Cola is working to be a more responsible global citizen by sustainably sourcing agricultural ingredients, reducing its carbon footprint, recovering and recycling bottles and cans, and improving its water-use efficiency [3].
Coca-Cola is seriously considering ways to reduce their greenhouse gas emissions across the entire value chain: ingredient sourcing, packaging, manufacturing, distribution/delivery, and refrigeration. These efforts are measured in the “drink in your hand” goal, in which the company set out to reduce its carbon footprint of the Coca-Cola “drink in your hand” by 25% by the year 2020 against the 2010 baseline [4]. And, they have made great progress! In 2016, Coca-Cola was able to reduce the carbon footprint embedded in a drink by 14% below 2010 levels [4]. To achieve this progress, the company has employed several initiatives in the short-term.
Contributing to the 2016 progress was an innovation in packaging [4]. Polyethylene terephthalate (PET) is a strong, lightweight plastic that many food and beverage companies use for the packaging of its soft drinks, juices, and water. PET plastic is completely recyclable; however, its raw materials are derived from crude oil and natural gas [5]. Coca-Cola created the PlantBottle packaging, replacing one of the fossil based ingredients in PET plastic with renewable materials made from plants. Eight percent of Coca-Cola’s global packaging volume is now made with the PlantBottle material, which allows them to tout themselves as the world’s largest consumer of bioplastics [6].
An innovation in refrigeration has also contributed to 2016 progress. Hydrofluorocarbons (HFCs) are organic compounds that are primarily used as refrigerants. HFCs are powerful greenhouse gases with a much higher global warming potential than carbon dioxide [7]. Coca-Cola found that refrigeration was the biggest source of the value chain’s carbon footprint [8]. In 2016 alone, the company introduced over 623,000 units of HFC-free coolers, fountains, and vending machines into the marketplace. This figure contributes to the 2.5 million pieces of HFC-free refrigeration equipment that have already been introduced since 2009 [4].
Long term, Coca-Cola has set out to advance their renewable energy program. Executives have provided local teams with a tool called the Clean Energy Toolkit. This tool will guide local teams through the decision-making process on potential investments in renewable energy. At year end of 2016, Coca-Cola was actively pursuing 50 renewable energy projects in addition to the 81 projects that were already operational [4].
Another example of Coca-Cola’s long-term strategy is the community water projects. Coca-Cola is replenishing 100% of the water used in their finished beverages back to nature and the communities in which they operate. In 2016, they replenished 221 billion liters of water through organizations such as the World Wildlife Fund, Water & Sanitation for the Urban Poor, and the United Nations Development Programme [2].
Lastly, Coca-Cola recognizes that the greenhouse gas emissions of the distribution/delivery trucking fleet accounts for about 5%-10% of the value chain carbon footprint. The company plans to add delivery trucks powered with alternative fuels to the fleet to reduce the carbon footprint in the distribution/delivery value chain [9].
In June 2015, Coca-Cola released a new innovation on the PlantBottle packaging, replacing both of the fossil based ingredients in PET plastic with 100% renewable plant materials. This new iteration of the PlantBottle has not been commercialized yet [6]. My recommendation to Coca-Cola’s management is to begin using this new packaging as soon as possible. This industry leading innovation will make Coca-Cola’s stance on sustainability clear in the food and beverage industry.
Although Coca-Cola has made much progress, they have also experienced some setbacks. In developed countries, 2016 emissions levels from manufacturing operations were 21% below the 2004 baseline. However, the total emissions levels were 13% higher than the 2004 baseline, suggesting that there is still much work to do in developing countries [4]. Is the Coca-Cola “drink in your hand” goal too ambitious to reach by 2020?
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Sources:
[1] United Nations Environmental Programme, GEO-5 for Business: Impacts of a Changing Environment on the Corporate Sector, http://web.unep.org/geo/about/sites/unep.org.geo/files/documents/geo5_for_business.pdf, accessed Nov. 2017
[2] The Coca-Cola Company, 2016 Sustainability Report: Water Stewardship, http://www.coca-colacompany.com/stories/2016-water-stewardship, accessed Nov. 2017
[3] The Coca-Cola Company, 2016 Sustainability Goals: Progress Update, http://www.coca-colacompany.com/stories/2020-sustainability-goals, accessed Nov. 2017
[4] The Coca-Cola Company, 2016 Sustainability Goals: Climate Protection, http://www.coca-colacompany.com/stories/2016-climate-protection, accessed Nov. 2017
[5] The PET Resin Association, An Introduction to PET, http://petresin.org/news_introtopet.asp, accessed Nov. 2017
[6] The Coca-Cola Company, More Sustainable Packaging: What We’re Doing and How We’re Doing It, http://www.coca-colacompany.com/stories/our-progress-what-were-doing-and-how-were-doing-it, accessed Nov. 2017
[7] Encyclopedia Brittanica, Hydroflurocarbon (HFC), https://www.britannica.com/science/hydrofluorocarbon, accessed Nov. 2017
[8] The Coca-Cola Company, Cooling Equipment: Pushing Forward with HFC-Free, http://www.coca-colacompany.com/stories/cooling-equipment-pushing-forward-with-hfc-free, accessed Nov. 2017
[9] The Coca-Cola Company, An Ambitious Goal: Reducing Carbon in Our Value Chain, www.coca-colacompany.com/stories/an-ambitious-goal-reducing-carbon-in-our-value-chain, accessed Nov. 2017
Kenya, you did a great job summarizing all the steps Coca-Cola is taking to make their supply chain more sustainable and lessen its impact on climate change. However, I have to take issue with your recommendation that the company begin using the new iteration of PlantBottle packaging as soon as possible. I assume that Coca-Cola hasn’t yet taken this step because this new, greener packaging is still significantly more expensive than the current packaging, in which only one of the fossil-based ingredients in PET plastic has been replaced by plant-based materials. I’m skeptical that Coca-Cola’s core consumers are willing to pay more for a greener bottle, especially given how competitive the soda space is, so it seems to me that Coca-Cola has a handful of more realistic options at its disposal. The company could wait until the next-generation PlantBottle costs reach parity with its current packaging, it could push for tax incentives in some markets that help offset the cost of this expensive packaging, or it could launch a new marketing campaign around the greener packaging to try to build demand for a more sustainable product. I’m skeptical of the last option, which means we could be in for a long wait before Coca-Cola’s bottles are truly “green.”
