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ICMR Center for Management Research

Coca-Cola’s Water Sustainability Initiatives

This case was written by Hadiya Faheem, under the direction of Debapratim Purkayastha, ICMR Center for Management Research. It was compiled from published sources, and is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation.

2009 ICMR Center for Management Research

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Coca-Cola‘s Water Sustainability Initiatives

“[…] The Coca-Cola Company pledges to return the water we use in our beverages and their production; to achieve balance in communities and in nature with the water we use. This goal is, admittedly, aspirational. It will be a multi-year journey for our entire system, but it is a journey we have begun and will continue to pursue.”1

E. Neville Isdell, Chairman and CEO, The Coca-Cola Company, in 2007.

“Coke has done „greenwashing‟ very well. They shifted their image to one of a green and socially responsible organization, but they‟re not changing their operations.”2

Richard Girard, Researcher, Polaris Institute3, in 2008.

INTRODUCTION

On March 26, 2008, US-based leading beverage company, The Coca-Cola Company (Coca-Cola), received the US Agency for International Development‘s4 (USAID) ‗2007 Alliance of the Year‘ award for its water sustainability initiatives in developing countries worldwide. The award recognizes public-private partnerships for their outstanding contribution to global challenges.

Since 2004, Coca-Cola had been accused by several governmental organizations and activists of creating environmental problems in several countries by depleting groundwater tables. In 2005, the company used 290 billion liters of water to produce its beverages. Around 40 percent of the water was consumed in making beverages and the remaining 60 percent was used in the supply chain and in the production of ingredients like sugar and corn.5

In 2005, Coca-Cola entered into an alliance with USAID to address global water management problems. These initiatives were funded by Coca-Cola and the Water and Development Alliance6 (WADA). Coca-Cola in association with USAID and WADA addressed critical water issues across the world. However, the beverage company was criticized for depleting groundwater that was an important resource to the local communities in developing countries. Coca-Cola was also criticized for distributing what was alleged to be improperly treated sludge containing toxic carcinogens and heavy metals like cadmium and lead, as fertilizer to farmers in India.

1 ―The Coca-Cola Company ‗Replenish Report‘,‖ www.thecoca-colacompany.com, January 2008.

2 Ling Woo Liu, ―Water Pressure,‖ www.time.com, June 12, 2008.

3 Launched in 1997, the Polaris Institute empowers the movement of citizens in the direction of democratic social change (Source: www.polarisinstitute.org).

4 Launched in 2001, USAID is the key federal agency in the US that provides humanitarian assistance. USAID supports long-term economic growth, global health, trade and agriculture, conflict prevention, etc. (Source: www.usaid.gov).

5 Ling Woo Liu/Shanghai, ―Is Coca-Cola Serious about Conserving Water?‖ www.indiaresource.org, June 12, 2008.

6 In November 2005, the WADA was founded by Coca-Cola and USAID in conjunction with the Global Environment and Technology Foundation. WADA supports initiatives like protection of watersheds, improved sanitation and water supply, and encourages local communities to use water productively.

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Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9IOn June 5, 2007, Coca-Cola and the World Wildlife Fund7 (WWF) launched a global project that focused on water conservation. Coca-Cola aimed to return to the environment all the water that it consumed in beverage production and become water neutral by 2010. This it proposed to do by focusing on three core areas — reduction, recycling, and replenishment. Commenting on the launch of its global water project, Neville Isdell (Isdell), Coca-Cola‘s chairman and CEO, said,

―Our goal is to replace every drop of water we use in our beverages and their production. For us that means reducing the amount of water used to produce our beverages, recycling water used for manufacturing processes so it can be returned safely to the environment, and replenishing water in communities and nature through locally relevant projects.‖8

Some environmentalists opined that Coca-Cola‘s efforts toward water conservation were part of its environmental responsibility initiatives. The company focused a lot on developing solutions for sustaining water for two reasons: water scarcity was an emerging issue, and the resource was an important element for the company to run its business. (Refer to Exhibit I for importance of water to Coca-Cola). However, the company‘s water sustainability initiatives came in for criticism from analysts who were of the opinion that Coca-Cola was trying to create an image of a socially responsible company and that it was nothing more than greenwashing9. In fact, in 2007, the Polaris Institute (Polaris) presented it with the First Corporate Greenwashing Award10. ―After careful consideration, the Coca-Cola Company stood out as the company that has worked the hardest this year to present itself as socially and environmentally responsible – while continuing to harm environments and communities through the production and distribution of its products,‖11 said Verda Cook, Campaigns Coordinator, Polaris.

