A global water replenishment target may not consider local water issues

A global water replenishment target may not consider local water issues

Coca-Cola's recent water-replenishment achievements underline the company's status as a leader in sustainability within the drinks sector. However, Ben Cooper writes, an even greater focus on specific areas of water stress from all drinks companies looks certain to be required to take industry engagement on water to the next level.

The Coca-Cola Co's announcement last month that it had returned more than the equivalent amount of water used in its global sales volumes in 2015 "back to nature and communities" received considerable attention, and little wonder. The Atlanta-based soft drinks giant became the first Fortune 500 company to claim such a milestone and had reached its 2020 target some four years ahead of schedule.

The group understandably trumpeted its achievement. but others were quick to add their own praise. Carter Roberts, president & CEO of World Wildlife Fund (WWF), said it was "an important milestone in Coca-Cola's continued leadership on water stewardship and sets a standard for other water users to build from".

Brooke Barton, senior director of Water & Food Programs at sustainability think-tank Ceres, tells just-drinks: "Without a doubt, the major growth markets for the global beverage industry are water-poor. The Coca-Cola Co's water stewardship investments reflect a deep understanding of this challenging dynamic."

The beverage sector is not short of leaders in sustainability. With its recent announcement, Coca-Cola may be deserving of top honours right now, but Diageo, Pernod Ricard, PepsiCo, SABMiller and others have all won praise from external stakeholders for aspects of their sustainability strategies. However, Coca-Cola's announcement highlights an interesting contrast between the two leaders in the drinks sector. While Coca-Cola has set - and achieved - a global replenishment target, returning an estimated 191.9bn litres of water to nature and communities in 2015 (representing 115% of the water used in its beverages last year), Diageo has set itself a target focused on areas of water stress. Among the spirits giant's 2020 sustainability targets is a commitment to restore 100% of the water it uses in facilities that are located in areas of water stress.

As is often stressed by environmentalists, the issue of water use and efficiency is very different from that of greenhouse gas emissions, in that water is a locally-defined resource. Global efficiency figures are not meaningless, but analysis of water performance is hugely dependent on context.

While Coca-Cola expresses its replenishment achievement as a percentage of global sales, the many projects that make up its 191.9bn-litre figure are naturally targeted at areas where water stress is an issue. There is no suggestion that its water policy does not take account of local requirements even though its target was a global one.

The 191.9bn litres are quite separate from the 145.8bn litres the group returns from its plants, after being used in the production process and treated, to local supplies. That figure reflects a very high average energy efficiency ratio across its production sites. In all, Coca-Cola returns some 337.7bn to nature, mains supplies and communities.

In an interview with just-drinks, Coca-Cola's senior director of global water stewardship, Greg Koch, also stresses that governance procedures stipulate high sustainability standards at all its facilities, whether operated by the company or its bottlers, and are aimed at ensuring no site negatively impacts local supplies. However, he did not go so far as to say this is an absolute guarantee.

What Coca-Cola does not have is a site-specific target committing to be water-positive in facilities located in areas of water stress, though Koch said this was "something to consider". It is perhaps churlish to focus more on what Coca-Cola lacks rather than what it has achieved.

Indeed, while its main rival, PepsiCo, stresses that its water strategy is locally-focused, it does not have a specific target for water-scarce areas either. "PepsiCo's approach to water stewardship is driven by the understanding that water is inherently local, so the company focuses on specific solutions for watersheds where it operates, to make more and better water available to local communities," a PepsiCo spokesperson says.

At the end of last month, PepsiCo announced it had reduced its operational water use per unit of production by 26% versus a 2006 baseline, exceeding its previously-stated goal to reduce operational water use by 20% by the end of 2015. Meanwhile, it stressed its continuing work in providing safe water in water-stressed areas. It might also be noted that while Coca-Cola has already achieved its 2020 global goal, Diageo's 2020 site-specific aim remains just a target.

What these contrasts highlight is that there are many nuances around water stewardship, reflected in differing approaches, and that local context is arguably the most critical factor.

"Beverage companies and their shareholders increasingly recognise that water impacts are intensely local," says Ceres' Barton. "Corporate strategies to mitigate water risks - reputational, physical or regulatory - must reflect an understanding of the complex nature of local water problems and a willingness to engage local communities in getting it right."

The importance of local context is one of the six principles outlined in the latest work on water by Beverage Industry Environmental Roundtable (BIER), a technical coalition grouping the world's largest beverage corporations. The group's Water Stewardship Definition, to be published this week, states: "Excellence in water stewardship cannot be achieved without consideration of local watershed conditions."

In a presentation at BIER's semi-annual meeting in May, associate director Nick Martin, who leads the coalition's water stewardship work, also focused on context when looking at what the organisation's next steps on water should be. BIER has identified the need for a tool to help companies shape actions according to local context and compare performance in light of differing local impacts.

"BIER members realise that facilities have different dependencies and impacts on local watersheds depending upon location," Martin told the meeting. "Given the localised nature of water, performance and investment decisions must consider 'watershed context'. Individual metrics are evolving, but a holistic decision support tool is absent. Should two similarly-sized facilities with nearly identical water use efficiencies be considered the same from a performance standpoint?"

BIER is now working with key technical advisors, including Ceres, The Nature Conservancy and World Resources Institute (WRI), to develop its business-focused decision support tool for water. This will be piloted by BIER member companies this year. "It is about helping our members invest where it matters most," Martin tells just-drinks.

The work that has made Coca-Cola's 115% replenishment achievement possible reflects a focus on water-stressed areas, even though it has not yet opted for a specific target. Diageo's 2020 target and the work of other major drinks corporations reveals that context is already playing a significant role in shaping the water policies of major drinks corporations.

BIER's tool could help them and other companies to further tailor their strategies and develop specific targets for sites in watersheds deemed to be at risk, as will grow more vital over the coming years.

For just-drinks' interview with Coca-Cola Co's global water stewardship director, Greg Koch, click here