COKE in hot water

10 October 2005 |

Oct 6th 2005 -From The Economist print edition

The world's biggest drinks firm tries to fend off its green critics

“WATER is to Coca-Cola as clean energy is to BP.” So declares Jeff Seabright, Coca-Cola's manager of environmental affairs, when asked about the firm's new global water strategy. The fizzy-drinks maker unveiled that strategy as part of its annual environmental report, released this week. “We need to manage this issue or it will manage us,” says Mr Seabright.

At first sight, the analogy with oil may seem odd, but it is not so far-fetched. Big Oil has long been the target of activists clamouring for action on global warming. BP stole a march on its oily brethren by accepting that climate change is a real problem, making smallish investments in clean energy, and grandly proclaiming itself “beyond petroleum”.

Coca-Cola has also been targeted by activists, but over the issue of water rather than energy. The firm has been hit hardest in India. First, experts from Delhi's Centre for Science and Environment, a green think-tank, tested various soft drinks and determined that they contained high levels of pesticide. It turned out that Coca-Cola was not the cause of the problem. But its inept handling of the accusations left the firm exposed to a much more damaging allegation: that it is aggravating the growing global problem of fresh-water scarcity. An ongoing controversy in India concerns allegations that some of the firm's bottling plants use too much water in drought-prone areas, thus leaving poor local villagers with too little. Amit Srivastava of the India Resource Centre, a Californian non-governmental group, has been using the Indian controversies to stoke an international grass-roots campaign against Coca-Cola.

The firm brags that it operates in 200 countries—“more than the UN itself”, says Mr Seabright. But Coca-Cola's global reach and iconic status make it an easy target. Mr Srivastava points with glee to recent decisions at a handful of university campuses in America and Britain to suspend or challenge its contracts on ethical grounds.

Worse may be in store, if some have their way. Corporate Accountability International (CAI), an activist group best known for organising a noisy boycott of Nestlé (for selling infant milk powder in countries without reliable access to clean water), now has its sights set on the world's largest producer of non-alcoholic drinks. CAI turned up at Coca-Cola's last shareholder meeting to grill the firm's management over the water issue. Kathryn Mulvey, CAI's boss, is concerned not only about its fizzy-drinks divisions but also its newish and booming bottled-water business. Echoing the sentiments of other campaigners, she insists that the “misleading marketing campaign” for the bottled water needlessly undermines confidence in tap water, and amounts to the “commodification of something that should not be bought and sold.”

Company officials argue that they started measuring and improving their use of water long before its troubles in India. The firm improved its water efficiency by 6% between 2003 and 2004. In 2002, it took 3.12 litres of water to produce one litre of final product (as much water is used to clean the assembly lines, flush out glass bottles, and so on). In 2004, that global average came down to 2.72 litres. Mr Srivastava is not impressed: he grouses that it is “ridiculous that a firm that calls itself a ‘hydration company’ should waste so much water; most of it does not even end up in the product.”

To improve that situation, Coca-Cola has just completed a detailed assessment of the “water risks” to its businesses and their local communities. Going plant by plant, the firm's boffins have calculated local water-scarcity ratios, depletion levels for local aquifers, water needs for the local plant, and so on. With this new information, the firm is now setting local targets for improving each plant's efficiency of water and energy use. Mr Seabright explains that before this new study, the firm tried to impose “one-size-fits-all” global targets which local bottlers (who are often not owned by Coca-Cola) refused to accept.

Coca-Cola is also working with non-governmental groups such as the World Wildlife Fund and CARE, as well as UN agencies, in an effort to burnish its image. In India, it is now promising to capture enough water via “rainwater harvesting” (an age-old technique for capturing monsoon run-off) to offset all of its water use by 2006. Even the deeply sceptical Mr Srivastava concedes that “if this company were really not to put any strain on local resources then it would be a different matter. Let us see if this is just greenwash.”

The accusation of “greenwash”—environmental window-dressing as a front for business-as-usual—has also been hurled at BP. But there the similarities between Coca-Cola and BP end, for the question of water is far more important to Coca-Cola than the issue of climate change is to BP. That is because if oil and gas run out, or are deemed too dirty to use one day, BP could still peddle ethanol or hydrogen fuel; it is, in the end, an energy company. Coca-Cola, on the other hand, simply would not exist without water. So while BP may yet see life beyond petroleum, Coca-Cola will never get Beyond Water.