BACKGROUND NOTE

The Coca-Cola drink, popularly referred to as ‗Coke‘, is a kind of cola, a sweet carbonated12 drink containing caramel13 and other flavoring agents. It was invented by Dr. John Smith Pemberton (Pemberton) on May 8, 1886, at Atlanta, Georgia, in USA. The beverage was named Coca-Cola because at that time it contained extracts of Coca leaves and Kola nuts14. Frank M. Robinson (Robinson), Pemberton‘s book-keeper and partner, who came up with the name for the drink, suggested that it be spelt Coca-Cola rather than Coca-Kola because he thought the two C‘s would look better while advertising. Robinson designed the now world famous Coca-Cola trademark as well.

Pemberton later sold the business to a group of businessmen, one of whom was Griggs Candler (Candler). By 1888, several forms of Coca-Cola were in the market competing against each other. Candler acquired these businesses from the other businessmen and established The Coca-Cola

7 On September 11, 1961, the World Wildlife Fund was established for the protection of nature. The WWF is also responsible for sustaining natural resources, promoting efficient utilization of resources, and provides approaches to curb the level of pollution (Source: www.worldwildlife.org).

8 ―WWF and Coca-Cola Embark on Water Conservation Initiative,‖ www.ens-newswire.com, June 5, 2007.

9 The 10th edition of the Concise Oxford English Dictionary defines greenwash as ―disinformation disseminated by an organization so as to present an environmentally responsible public image.‖

10 According to the Polaris Institute, the ‗award is presented to companies that have pushed profits higher while investing millions of dollars into covering up environmentally damaging practices with corporate social responsibility projects‘.

11 ―Coca-Cola Company Wins Corporate Greenwashing Award,‖ www.polarisinstitute.org, April 16, 2007.

12 Carbonation, which involves dissolving carbon dioxide, is used in aqueous solutions like soft drinks to make them effervescent.

13 Caramel is a food which has a brown colour and a sweet toasted flavour. Caramel can be made from sugar by heating it slowly to around 170°C.

14 The kola nut is a kind of a nut with a bitter flavor and high caffeine content, and is primarily obtained from some West African or Indonesian trees.

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Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9ICompany (Coca-Cola) in 1892. He aggressively marketed the product through advertising and distribution of coupons and souvenirs, and promoted the brand name Coca-Cola. Sales grew rapidly and by 1895, the product was being sold across the US.

In the initial years, Coca-Cola was sold through soda fountains15 wherein the Coca-Cola syrup, carbon dioxide, and water were mixed and given to customers. In 1894, a fountain seller named Joseph A. Biedenharn introduced the concept of selling the prepared drink in bottles. He thus became the first bottler for Coca-Cola. The Coca-Cola bottling system grew to become one of the largest, widest production and distribution networks in the world.

In 1919, a group of investors headed by Ernest Woodruff and W C Bradley purchased Coca-Cola from Candler for US$ 25 million.16 In 1923, Robert Winship Woodruff (Woodruff), son of Ernest Woodruff, was elected as the company president. He is widely credited with making Coca-Cola, one of the world‘s most recognized brands and a multinational company with huge revenues and profits.

The period 1940 to 1970 was one of rapid international growth and Coca-Cola became a symbol of friendliness and refreshment across the world. In 1955, it became the first company to introduce the sale of the soft drinks in metal tins, a concept originally developed for the American soldiers. In 1960, Coca-Cola acquired the Minute Maid Corporation to add fruit juices to its product portifolio. In 1977, PET (Polyethylene Terephthalate)17 bottles were introduced. During this time, the company also introduced various brands like Sprite and TAB, which went on to become bestselling soft drink brands.

