Coca-Cola – Corporate Greenwashing or Genuine Change?
Climate change is having a major impact on water supply across the world by increasing the rate of evaporation and modifying the pattern of precipitation which is reducing the quality of the water supply. Higher temperatures also translate into an increased requirement for water by people and animals which places an increasing strain on the shrinking supply[1]. For Coca-Cola, the largest beverage manufacturer in the world, water is its main ingredient and a core component in its manufacturing process so they have a very strong incentive to ensure they are as efficient in their water use as possible.
As a result, Coca-Cola has taken the lead in water preservation and restoration efforts around the world by investing more than $1 billion since 2001 in wastewater treatment[2]. In 2007, Coca-Cola announced a goal that by 2020, they would restore the equivalent amount of water it uses in its beverages and production and they reached the goal five years early in 2015[3]. They accomplished this by starting in 2008 a requirement that all plants conduct a water Source Vulnerability Assessment which analyzes the risks to the water source used for the plant and the local community. The assessment was conducted in partnership with the local government and community organizations to understand local water requirements and rules. The plants were then required to develop and implement a Source Water Protection Plan in 2012. The five-year plan detailed the mitigating actions, roles, responsibilities, and funding that will be used to address water issues in the community. As a result, by 2012, Coca-Cola had improved its water usage ratio in India by 25% compared to 2005[4]. Coca-Cola has also been recognized as one of the few In 2014, Coca-Cola also announced a major initiative with the United States Department of Agriculture to help restore and protect damaged watersheds for five years. The projects were expected to return greater than 1 billion liters of water to the National Forest System, which provides drinking water to more than 60 million Americans[5].
While there have been some critics who believe these initiatives are a form of corporate greenwashing since Coca-Cola has focused these initiatives in areas where it has plants, these projects provide an opportunity for both the government and general public to benefit through funding and environmental preservation while Coca-Cola also generates direct business benefit as well. Successful public-private partnerships like this will incentivize additional corporations to get involved which will only help mitigate the effects of climate change and reduce the burden on increasingly constrained tax dollars. The government will have to ensure though that no conflict of interest arises due to the funding provided by Coca-Cola.
There have also been occasional controversies with Coca-Cola’s plants such as in 2014, Coca-Cola faced an issue in northern India where they were accused of extracting too much groundwater at a plant and releasing pollutants above legal limits. As a result, the local community called for the plant’s closure which would add financial cost for Coca-Cola and potential brand damage[6].
While Coca-Cola did develop a methodology in partnership with NGOs to determine the benefits of its community water partnerships[4], they should focus on strengthening those quality measures to ensure the plans are followed. Coca-Cola should also look to build stronger connections with the local communities around their plants to ensure the success of their initiatives. The importance of this can be seen by Coca-Cola’s experience in southern India in April 2015 where they decided to not move forward with an $81 million bottling plant due to protests from local farmers who were concerned about the impact of the plant on local groundwater supplies[2].
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References:
[1] https://www.epa.gov/climate-impacts/climate-impacts-water-resources
[4] http://caringforclimate.org/wp-content/uploads/Business_and_Climate_Change_Adaptation.pdf
[5] https://www.theguardian.com/sustainable-business/coca-cola-usda-water-partnership-watersheds
[6] https://www.theguardian.com/environment/2014/jun/18/indian-officals-coca-cola-plant-water-mehdiganj
This is a great post about a very influential corporation. I personally don’t drink that many coke products, but feel a strong connection with the brand being from the southern part of the US (where Coke is headquartered). While reading this I became curious about the water consumption of other popular beverages and found that on average, it takes one gallon of water to grow a single almond. While Almond milk and coke are two totally different beverages to be consumed differently, did you look happen to come across any work being done by manufacturers of what would be considered health foods to mitigate water usages?
So apparently the quote “Save Water, Drink Coke” is not necessarily true. Your post is interesting because it seems Coca Cola is mainly focused on finding ways to reduce its water usage ratio, while the issue is much bigger than that. Every single being on earth needs water to survive, and it seems that Coca Cola is protecting itself from a decrease in water supply rather than addressing the root cause of the issue. But at the same time, if every company does the same, this will reduce the overall water usage. Since water is the main ingredient of Coca Cola, I totally agree with your point about finding ways to ensure success of similar initiatives in other plants. One idea could be to create some kind of fund to help other firms address this issue.
In one way Coca Cola is extremely fortunate in that their main raw ingredient is water. I say this because unlike other CPG companies who source multiple key ingredients from agriculture suppliers and thus must act on the environmental impact on their entire value chain, Coca Cola primarily has to look inwards at its own operations. Thus it is no surprise that these initiatives are focused on their own plants – which inevitably gives a perception of corporate green washing – since there is no incentive to implement water saving programs in another capacity.
I personally take no issue with the accusations of green washing, since in the end we all benefit from Coca Cola’s decreased use of water. I also wonder if there is any opportunity for Coca Cola to become an advocate of water conservation with its own consumers given their own conservation policy, which would give them credibility to spread the message.
Thanks Rajit. While I think Coke’s investment in water conservation is admirable (even with “only” a billion dollars vs. $44+ billion in revenues in 2015 alone) the greenwashing point concerns me since they need to maintain their efforts. The incident you mentioned in India makes it seem like the corporate effort to save water is being applied only selectively, rather than comprehensively across all the company does. While there have definitely been some benefits, a massive company like Coca-Cola cannot afford to be lax in their efforts — global warming is materially affecting the world’s water supply already and will only get worse. It seems Coca-Cola needs some more ideas.
