{"id":8441,"date":"2016-11-03T15:14:06","date_gmt":"2016-11-03T19:14:06","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/coca-cola-quenching-the-thirst-of-the-future-sustainably\/"},"modified":"2016-11-03T15:14:06","modified_gmt":"2016-11-03T19:14:06","slug":"coca-cola-quenching-the-thirst-of-the-future-sustainably","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/coca-cola-quenching-the-thirst-of-the-future-sustainably\/","title":{"rendered":"Coca-Cola: Quenching the Thirst of the Future Sustainably"},"content":{"rendered":"

Climate change is a global issue that has severe consequences for us all. One particularly challenging problem due to rising temperatures is a diminished freshwater supply, with an estimated overall water supply shortage of 40% by 2030 [1]. Additionally, according to the United Nations, approximately 1.6 billion people experience water scarcity, and water usage has been growing at twice the rate of population growth [2]. Fortunately, at least one company, Coca-Cola, a global leader in the beverage market that uses more than 300 billion gallons of water per year, recognizes this issue and is tackling it head on [3]. The company has publicly pledged to achieve an ambitious set of sustainability targets by 2020, including improving water efficiency, replenishing water used, and reducing CO2<\/sub> emissions, to combat the effects of climate change and sustainably rehydrate the planet [4].<\/p>\n

In terms of usage, by 2020 Coca-Cola aims to improve water efficiency in manufacturing operations by 25% compared with a 2010 baseline; however, it should be noted that the company has already made substantial progress [5]. For example, in 2004 the company used 2.7 liters of water to make 1 liter of product (e.g., Coca-Cola and Diet Coke), and today that figure is down to only 1.98 liters [5]. Through focus, effort, and significant investment, Coca-Cola has achieved 13 years of consecutive improvements and is well on its way to achieving its 2020 target of 1.7 liters of water usage per liter of product.<\/p>\n

Exhibit 1: Coca-Cola Water Efficiency<\/strong><\/p>\n

\"exhibit-1\"<\/a><\/p>\n

Although improving water efficiency is a great start, it is not enough, as even at an improved rate, Coca-Cola still uses more water (1.7x) than is contained in the resulting beverage. This is where Coca-Cola\u2019s replenishment and recycling goal comes into play. Coca-Cola has committed to replenishing 100% of water used, an impressive goal. To achieve this, Coca-Cola has invested over $1 billion to process, clean, and return water used in the manufacturing process at a level that supports aquatic life, even when not required by local governments [5]. Additionally, the company has partnered with local communities to support a variety of water projects, such as improving water access and sanitation, also known as replenishment projects [5]. Combined, these two efforts returned over 100% of water used in 2015, five years ahead of plan [6].<\/p>\n

Exhibit 2: Coca-Cola Water Use & Returned Water<\/strong><\/p>\n

\"exhibit-2-a\"<\/a><\/p>\n

Finally, while it is certainly useful to address the water supply issue directly, it should be recognized that water shortage is only a symptom of a larger issue \u2013 global warming. Coca-Cola is also helping to address this underlying cause by aiming to reduce CO2 <\/sub>emissions across its value chain by 25% by 2020 as compared to a 2010 baseline. By sourcing more of its energy from renewable sources as well as meaningfully improving the average plant\u2019s energy efficiency, Coca-Cola has made strong progress on this front to date. For instance, Coca-Cola has reduced the energy required per liter of product by approximately 10% since 2010 [5]. Although the company still has a ways to go to meet its 2020 target, the investments made will help not only Coca-Cola, but the planet as a whole.<\/p>\n

Exhibit 3: Coca-Cola Energy Use Ratio<\/strong><\/p>\n

\"exhibit-3\"<\/a><\/p>\n

Interestingly, years ago Coca-Cola would fight almost any change that resulted in higher water costs, according to Radtke, Coca-Cola\u2019s water sustainability director. Now, however, the company is actually willing to pay more for water if it is going to be more sustainable [7]. Clearly Coca-Cola views addressing the challenges presented by climate change as a priority, and even more important, the company is actually on track in terms of meeting its bold 2020 sustainability targets [8]. In fact, Coca-Cola is so dedicated to meeting its sustainability goals that the company appointed the former CMO of Coca-Cola North America, Bea Perez, to a newly created role called Chief Sustainability Officer [9].<\/p>\n

