Just how important is water in the stratosphere of business?
For more than a decade, the shortage of global water availability has had a direct impact on the operating performance of some of the world’s largest companies. This has led Atlanta-based beverage giant Coca-Cola to rethink how it views climate change. “Increased droughts, more unpredictable variability, 100-year floods every two years…when we look at our most essential ingredients, we see these events as threats” . This realization over the past few years has suddenly made water efficiency one of the company’s most pressing initiatives.
Water is the lifeblood of Coca-Cola’s business. It is needed to grow ingredients, is used in manufacturing, and ultimately is a core element in every one of the company’s 500+ brands. In fact, the company uses more than 300 billion liters of water annually to make its products . Furthermore, Coca-Cola has a strong relationship with the local communities in which it operates, and those communities count on Coke to replenish their water (more on the water stewardship efforts later). Therefore, as the issue of water supply has intensified over the past several years, Coca-Cola’s leaders have realized that fighting water scarcity is not only important to the company’s bottom-line – but also to the millions of people who live in the communities in which Coke operates every day.
To combat this major threat, Coca-Cola has undertaken several major initiatives relating to water stress. The first, and perhaps most important, is a water-use efficiency project that the company has been working on for over a decade. The key to improving water efficiency is to reduce or eliminate water use in the manufacturing process. Coke has done this effectively by allocating significant resources to new manufacturing technologies in both the United States and abroad. Included below is a graphic that shows the improvement Coca-Cola has made in this area over the past dozen years :
Over the next two years, the company’s goal is to drive this water efficiency figure down to 1.7 liters.
Coca-Cola has also partnered with several organizations, including the World Wildlife Fund and The Nature Conservancy, to help identify its water footprint. A recent study found that 80% of Coke’s total water footprint comes from their agricultural ingredient supply chain , which has redirected many of the company’s efforts to this focus area. In fact, recently Coca-Cola publicly committed to “sustainably source” 100% of its main ingredients by 2020. Such ingredients include high-fructose corn syrup, stevia, coffee, cane sugar, oranges, and soy. The company also announced its Sustainable Agriculture Guiding Principles (SAGP), which outlined the in-depth process of “sustainably sourcing” and set expectations for the future.
Although Coca-Cola recently hit its goal of “replenishing 100% of the water it uses” three years early , one recommendation would be for the company to take the project one step further. It would be wise for them to push forward and try to increase water efficiency another 30% by 2025. Doing the simple math shows that this would cut over 100 billion liters of water annually from Coke’s supply chain. Below is a graphic of Coca-Cola water stewardship efforts and impact over the past few years :
Another recommendation would be to invest more heavily in manufacturing technology in developing countries. Bottling plants in the US and Europe have become extremely water-efficient over the past few years, but plants in Africa and parts of Asia are still severely lagging . Investing in this infrastructure would enable Coca-Cola to develop even better relationships with its partners overseas, while simultaneously bolstering its supply chain for the years ahead.
Finally, Coca-Cola should consider putting more resources into its water footprint research, perhaps by partnering with additional water sustainability organizations. Areas such as Africa, where water is scarce, have an extremely difficult time sustaining even a small water footprint. This can be devastating for communities, and so it is paramount for private sector companies to understand the ‘benefit vs. impact’ of their practices in these places.
Simply stated, water replenishment and water efficiency strategies are critical for Coca-Cola and other global beverage companies moving forward. Not only do these companies’ supply chains rely on it, but communities around the world do as well. How will large multinationals fare now that their water efforts are in the public eye? Will these companies be willing to sacrifice profits to increase the necessary investment in these areas?
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 Davenport, Coral. 2017. “Industry Awakens To Threat Of Climate Change”. Nytimes.Com. https://www.nytimes.com/2014/01/24/science/earth/threat-to-bottom-line-spurs-action-on-climate.html?_r=2
 “Mitigating Water Risk For Communities And For Our System”. 2017. The Coca-Cola Company. http://www.coca-colacompany.com/stories/mitigating-water-risk-for-communities-and-for-our-system
 “Improving Our Water Efficiency”. 2017. The Coca-Cola Company. http://www.coca-colacompany.com/stories/setting-a-new-goal-for-water-efficiency
 “Coca-Cola Met Its Water Goals Early. Were They Too Easy?”. 2017. Harvard Business Review. https://hbr.org/2015/09/coca-cola-met-its-water-goals-early-were-they-too-easy