For the first part of this two-part feature, click here

The drinks industry must tighten up its game when it comes to water usage, argues Ceres

The drinks industry must tighten up its game when it comes to water usage, argues Ceres

In the second part of this month's Sustainability Spotlight, Ben Cooper continues his review of the findings from a new report from Ceres on water stewardship, which identifies the leaders and the laggards in the beverage sector, as well as flags the issues that require particular attention.

The headline findings of a new report on water stewardship from sustainability non-profit Ceres suggests progress on the environmental issue that most drinks companies make their biggest priority needs to be stepped up. Whilst the average score of the eight beverage companies, at 36 out of 100, is above that for the 42 companies assessed, Ceres points to a number of areas where the sector needs to improve, namely governance, alignment of sustainability and procurement functions and engagement with suppliers.

On a more positive note, the report identifies water accounting metrics, water risk assessment, operational water targets and engagement with manufacturing suppliers as areas of strength for the sector.

Also providing some cheer is the strong performance of some of the sector's leading players. The Coca-Cola Co, PepsiCo and Diageo all appear in the top five, with scores of 72, 70 and 68, respectively. The two top-scoring companies overall were both food corporations with substantial beverage interests, Nestle (82) and Unilever (73).

"It's great to see our work in this area being recognised, and we will continue to strive to make a positive impact on this increasingly important and very challenging global issue," says David Croft, global sustainable development director at Diageo.

One might expect the high-scoring companies to be the most effusive about the report, but the strongest praise comes from lower-scoring drinks companies.

"We welcome any and all efforts to preserve and protect the world's most precious resource and applaud Ceres for its work in that regard," says Kim Marotta, global senior director of corporate responsibility at Molson Coors, which achieved an above-average (but not stellar) score of 47, against 44 in the corresponding 2015 report.

Meanwhile, Brown-Forman, which saw its score decline from 29 to 26, is positive about the report. The US-headquartered group is one of three beverage companies assessed that belong to the Ceres company network, the other two being Coca-Cola and PepsiCo.

"As a member of Ceres, we support their desire to increase awareness of water risk and their assessment of performance to help drive understanding and improvement," says Brown-Forman director of corporate responsibility Rob Frederick. In fact, Brown-Forman held a conference call with Ceres to review the findings, which Frederick describes as "a valuable input into our sustainability planning and strategy development".

Frederick is also refreshingly candid in responding to Ceres' assessment. "The scoring methodology emphasises water use in the supply chain," he says. "We have yet to focus heavily in this area so we are not surprised by the scores."

The increased weighting given to water use in agricultural and manufacturing supply chains is a significant change in the report's methodology from 2015, reflecting the need for companies to expand their work in this regard. "We appreciate the importance of this aspect of our overall performance and will address this as part of our sustainable agriculture strategy," Frederick adds.

Brown-Forman is not the only company to have been affected by this change, according to Eliza Roberts, who heads up the Ceres water programme and co-authored the report. "A number of the beverage companies have focused primarily on operational water use," Roberts tells just-drinks. "In this analysis, we put more emphasis on water use in the agricultural supply chain.

"There is a tremendous opportunity for beverage companies to leverage the work they have done at the operational level to tackle the water risks that they are exposed to in their agricultural supply chain."

It is clear to see from the composition of scores how increased focus on water use in agricultural supply chains has boosted the higher-scoring companies. PepsiCo scored 29/35 for water management in their agricultural supply chains, while Diageo scored 20/35, and Coca-Cola 18/35. In contrast, A-B InBev scored 13, Molson Coors 11 and Brown-Forman 3.

"PepsiCo's strategy is based on rethinking, replenishing and reusing water across our value chain," says Roberta Barbieri, VP of global water & environmental solutions at PepsiCo. "We are working with growers to drive water use efficiency in agriculture and, in water-scarce regions where we operate, we are replenishing locally the water we consume."

The reference to water scarcity speaks to another development in the report's methodology, reflecting evolving priorities in water management, namely the critical importance of water context.

"The incorporation of context-based targets into the framework was a new addition in the 2017 analysis," Roberts explains. "While companies are beginning to explore this, none of the companies evaluated provided any disclosure on context-based data or targets thus far."

Such is its importance, Frederick believes Ceres could have given even greater weight to water context. "We do believe the report could have better taken into account the local nature of water use, both water quality and availability," he says. "Much of our focus is on operations in regions with greater potential for water stress, such as Mexico or California, and this context-specific approach and evaluation of performance is critical."

However, Nick Martin, associate director of industry coalition the Beverage Industry Environmental Roundtable (BIER), points to the challenges a context-based approach can bring. "Leading companies want to make informed decisions, but are limited by the availability of location-specific water data and information," Martin says. Execution of context-based initiatives is "still a work in progress and not fully controlled by these companies". BIER is due to publish an Insights Paper on its performance in context work later this month.

When evaluating the degree to which the Ceres report reflects progress on water stewardship across the entire beverage sector, it needs to be borne in mind that Ceres is a US organisation and US-based corporations, albeit most with global reach, make up the majority of the 42 companies covered. The beverage companies analysed certainly have global spread and include most of the names that might be expected. Two notable omissions, however, are Heineken and Carlsberg. Their inclusion would provide a more globally-representative picture and, given that both of these major companies prioritised sustainability from an early stage, would almost certainly enhance the beverage sector's score.

The 2017 report saw the number of companies expand from 37 to 42, and Roberts says Ceres may consider making further additions for the next report. "We have not considered them [Heineken and Carlsberg] thus far but there will potentially be an opportunity to tweak the company universe in the next 'Feeding Ourselves Thirsty' analysis."

Water stewardship is increasingly vital to companies across all sectors but because quality water is a primary ingredient in their products, water stewardship has become an emblematic sustainability issue for many drinks companies. Also, as beverage companies have long had to deal with the reputational risks associated with water management, they recognised early on that water had to be priority issue. So, in view of this should the sector not be topping the Ceres rankings with ease?

"Yes," Roberts replies, succinctly.

A key objective of such reports is to encourage companies to go further by comparing their performance with others, and that sounds suspiciously like a challenge to the drinks sector for the next edition of Ceres' water report. It is one the industry is arguably well-placed to meet but, as the 2017 results clearly show, a strong lead from the most progressive companies can only take the sector so far.

Success will only be achieved when that lead is widely followed.

For the first part of this two-part feature, click here