In 1980, Roberto Goizueta18 became the Chairman and CEO of Coca-Cola. Business analysts described him as a man with a global vision and credited him with taking steps that made Coca- Cola popular across the world. In 1985, Coca-Cola changed its old formula to make its product taste sweeter to compete more effectively with Pepsi Co. Inc.19 (Pepsi). The new formula was launched with a lot of publicity and was marketed as the ‗New Coca-Cola‘. However, to the company‘s dismay, the new product proved to be a commercial failure and was even described as one of the biggest marketing blunders ever. Customers were vociferous in their demand for the original taste and demonstrations were held against the company. Bowing to public opinion, Coca- Cola soon reintroduced the original taste as ‗Coca-Cola Classic‘. In 1982, ‗Diet Coke‘ was introduced as a low calorie soft drink for health conscious customers.

In 1986, Coca-Cola merged the company owned distribution network with two large ownership groups that were for sale – the John T. Lupton franchises and BCI Holding Corporation‘s bottling holdings – to form an independent entity, Coca-Cola Enterprises Inc. (CCE), which mainly operated in America and Europe.

By 2008, Coca-Cola had operations in over 200 countries and was selling more than 400 brands in categories like packaged drinking water, coffees, juices, sports drinks, and teas, apart from its main soft drink products.20 The company owned four of the top five soft drink brands in the world — Coca-Cola, Diet Coke, Fanta, and Sprite. It also had other popular brands like Barq‘s, Fruitopia,

15 Historically, a soda fountain referred to soda shops and the part of a drugstore (pharmacy) where sodas, ice cream, sundaes, hot beverages, iced beverages, baked goods, and light meals were prepared and served. Now the term refers to the carbonated drink dispensers found in fast food restaurants and convenience stores in the US and Canada.

16 ―W.C. Bradley Co.,‖ www.fundinguniverse.com.

17 PET (Polyethylene terephthalate) is a thermoplastic resin of the polyester family that is used to make beverage, food, and other liquid containers, synthetic fibers, as well as for some other thermoforming applications.

18 Roberto C. Goizueta, a Cuban immigrant, had worked up the ranks at Coca-Cola and was its Chairman and CEO from 1980 to 1997. Under his leadership, return on Coca-Cola‘s stock was over 7,100 percent (Source: ―Coke CEO Roberto C_ Goizueta Dies at 65,‖ www.money.cnn.com, October 18, 1997).

19 Headquartered in New York, Pepsi was founded in 1965 through a merger between Pepsi Cola and Frito Lay. Its products include beverages, snacks, juices, etc. For the financial year 2007, it had annual revenues of US$ 39 billion.

20 ―Around the World: Our Global Operations,‖ www.cokefacts.com, 2008.

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Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9IMinute Maid, POWERade, and Dasani water. In the year 2007, the company witnessed strong finacial performace with net operating revenues of US$ 28.86 billion and operating income of US$

7.25 billion. This represented a growth of 20 percent and 15 percent over 2006 respectively. Earning per shares (diluted) growth was 19 percent (Refer to Exhibit II for the selected financials of Coca-Cola: 2003-2007).

COCA-COLA‘S ENVIRONMENTAL ISSUES

Coca-Cola was accused of draining the underground water table and of releasing improperly treated industrial effluents in less developed countries. The company was hit hardest in India. The focal point of the environmental accusations in India was the Coca-Cola plant located in the southern state of Kerala. Coca-Cola, through its subsidiary in India, The Hindustan Coca-Cola Beverages Pvt. Ltd. (Coca-Cola India), had established a bottling plant in the Plachimada locality of Palakkad district in Kerala. It was alleged that Coca-Cola India had dug more than 65 bore- wells at the factory site to extract groundwater for production and operations. Daily production was estimated at 85 truck loads of beverages wherein each load contained 550-600 cases and each case contained 24 bottles, each of 300 ml volume. It was estimated that every day, 15 million liters of groundwater were extracted free of cost and used for production and bottle washing.21

Many local residents in the villages surrounding the factory site alleged that over the years, they had been facing depleted underground water levels, leading to water scarcity. In addition, the bottle washing operations involved the use of chemicals and the generation of effluents. These effluents were allegedly released without being adequately treated, leading to the contamination of groundwater. As a result, it was reported that the groundwater had turned turbid or milky on boiling and was unfit for consumption. Another by-product of bottle washing was a foul smelling dry sediment sludge waste. It was said that the waste was initially sold to unsuspecting farmers as a fertilizer. When there were no takers, Coca-Cola India allegedly offered it free of charge.