Kenya, similar to Mike, I think there are some reasons why Coca-Cola has not immediately commercialized its new PlantBottle packaging. On top of the costs, packaging is one area that actually impacts the consumer’s experience with the product. While it is not clear, the new packaging could have the potential to change how the consumer interacts with the product (e.g., it could be more “flimsy”, it could require a different bottle shape, etc.) and have negative consequences to topline if the transition is not executed correctly. I think a good example of commercializing too fast is PepsiCo’s compostable Sunchips packaging (https://www.greenbiz.com/blog/2014/03/18/pepsis-biodegradable-backlash-snack-bag-was-too-noisy). Even though PepsiCo was trying to shift towards more sustainable packaging, consumers ultimately rejected the packaging because it was “too loud.” In the end, PepsiCo had to re-design a new bag, likely costing the company more money because it did not get it right the first time around. Thus, while Mike is likely right on the incremental costs, it could also be the case that Coca-Cola is trying to understand all of the consumer implications to new packaging.
Thank you, Kenya, for writing this piece! You’ve highlighted several ways that one of the most famous food and beverage brands in the world is looking to make the world a safer place by being more conscious about its business practices. My hope is Coca-Cola will set an example for smaller or emerging brands and take similar actions as Coca-Cola early on if they have not done so already; hopefully these practices will transcend industries as we have seen in several case throughout the semester, most notably in the Ikea case. The work that Coca-Cola is doing reminds me of what Ikea is doing in that it is absolutely possible to make the world a better place and still be profitable. While I agree with Mike that there may be some incremental or unforeseeable costs associated with being a first mover in this space, I believe the benefits outweigh the costs for two primary reasons: first, according to a report by nonprofit CDP, there is evidence to suggest that there is a strong link between a business’ actions to combat climate change and the business’ profitability. Secondly, by investing in these learning early on, Coca-Cola demonstrates its commitment to making the world a better place to its consumers; if the company waits until PlantBottle costs reach parity, it may show that Coca-Cola is not genuinely interested in being a leader in innovative sustainability (which I believe serves as a significant competitive advantage).
https://www.theguardian.com/sustainable-business/2014/sep/23/business-companies-profit-cdp-report-climate-change-sustainability
Hey Kenya, I love that Coca-cola is setting sustainability goals – but rather than wonder whether they are too ambitious like you asked, I was wondering if they were enough. It seemed to me like they should try for loftier goals than for 25% reduction of the “drink in your hand” carbon footprint over the course of 10 years. Other large companies that we’ve studied, like Ikea, have had much more ambitious sustainability goals.
I’m left wondering if Coca-Cola is actually trying to have an impact on the environment or if this is just a marketing / CSR strategy. One of my biggest questions is why only 8% of their drinks are made out of the “Plantbottle” material. It makes me very skeptical about when and how pervasively they will actually implement their new “Plantbottle” design. I’m also wondering what it actual means to “replenish” the water sources that they use. Also – just wanted to say that I think your article is very well-written and well-sourced. It is not your post that I’m skeptical about, but Coca-colas motivations / intentions.
Kenya, thank you for sharing this incredible article.
In my last job I had a project with one of the largest plastic manufacturers in Latin America and during one of our meetings he told me that companies don´t adopt these new technologies because the costs associated with implementation is really high. Other options do exist, but most of the time they require a significant investment to be applied. Considering Coca-cola´s size, I wonder if they would be willing to make this huge capital investment taking into account solely the benefits for the environment. As Landen mentioned, changing the material might change the whole manufacturing process and how the consumer interacts with the product. This same plastic manufacturer argued that they had developed a bioplastic made from corn that had very similar mechanical/chemical behavior compared to a standard carbon-based plastic, but companies had never adopted the technology because it was a lot more expensive and the final value couldn´t be perceived by customers. I would like to see companies like Coca-Cola more engaged in initiatives focused on removing the trash and pollutions caused by their activities, specially the dissemination of PET bottles in oceans and rivers.
Thiago