Admittedly, a key question for critics is whether Coca-Cola could, and should, be doing more. To the first, I say of course it could. In 2015, Coca-Cola generated more than $7 billion of net income and distributed nearly $6 billion to shareholders via dividends [10]. Instead, Coca-Cola could have used those funds to invest in additional sustainability efforts or donated to water conservation organizations, such as the World Wildlife Fund; however, in terms of should, that is much more controversial. To whom is Coca-Cola\u2019s ultimate obligation? If it is to the world, then perhaps Coca-Cola should do more. If it is to the shareholders, then Coca-Cola appears to be doing enough.<\/p>\n

(Word Count: 784)<\/p>\n

Endnotes:<\/strong><\/p>\n

    \n
  1. “UN Predicts Serious Water Shortages by 2030.”com<\/em>. The Weather Channel, 23 Mar. 2015. https:\/\/weather.com\/science\/environment\/news\/water-shortage-united-nations-report<\/u>. 29 Oct. 2016.<\/li>\n
  2. Liu, Jiaqian, and Yifei Fang. “The Analysis of the Clean Water Supply and Demand in the Water-Scarce Regions.”International Review of Management and Business Research<\/em>\u00a02 (2016): 379-99.\u00a0ProQuest.<\/em>\u00a0<\/em>1 Nov. 2016.<\/li>\n
  3. Davenport, Coral. “Industry Awakens to Threat of Climate Change.”\u00a0New York Times<\/em>. New York Times, 21 Jan. 2014. http:\/\/www.nytimes.com\/2014\/01\/24\/science\/earth\/threat-to-bottom-line-spurs-action-on-climate.html?_r=0<\/a>. 29 Oct. 2016.<\/li>\n
  4. “Our Sustainability Commitments.”\u00a0 Coca-Cola Company, n.d. http:\/\/www.coca-colacompany.com\/stories\/2020-sustainability-commitments<\/a>. 29 Oct. 2016.<\/li>\n
  5. “Stories – The Coca-Cola Company.”\u00a0 Coca-Cola Company, n.d. http:\/\/www.coca-colacompany.com\/stories<\/a>. 29 Oct. 2016.<\/li>\n
  6. Moodie, Alison. “Coca-Cola to Reach Water Goal Five Years Early.”\u00a0The Guardian.<\/em> Guardian News and Media, 25 Aug. 2015. https:\/\/www.theguardian.com\/sustainable-business\/2015\/aug\/25\/coca-cola-replenish-water-goals-early-watersheds<\/a>. 29 Oct. 2016.<\/li>\n
  7. Jordan, Steve. “After Water Usage Criticism, Coke Chooses Sustainability over Costs.”\u00a0com.<\/em> Omaha World Herald, 16 Sept. 2015. http:\/\/www.omaha.com\/money\/after-water-usage-criticism-coke-chooses-sustainability-over-costs\/article_1fb395e1-9808-5f06-bfee-1da83fb3afe4.html<\/a>. 29 Oct. 2016.<\/li>\n
  8. “2020 SUSTAINABILITY COMMITMENTS: PROGRESS UPDATE.” (n.d.): n. pag.\u00a0 Coca-Cola, 2015. http:\/\/www.coca-colacompany.com\/content\/dam\/journey\/us\/en\/private\/fileassets\/pdf\/2016\/Scorecard-2020SustainabilityCommitments.pdf<\/a>. 29 Oct. 2016.<\/li>\n
  9. Albanese, Maya. “How She Leads: Coca-Cola’s Beatriz Perez.”\u00a0 GreenBiz, 3 Oct. 2011. https:\/\/www.greenbiz.com\/blog\/2011\/10\/03\/how-she-leads-coca-colas-beatriz-perez<\/a>. 29 Oct. 2016.<\/li>\n
  10. “KO Financial Statements.”\u00a0Yahoo Finance.<\/em> Yahoo, 2016. https:\/\/finance.yahoo.com\/quote\/KO\/financials?p=KO<\/a>. 29 Oct. 2016.<\/li>\n<\/ol>\n

    Photo & Exhibit Credits:<\/strong><\/p>\n

    Cover Photo: “Our Sustainability Commitments.”\u00a0Sustainability.<\/em> Coca-Cola Company, n.d. http:\/\/www.coca-colacompany.com\/sustainability<\/a>. 29 Oct. 2016.<\/p>\n

    Exhibit 1, 2 & 3: “Stories – The Coca-Cola Company.”\u00a0Stories<\/em>. Coca-Cola Company, n.d. http:\/\/www.coca-colacompany.com\/stories<\/a>. 29 Oct. 2016.<\/p>\n","protected":false},"excerpt":{"rendered":"

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