In 2003, BBC Radio 4‘s Face the Facts program revealed that a separate study conducted by it has shown that the sludge contained high levels of carcinogenic heavy metals like cadmium and lead. It was alleged that when the farmers came to know that it was toxic and raised protests, the waste was dumped on the wayside and on the lands at night. In the same year, the Center for Science and Environment22 (CSE) published a report which revealed that 12 soft drink brands sold by Coca- Cola and Pepsi in India had pesticide levels far higher (almost 36 times more) than what was permitted by the European Economic Commission23 (EEC). This issue again re-surfaced in August 2006, when CSE tested around 57 samples of carbonated drinks of Coca-Cola and Pepsi in India and found pesticides in all the samples. CSE alleged that the pesticide residues were 24 times higher than the standards proposed by the European Union and the Bureau of Indian Standards24.25

In 2004, Coca-Cola India utilized 283 billion liters of water, which was equal to the world‘s consumption of water for a period of ten days. Moreover, the company used 2.7 liters of water for the production of a single beverage bottle wherein 1.7 liters were discarded as waste.26

21 ―Struggle against Coca-Cola in Kerala,‖ www.zmag.org, September 10, 2002.

22 The Center for Science and Environment (CSE) is an independent, non-governmental organization with the stated aim of increasing public awareness about science, technology, environment, and development. CSE was established in 1980 and is based in New Delhi.

23 The European Economic Commission is a branch of the governing body of the European Union (EU) possessing executive and some legislative powers. It is located in Brussels, Belgium. The European Union is comprised of 27 member states located in Europe and was formed to enhance the social, political, and economic co-operation among member nations.

24 The Bureau of Indian Standards is the national body that sets standards related to product quality and management system, consumer affairs, and technical standards in India.

25 ―Dangerous Pesticides in Coca-Cola and Pepsi in India,‖ www.indiaresource.org, August 3, 2006.

26 ―Coca-Cola Essay,‖ http://sgu05ysw.wordpress.com.

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Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9IIn 2005, it was reported that Coca-Cola India had drawn around 225,000 liters of water per day in Khammam district of Andhra Pradesh for its Kinley brand of mineral water. This excessive water usage led to the drying up of wells, leaving local communities with no access to water. In the same year, the company was reported to have released saline effluents in a village of Chennai. The effluent made the water brackish and unsafe for drinking. In Mehdiganj, Rajasthan, and Maharashtra, the company was alleged to have contaminated the water and caused severe water shortages.

Coca-Cola faced environmental problems mostly in India, but a similar incident occurred in Panama in May 2003. Coca-Cola‘s bottling partner in Panama discharged over 1,000 gallons of concentrate used in beverages into a canal that ran into the Matasnillo River. The water from this river then flowed into the Bay of Panama. The concentrate that was discharged turned the water a reddish pink and made it unsuitable for drinking. The bottler was fined a sum of US$ 300,000 by the Panama National Environmental Authority27.28

There were other countries that faced problems related to water shortages and poor access to potable water in Africa, Latin America, Europe, and other parts of Asia. Coca-Cola implemented several community development and watershed projects in these countries but continued to face criticisms and protests for local communities, especially in India. The company vociferously refuted all the allegations leveled against it and maintained that it was being targeted as it was the world‘s leading beverage company.

COCA-COLA & WATER

In 2002, Coca-Cola initiated its water sustainability initiatives to provide local communities residing in the areas near its bottling plants with access to potable water. Since the company was facing several issues related to its environmental sustainability in India, it launched several rainwater harvesting projects in India in June 2002.29 The company received support from several non-governmental organizations30 (NGOs), central groundwater authorities, state groundwater boards, and welfare associations. In addition to recharging water, the company focused on curbing the usage of water in its production processes.

