Once again Pepsi and Coke are going head-to-head only this time the outcome will be something more valuable than a better tasting soda – more efficient use of the billions of gallons of water critical to their products. The two soft-drink corporations published water stewardship reports this month detailing measures they’ve taken to conserve water, results they’ve achieved and goals they’ve set for the future.
Not only is water the essential ingredient of their soft drinks, it’s also used in abundance in their manufacturing processes such as rinsing, cleaning, heating and cooling. Coke, for example, says that in 2008 it used 2.43 liters of water to produce one liter of beverage. In other words, the other 1.43 liters are outside of a bottle of Coke Zero and not in it.
Yet based on their reports, both corporations not only recognize their massive water usage, they’re aware of the shortage of clean water in many parts of the world. Both reports note that about one billion people are currently without access to clean drinking water, according to a recent United Nations Children’s Fund (UNICEF) report. Billions more are vulnerable to disease and food insecurity because of issues around their water supplies.
In its report, entitled Water Stewardship, Good for Business, Good for Society, PepsiCo pledges to support the United Nation’s declaration that there is a “human right to water” because it is so essential for an adequate standard of living. PepsiCo says it has embraced that concept for years, but now has incorporated it into its operations. In 2007, PepsiCo set a global goal to reduce water consumption by 20 percent per unit of production by 2015. To date, the company has improved by more than 15 percent in water use efficiency as compared with a 2006 baseline.
Through efficiency improvements PepsiCo saved more than 3.1 billion gallons of water last year, according to the report. The company’s India manufacturing team has reduced water usage by more than 45 percent since 2005, conserving more than 792 million gallons of water.
Coca-Cola has set a goal to return 100 percent of the water used for manufacturing safely back to the environment and communities by the end of 2010. It also is working to improve its water use efficiency by 20 percent by 2012 compared to a 2004 baseline.
Its report may not sound sexy – Product Water Footprint Assessments: Practical Application in Corporate Water Stewardship – but like PepsiCo it suggests that Coca-Cola is taking its water management effort to another level. The news is that Coca-Cola is developing a better understanding of its product water footprint, which is the total volume of freshwater consumed, directly and indirectly, to produce a product. A full water footprint assessment considers the impacts of water consumption, as well as appropriate response strategies to minimize those impacts.
In other words, water footprint assessments act as a tool to understand water use throughout the supply chain. What activities consume the most water and where do they occur? What stress do they place on the local watershed and what will be the impact on the community, the environment and the company’s needs in the future? It’s a young science, but one that proponents hope will do for water conservation what carbon footprint science has done in measuring a company’s carbon emissions.
Working with The Nature Conservancy, the company found that the largest portion of its product water footprint occurred in the cultivation of ingredients that go into its product and not in the manufacturing process. As a result, Coca-Cola intends to work more closely with its suppliers of sugarcane, oranges and corn to improve sustainable water use.
Corporations such as Pepsi and Coke are not only acting altruistically, they’re also responding to the desires of investors who are concerned about changes in water resources and the potential risks. They’re asking public companies to disclose how water shortages could hurt their businesses and what those companies are doing about the issue.
The Norwegian government’s pension fund has begun requiring the 1,100 companies in its portfolio of holdings to meet certain defined minimum standards of water risk reporting and management. The California Public Employees’ Retirement System, whose approximately $170 billion in assets make it the largest public pension fund in the U.S., is also asking for greater disclosure regarding water issues.
Last January the federal Securities and Exchange Commission, recognizing this increased focus, issued new interpretive guidance clarifying the disclosure requirements public companies must meet about the climate-related risks and opportunities that they face — and specifically cited water’s business risk.