The recent problems that the Coca-Cola Co has encountered in India, and the launch by Diageo of its new Water Blueprint, underline once again just how central water stewardship is to the sustainability strategies of major beverage companies.
Water stewardship has become a critical element for all companies as they bid to make their businesses more sustainable and address the impact of climate change, but for beverage companies it arguably has an even greater significance as it is both a primary ingredient as well as a vital resource in the manufacturing process. Moreover, the unique relationship beverage companies have with water also affects how other stakeholders view them and their approach to water-related issues.
Sustainability initiatives are aimed both at reducing impacts and mitigating risk, including reputational risk. Sustainability laggards attract bad publicity, and history shows that campaigners are particularly vigilant when it comes to the water policies of major beverage companies. The past month has provided ample illustration both of the
risks and the importance of having policies in place to mitigate them.
Tensions over how the requirements of bottling plants compete with the water needs of local communities and agriculture have dogged Coca-Cola’s progress in India over the years, and the issue emerged again last month when the state government of Tamil Nadu withdrew its permission for the soft drinks giant to build a bottling plant in the town of Perundurai. Development of the plant had been opposed vehemently by local communities and environmentalists concerned over its impact on groundwater resources. Comments by the chair of the Perundurai Environment Protection Trust reflect the degree to which Coca-Cola is targeted by campaigners. VM Kandasamy was quoted as saying: “This is a great victory for the people of Perundurai. We put all our efforts to stop Coca-Cola and we have succeeded.”
It is a measure of the extent of the challenges water stewardship represents that Coca-Cola continues to face such pressure in spite of positioning water as one of the three primary pillars in its sustainability strategy, along with empowering women and well-being. Only last month, the companyannounced the expansion of The Coca-Cola Africa Foundation’s (TCCAF) Replenish Africa Initiative (RAIN), committing a further US$35m to Pan-African safe water access and sanitation programmes aimed at reaching an additional 4m people by 2020.
The problems Coca-Cola has encountered in India speak to the particular risks that beverage companies face in water-stressed areas, which are so often also located in the emerging markets of the developing world.
In its new Water Blueprint, launched last month, Diageo has sought to create a water strategy for the whole company, but a defining characteristic of that strategy is that it prioritises water-stressed areas. This is a crucial attribute for any water strategy to have as water is a local and regional resource. In contrast to carbon emissions, global figures on water usage and efficiency are of little significance. It is how companies respond to water risk in specific locales and regions which really matters.
The four core areas identified by Diageo in its new strategy underline the importance of taking account of regional variations in water availability and the particular challenges represented in developing countries. It is notable that Diageo CEO Ivan Menezes referred specifically to Diageo’s expanding footprint in emerging markets in his comments on the new strategy.
The programme aims to enhance the company’s water stewardship efforts in its sourcing of raw materials; within its own operations; within the communities in which it operates and through local and global advocacy for best practice in water stewardship at large. The general aims of reducing water use through a 50% improvement in water efficiency and to return 100% of waste water from its operations to the environment safely are not insignificant, but it is the specific aims related to water-stressed areas that are particularly notable.
Among other targets, Diageo has pledged to replenish water-stressed areas with the equivalent amount of water used in the final products produced in those areas, through projects such as reforestation, wetland recovery and improved farming techniques. The new strategy also reflects the importance of extending a responsible view of water back into the supply chain, where by far the largest proportion of any food or beverage product’s water footprint is to be found. As part of the Water Blueprint, Diageo will equip suppliers with tools to protect water resources in water stressed areas.
In addition, Diageo has said it will develop community projects through its existing Water of Life programme in water-stressed areas where it has production sites. It will also ensure appropriate access to safe water, sanitation and hygiene for all employees in the premises under its control.
Diageo’s new strategy was publicly endorsed by Barbara Frost, CEO of the water charity, WaterAid. Frost said WaterAid welcomes the Diageo Water Blueprint and would “encourage all businesses, governments and civil society to play their part in solving the water and sanitation crisis by making a solid commitment to managing water sources responsibly”.
Holding up Diageo as an example to others in this way reflects the important role the larger players have in leading the way on key sustainability issues. There may be those who bemoan the hegemonic way in which global giants like Diageo, Coca-Cola and PepsiCo bestride their sectors but, if they show the same assertiveness and resolve to lead from the front in sustainability, they can do much to deflect criticism and rebut the contention that there is something inherently unsustainable in the existence of multinational conglomerates.
Such sensitivities are arguably at their rawest when it comes to the relationship multinationals have with water security and the developing world, which makes programmes such as Diageo’s Water Blueprint all the more important.
The particular vigilance that water stewardship attracts from campaigners also ensures that companies risk enormous reputational damage if they fail to follow through on commitments. In all areas of sustainability, walking the walk, rather than just talking the talk, is vital and, given its crucial importance and capacity for attracting negative publicity, nowhere is this more true than in water stewardship.
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