Coca-Cola (“Coke”) shares many of the same challenges that other CPG and beverage companies face with regard to climate change. The nearly 1.9 billion number of bottles of Coke consumed each day rely on various raw materials and agricultural products that will be affected by changing temperatures around the world. Moreover, manufacturing the Coca-Cola syrup leaves a carbon footprint, and as Coke attempts to become more sustainable, becoming a more efficient in its manufacturing process will be necessary to reduce costs. Packaging its soda and other beverages can also lead to increased emissions to the extent the materials used to bottle are not sourced in an environmentally friendly manner or are not recyclable. But while these issues are common across many CPG companies, Coke faces a few more pressing concerns as it thinks about global climate change.
Would you like some sugar in your water?
Coke’s greatest challenge will be its heavy reliance on water in its production process. It is estimated that by 2030 global demand for water will be 40% greater than the supply of available freshwater. Any sustainability goal Coke attempts will be dependent on the availability of water, the quality of that water, and the efficiency in which it uses it. The company reports that approximately 80% of its total water usage comes from its agricultural ingredient supply chain. Coke recognizes this potential problem and has committed that by 2020 it will improve water efficiency in its manufacturing operations by 25% (compared with its 2010 baseline). Making this process more efficient is key to its long-term success.
Yet Coke must be careful in the manner it goes about acquiring its water. In 2004, Coke lost an operating license for one of its manufacturing plants in India due to its over usage during water shortages, angering local villagers. We have also seen an increasing frequency of droughts across the world, meaning freshwater will not come as easily nor will quality water be as available.
Warm Coke? No thanks.
Another of Coke’s major challenges is refrigeration. Approximately 73% of its carbon footprint is due to refrigeration of its end products. This is because many of the coolers that house Coke products are cooled with hydrofluorocarbon (“HFC”). An alternative is cooling with CO2 coolers that are 1,430 times less harmful for climate change than HFC refrigerant gas. Coke has attempted to work on this problem by setting a goal that by 2020, all new cold-drink equipment will be HFC-free. Thus far, it has improved its efficiency by 40% since 2000.
The soda supply game.
Coke’s challenges with climate change are exacerbated by its distribution model as it relies on supply chain partners to bottle and sell most of its product. Since 1899, Coke has operated a franchise system in which it only produces the Coca-Cola syrup and then sell it to bottlers and fountain companies who bottle, mix, and sell the finished drink. While in the United States, Coke owns the main bottler, around the world Coke has various levels of ownership in its distribution partners. While Coke can control the overall sustainability of its product in the areas of the supply chain that it owns, it does not have the complete ability to regulate downstream. As consumers become aware of the total carbon footprint of one bottle of Coca-Cola, they may not realize that only certain of those channels are Coke-owned, and put pressure on the company to increase efficiency of the third-party distributors.
What to do.
Coke maintains laudable stated climate and environmental sustainability policies. Their goals focus on improving efficiencies which will both help in reducing costs for the business as well as leaving less of a negative environmental impact and contribute less to global climate change. Examples include those listed above as well as using more recyclable materials in their packaging and using best practices for agriculture sustainability. But Coke still must improve upon its distribution model if it is to be fully prepared for future climate change effects on the environment and potential regulation. One solution is to change its supply chain from a franchise system to a vertically integrated system, bringing bottlers and fountain producers into its ecosystem. This will allow Coke to have more control over the method of distribution and can cut down on its carbon footprint in refrigeration.
Finally, while Coke maintains strong written environmental policies, its record on lobbying for climate change regulation is weak. Coke has supported organizations that attempt to stall policies that in the short-term would add costs to its business. If the organization is committed to reducing the effects of global climate change, it must not only become more efficient internally, but use its power in the industry to promote global, productive change.
 Giulio Boccaletti, Sudeep Maitra, and Martin Stuchtey, “Transforming Water Economies,” McKinsey & Company, 2012, p. 1, accessible at https://www.mckinsey.com/~/media/McKinsey/dotcom/client_service/Sustainability/PDFs/McK%20on%20SRP/SRP_09_Water.ashx
 William K. M. Lau and Kyu-Myong Kim. “Robust Hadley Circulation changes and increasing global dryness due to CO2 warming from CMIP5 model projections.” Proceedings of the National Academy of Sciences of the USA. Vol 12. No 12. Accessible at http://www.pnas.org/content/112/12/3630.abstract
 Sonja J. Vermeulen, Bruce M. Campbell, and John S.I. Ingram. “Climate Change and Food Systems” Annual Review of Environment and Resources. Vol. 37: 195-222. Accessible at http://www.annualreviews.org/eprint/EBIXxM7sNxrBJyuRYgki/full/10.1146/annurev-environ-020411-130608