According to the International Water Management Institute (IWMI’s) Comprehensive Assessment of Water Management in Agriculture, one-third of the world population faces some form of water scarcity. A recent JP Morgan Report states that by 2025, this is expected to rise to two-thirds, due to climate change and increasing urbanization and population growth. The Intergovernmental Panel on Climate Change (IPCC) report on ‘Climate Change and Water’ predicts that global population will rise from about six billion today to 8.7 billion by year 2050; which means that much more will be needed to feed the growing population. Already about seventy percent of the water used worldwide is used for agriculture.
It is quite clear that the future for fresh water does not look bright. Especially when you also consider that all the fresh water there is today will be all the fresh water that will be there in the years to come. It is a resource that will not increase in quantity over time.
The IPCC goes on to say that the unprecedented challenges from population growth, pollution, climate change and problems of allocation of water pose a severe threat to ecosystems worldwide, posing a further serious threat to fresh water availability as in water-stressed areas, people and ecosystems are particularly vulnerable to decreasing and more variable precipitation. An estimated third of the world’s population currently lives in water-stressed countries. This is set to increase to two-thirds within 25 years. Africa and Asia are already hard-hit by water stress. Increasing populations will create more pressure in the coming decades.
The Impact of the Water Crises on Sustainability of Businesses
In this scenario, everyone around the world, particularly in waterstress areas, needs to become increasingly aware of the water challenges and needs to act now to proactively address the looming water crisis. Within the corporate sector, industries that have water as a key input must particularly consider the impact of decreasing water resources on the sustainability of their businesses. Such organizations must focus on developing strategies and solutions now to counter future expected water shortages, or face the risk of closing down their businesses.
For the international beverage giant Coca-Cola, water is a vital resource. It is the main ingredient used in nearly every beverage that the company makes. “Without access to safe water supply, our business simply cannot exist,” says Coca-Cola’s Chairman and CEO, Neville Isdell.
Coca-Cola sells 1.5 billion beverages a day in over 200 countries and territories across the planet. At Coke’s bottling plants, it takes 2.5 litres of water to produce one litre of its product. In 2006, Coca-Cola and its bottlers used 290 billion litres of water to produce its beverages – equivalent, for instance, to one-fifth of the daily water usage of the U.S.A. Forty percent of that went into drinks. The other 60 percent was consumed by the firm’s supply chain and in the production of ingredients.
Clearly Coca-Cola cannot do without water. No surprise therefore that last year, Coca-Cola announced its bold commitment to achieve ‘water neutrality’ by year 2010, in collaboration with the WWF. The concept of water neutrality was created by Pancho Ndebele at the 2002 Johannesburg World Summit for Sustainable Development (WSSD). Waterneutral.org defines water neutrality as “reducing the water footprint of an individual (or entity), and where appropriate, balancing (off-setting) the remaining use in a meaningful way”.
Coca-Cola and WWF Conservation Partnership
At the WWF Annual Conference in Beijing last year, Coca-Cola pledged to increase water efficiency in its global beverage operations and become ‘water neutral’. That means that the company will work to replace all the water it uses in production of its beverages – every drop of water it uses to produce beverages would be returned to the earth or compensated for through conservation and recycling programmes.
Earlier, in June 2007, Coca-Cola had already announced its collaboration with WWF to help conserve and protect freshwater resources. It committed $20 million over five years to WWF to help conserve seven of the world’s major freshwater river basins that span more than twenty countries in North America, Europe, Africa and Asia. Their challenges vary greatly, from
dams that have outgrown their usefulness to agricultural run-off issues to loss of habitat due to development and land reclamation.
According to WWF, these waters were chosen “because of their biological distinctiveness, opportunity for meaningful conservation gains, and potential to advance issues of resource protection.”
So how will Coca-Cola execute its commitment to Water Neutrality?
“For us that means reducing the amount of water used to produce our beverages, recycling water used for manufacturing processes so it can be returned safely to the environment, and replenishing water in communities and nature through locally relevant projects,” said Isdell at the WWF Annual Conference.
Coca-Cola’s Water Neutrality Initiative: The Three Rs
Coca-Cola’s water neutrality programme has 3 core components: Reduce, Recycle, and Replenish. These were explained by Isdell at the WWF Annual Conference: To Reduce, Coca-Cola will set “specific water efficiency targets for global operations by 2008 to be the most efficient user of water among peer companies”. This is a key element of the Coca-Cola – WWF partnership.
To Recycle, the company will return “all the water that it uses for manufacturing processes to the environment at a level that supports aquatic life and agriculture”, by 2010. Coca-Cola’s water treatment standards are more stringent than many local standards and nearly 85 percent of its manufacturing facilities have implemented these standards. As part of its water neutrality programme, the Company has pledged to align 100 percent of its manufacturing facilities with these stringent water treatment standards by 2010.
To Replenish, Coca-Cola will “expand support of healthy watersheds and sustainable communities to balance the water used in its finished beverages”. This will include a wide range of initiatives, such as watershed protection, community water access, rainwater harvesting, reforestation and agricultural water use efficiency. The company will focus, along with its partners such as WWF, UNDP and USAID, to identify the locations and projects where the need is the greatest, and where it can have a positive impact on communities and ecosystems. It will also focus on reducing water use in its supply chain, beginning with sugar, where it will expand its existing collaboration on the ‘Better Sugar’ Initiative.
Coca-Cola continues to work with – and learn from – its bottling partners in developing and implementing responsible water management and community engagement in water stressed regions.
CCC=CSR, Using Companies’ Core Competences
Understanding that water stewardship is essential for its business and safe water is vital to the sustainability of the communities it serves, forms the guiding principle for Coca-Cola to launch a comprehensive strategy to work with partners worldwide on water conservation initiatives. As we know, CSR is today recognized as being much more than corporate philanthropy, which gave birth to it. True CSR means that a company’s responsibility to society first of all starts with ensuring that it produces high quality products, and it does this with the least environmental impact and with the most benefits for its stakeholders and the community. Jeff Seabright, Coca-Cola’s vice president of environment and water resources, emphasizes that, “Increasingly the real relevance is using the company’s core competence to address issues that are of societal concern”.
Walking the Talk
Coca-Cola’s water-conservation efforts are to be seen as going beyond altruism: they relate directly to the company’s own sustainability. Literally, as it is trying to ensure the continuing availability of a crucial ingredient. Businesses that do not address looming shortages of non-substitutable inputs run the risk of plant closures and sullied reputations, says Marc Levinson, lead author of the JP Morgan Report. Coca-Cola’s vision is to ‘establish a truly water-sustainable business on a global scale’. Water stewardship is a growing global issue whose impacts are felt at the local level. The Company realises that a strategy to combat water scarcity, conserve water and ensure a sustainable supply of clean water, must be driven by a global vision and implemented in collaboration with local community stakeholders and other global partners like the WWF.
“WWF and Coca-Cola are two powerful brands with a history of building credible connections on the initiatives we support. By working together, they intend to harness this power to address the freshwater challenges we face in this century in a more impactful way than either of us could do alone”, said Neville Isdell at the WWF Annual Conference. The definition of synergy, realized.
