By Sara Jerome,
When Coca-Cola announced last month that it had met its sustainability goals for water five years before expectations, the development was applauded by analysts and environmentalists. But the feat also raised a question: Were the company’s goals too easy for it to meet?
In August, Coke announced that “by the end of the year, it and its bottlers would reach its goal of returning water to the environment and to communities around the world. Coca-Cola uses roughly 300 billion liters each year to produce about 160 billion liters of ‘finished beverages’ — Coke, Sprite, Fanta and hundreds of other brands,” The New York Times reported.
So, did Coke aim too low? Andrew Winston, an environmental strategy consultant for major companies, recently posed that question in a Harvard Business Review analysis. The short answer is no, he wrote, noting that Coke’s effort shows commitment and effort. Winston said there are, however, some problems with Coke’s strategy:
Any eco-efficiency goal related to operational footprint alone often has weaknesses that Coca-Cola’s target shares to some extent. First, companies can go faster than they realize. In my experience, companies consistently hit energy, water, and waste reduction targets quicker than they thought because there are tremendous inefficiencies in the system that can be fixed with limited investment (in Coca-Cola’s case, the big news is the replenishment, but it’s also been killing it on efficiency for years, which brings down the total number of liters they need to replace).
A second weakness surrounds the way companies set sustainability goals. “We need to set externally-driven, science-based targets that take into account global and regional limits. On climate, that means cutting carbon at the pace required by both science and physics. On water, it could mean that replenishing how much you use specifically is much less important than how much a specific watershed needs to cut back to protect everyone’s ability to do business, grow food, and live,” the writer said.
A third weakness is that Coke is only focusing on one part of its water use. “A company’s own footprint is often very small compared to the value chain impacts. Coca-Cola wrote a groundbreaking report with The Nature Conservancy five years ago that calculated total water use along the full chain: Only about 1 percent of the company’s water use was under its direct control in operations. The vast majority of water was consumed upstream, mainly in the growing of crops — and that means sugar,” the Harvard Business Review writer said.
In addition, Coca-Cola may be vulnerable when it comes to its approach on sugar and obesity, an increasingly important issue in the public sphere. The New York Times editorial board recently admonished the company for emphasizing exercise over calorie cutting as the way to combat obesity. This is another risk area for Coke, according to the Harvard Business Review article:
For the food giants, goals need to focus increasingly on the full value chain and what’s in the products. Full lifecycle targets will become the norm. Goals on sugar, salt, and fat are commonplace. And a few big food companies, like Campbell’s and, as of about a week ago, General Mills, now have goals for reducing carbon and/or water use upstream in agriculture. Coca-Cola is not unaware of the challenge and its 2020 supply chain targets include statements about improving yields (which clearly affects total energy and water use) and helping farmers use drip irrigation techniques.
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