By 2030, it is estimated that water demand will outpace supply by up to 40% . Water is the life source of Coca-Cola (“Coke”), the largest beverage company in the world. From 2003, when Coke first acknowledged that water was a “limited resource facing unprecedented challenges from over-exploitation, increasing pollution and poor management” to 2016, when Coke announced it was the “first Fortune 500 Company to replenish all the water it uses globally”, the company took great strides to create a sustainable water supply source . Despite emphasizing corporate responsibility, debate rages over the ethical practices of the company.
Water Stewardship Program
In 2007, Coke began its Water Stewardship Program with a goal of creating a “water-sustainable” business. The company’s current program is organized around four targets: water-use efficiency, managing wastewater, replenishment, and mitigating risk .
Water-Use Efficiency: Since 2004, when Coke was using 2.7 liters of water per liter of product, the company has increased its water-use efficiency by 27% to 1.96 liters. By 2020, the company plans to increase its current efficiency by 13% to reach a goal of 1.7 liters. Water-use efficiency is not limited by the company’s 2020 goal. The company currently operates facilities in North America, Europe and South Pacific bottling at or below the 2020 goal with the company aiming to continuously increase efficiencies across all facilities .
Managing Wastewater: Treating waste-water used in manufacturing Coke products has become a standard operating requirement. In 2015, the company transitioned wastewater management into a performance-based model to accelerate quality and efficiency improvements . Today, 795 out the company’s 804 facilities have a wastewater treatment plant, with five out of the nine non-conforming sites in the planning/construction phase of such treatment facilities .
Replenishment: In 2009, Coke began taking steps to replenish the water it used in its products . The company met is 2020 goal of 100% replenishment five years early in 2015. Coke partners with governments, civil societies and the private sector to run proximately 250 community projects in 71 countries. These projects focus on improving access to safe water and sanitation, conserving/restoring water quantity or quality of watersheds, and providing water for productive use through rainwater harvesting or water reuse for irrigation. In 2016, the company surpassed its 100% replenish rate, returning 115% of the water used in Coke’s products in 2015 . Coke plans to meet or exceed its 100% replenishment goal through sustaining its current community projects and investing in additional projects as the company’s business grows .
Mitigating Risk: In 2015, Coke conducted a plant-by-plant assessment, in conjunction with local communities and governments, to determine the risks of the water supply for both the company’s facilities and the communities they operated in. Each facility developed a protection plan to mitigate the identified risks. The action steps identified in the various protections plans have led to over 3,700 mitigation actions and have served as the bases for many community projects under the Replenishment initiative. The Company plans to reevaluate existing plants every five years .
Sustainability Example or Corporate Exploitation
Coke’s emphasis on creating a sustainable and socially responsible water supply source should serve an example for corporations, however, in recent years Coke has faced backlash over water exploitation. In 2004, Coke was forced to shut down its operations in Rajasthan, India after local citizens and NGOs accused the company of excessive water withdraws and water pollution . Although the company was found to be acting within the law, this facility, along with many others, is located in water-stressed regions in India .
The incident in Rajasthan is not unique. In 2014, Coke was forced to close another Indian facility due to water exploitation and abandon a new facility after a public campaign against the company. Shortly thereafter, Coke withdrew permits for two additional facilities . Just this year, local Indian merchants refused to sell coke products over water exploitation issues .
Coke has implemented various initiatives to secure its water supply and increase efficiencies. However, its questionable tactics have resulted in a backlash and reputational damage in one of its fastest growing regions. In addition, Coke’s 100% replenishment rate has come under scrutiny as the program does not always benefit the communities the company operates in . To maintain its place as the leading beverage manufacturer, Coke must commit itself to 100% ethical behavior or face expulsion from many regions and permeant reputational damage.
As Coke looks ahead, it must decide what to do with the many facilities it currently operates in water-stressed areas. Having a responsibility to its shareholders, does the company maintain operations in these areas while it looks for alternatives to alleviate the situation or does it close its many operations to preserve the water rights of the local community?
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