I’m so surprised by how proactive Coca-Cola has been about water conservation! Compared to many other industries, it seems that Coke has actually gone above-and-beyond what’s been just mandated of them, and I think that’s commendable.
On your point of “greenwashing,” I frankly don’t think that criticism is valid as long as the impact is a positive one. I may be cynical, but I think that for-profit companies still need economic reasons to do anything beneficial for the environment. And if greenwashing (convincing consumers that Coke is a sustainable brand) is what’s getting Coke to make these types of investments, then I’m all for it!
Thanks for the great article, Rajit.
Great post, Rajit! I am shocked to learn how incredibly active Coca-Cola has been in its water sustainability initiative. It is refreshing to learn that many of the world’s largest companies (including Coke) are taking measures to reduce their carbon footprint even when not mandated to do so by the government. Your post gave me reason to ask, “what drives Coca-Cola to take a responsible approach to carbon emission and sustainability efforts?” Coca-Cola, one of the largest and most successful companies of all time does not necessarily have to be taking these measures? Is it the threat of future government regulation, the perception by the end user(customers), possibly it is the investors that require Coca-Cola to take this hardline approach? In a perfect world, I believe it would be out of virtue and integrity- a pure desire to want to see a better future world. I wish I could believe that. It would be very interesting to delve deeper into what motivates Coca-Cola. My first thought when it comes to motivation for large companies like Coke is the CDP(Carbon Disclosure Project) score (http://www.coca-colacompany.com/stories/the-coca-cola-companys-cdp-climate-change-and-water-disclosures). This score is used by investors when investing in the business and by organizations like Forbes that do “Best Companies To Work For” awards. So my biggest question is this- when the Board of Coca-Cola has its quarterly meeting and the topic of sustainability comes up do they talk about it from a “The project in India is really helping our perception. Keep up the greenwashing efforts!” Or do they talk about it from a “How else can we continue to truly help our world” angle? I hope it is the latter!
Thank you for your insightful article! I look forward to discussing this topic with you further.
Thanks, Rajit! This is really interesting – seems like a prime example of ‘creating shared value’ through rethinking production and supply in light of a changing environment. I’m really curious if you came across anything discussing Coke’s plans to address issues with water supply in current production areas that might be severely impacted by climate change. In other words, are they worried that it might become impossible to source water in certain regions or countries where climate change would virtually eliminate fresh water supplies? If so, how are they thinking of addressing that, given that Coke is available in basically every country? I’d imagine being forced to close plants by the local population would be bad, but so would having to ship Coke from further away (particularly given the GHG emissions that would entail).
Dear Rajit,
Thanks for your blog post. It was interesting to see the references to Coca-Cola operations in India — which have been mired with sporadic controversies from time to time, due to rampant, unsustainable usage of groundwater resources. But, it was interesting to note that the company has achieved a 100% water equivalent restoration. My concern is, what is the quantifiable climate impact of these initiatives to achieve 100% water equivalent restoration? Are these steps causing more pollution? And, what is the impact of Coca-Cola’s packaging on the environment? Are they doing anything to improve the recycling of their packaging material?
Thanks.
Regards,
EK.
I’m glad to hear about the steps Coca-Cola has taken in their water initiatives. One aspect of the Coke business that I’m curious to learn more about is how they approach making greener packaging. While their bottles and cans are recyclable, a large portion of their business is in developing markets where recycling isn’t an option. Coke’s share of the international soda market is estimated to be about 25% (http://www.forbes.com/sites/greatspeculations/2015/12/22/will-emerging-economies-drive-coca-colas-growth/#3610d34e1be9) so anything they can do to promote recycling would have a real impact on a lot of consumers. I remember seeing an ad about Coke bottle’s second lives (https://www.youtube.com/watch?v=M1d8ePXioIs) and I wonder if this approach has been adopted more widely. I hope so!
I was drawn to this post because of how pervasive Coca-Cola is in our culture – and because I chuckled at the term “greenwashing” – I didn’t know that was a thing. Although Coca-Cola’s water preservation initiatives like the Water Source Vulnerability Assessment and Source Water Protection Plan are almost certainly just for its own financial benefit, it also crystallizes the purity of the community’s water source. What I would like to see Coca-Cola do is stretch itself more to undertake a campaign straight to the end-user. So many people drink coke that it would be quite impactful for Coca-Cola to have a recycling campaign or to run catchy ads about water source protection and how the Coke difference is that the company cares about the global community.
I also wrote about Coca-Cola, but about the microeconomic impacts on 20 oz. soda offerings. This was an interesting piece that focused more on the macroeconomics, especially related to the largest, critical input for soda: water. While Coke started with these initiatives, I agree they haven’t gone nearly far enough. They should be offering more ways of enjoying their products that are less water intensive such as concentrated offerings. I also think their bottled water, arguably non-value added products, are inherently in conflict with water usage reductions since we already efficiently pump water directly to people’s homes in most countries. So any extra water to manufacture bottled water is just wasteful. I do think that in developing nations where clean water sources are less prevalent, bottled water serves an important role in hydrating and stopping the spread of disease. But its definitely overdone in developed nations, and the perceived value of bottled products is still a mystery to me when the next alternative is free and clean.