Over the years, Coca-Cola had made investments in human resources and finance with an objective to improve its environmental performance worldwide. In 2003, the company formed a department called the Environment and Water Resources Department and consolidated its resources in this department. The department was headed by the vice president, Jeff Seabright (Seabright). In 2003, the company published its first system wide environmental performance report. The report set benchmarks for evaluating the environmental performance of Coca-Cola and its bottling facilities. Coca-Cola‘s initiatives toward water conservation showed positive results since its overall water usage declined despite a 4 percent increase in unit case volume (Refer to Table I for Coca-Cola‘s water use efficiency in 2003).31

27 The Panama National Environmental Authority was created by the July 1, 1998 Republic of Panama Environmental General Law for management of the environment and promoting sustainable development by efficient management of natural resources (Source: www.rinya.maff.go.jp).

28 2003 Environmental Report, www.thecoca-colacompany.com, 2003.

29 2003 Citizenship Report, www.thecoca-colacompany.com, 2003.

30 A non-governmental organization is a legal organization set up by private companies or the public having no contribution from the government or any representative of the government (Source://http:en.wikipedia.org).

31 2003 Environmental Report, www.thecoca-colacompany.com, 2003.

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Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9ITable I

Coca-Cola‘s Water Use Efficiency in 2003

Water Operation

Water Use Ratio

2003

2002

change

Concentrate & Beverage Base

0.014

(liters of water per liter of finished product equivalent)

0.015

(7)%

Bottle/Can

2.95

(liters of water per liter of finished product)

3.16

(7)%

Juices

1.76

(liters of water per liter of juice)

2.43

(28)%

Fountain Syrup

1.34

(liters of water per liter of syrup)

1.12

20 %

Packaged Water

1.48

(liters of water per liter of finished product)

—

Source: 2003 Environmental Report, www.thecoca-colacompany.com, 2003.

In 2004, Coca-Cola launched the global water initiative – an integrated program through which the company not only aimed to curb its water consumption but also to provide sustainable solutions to water resource management. The company analyzed around 840 locations worldwide to analyze the risks related to water since it was the primary ingredient in beverage production and a major resource needed to run its business. The company stated the importance of water in its manifesto for growth, ―Water is the lifeblood of The Coca-Cola Company. We have the responsibility and the opportunity to invest in the sustainability of this critical resource, and doing so will produce real benefits for both the Company and the wider world.‖32

The company aimed to enhance efficient usage of water in its business operations in conjunction with local communities in several countries (Refer to Exhibit III for Coca-Cola‘s initiatives in different countries).33

In 2004, Coca-Cola established a Stakeholder Forum wherein the company‘s stakeholders were engaged to discuss issues related to the global water crisis and its implications to its business. The discussions received support from experts in the government and NGOs, employees from senior management, etc.

In 2005, Coca-Cola increased its water use efficiency by 4 percent. However, the growth was expected to remain stagnant since the company had forayed into several tea and coffee products that had more water intensive operations.34 In the same year, the company assessed risks related to water scarcity in 811 bottling plants worldwide to implement efforts toward water conservation

32 ―Toward Sustainability, 2004 Citizenship Report,‖ www.thecoca-colacompany.com, 2004.

33 2004, Environmental report, www.thecoca-colacompany.com, 2004.

34 2005, Environmental Report, www.thecoca-colacompany.com, 2005.

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Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9Iand wastewater treatment. The company also said that it had often exceeded the applicable standards related to wastewater treatment and water resource management.35 In 2005, the company‘s compliance related to effluent wastewater treatment stood at 81 percent. By 2010, the company planned to comply with 100 percent standards. 36

By the end of 2005, the company had set up 20 community and watershed projects in conjunction with local and international organizations to provide access to safe drinking water to local communities surrounding its bottling plants.37

In 2006, Coca-Cola continued its water stewardship strategy and launched 70 community water projects in 40 countries. The company‘s water conservation initiatives led to a 19 percent increase in water use efficiency from 2002.38

COCA-COLA‘S WATER STEWARDSHIP STRATEGY

In 2007, Coca-Cola initiated a global water project that focused on reducing, recycling, and replenishing water used in the company‘s beverage production (Refer to Exhibit IV for Coca- Cola‘s global water sustainability goals). In the same year, it initiated a water stewardship strategy that focused on four core areas such as plant performance, watershed protection, community water initiatives, and global awareness & action.

Plant Performance

Coca-Cola in association with the WWF developed an interactive water resource management toolkit that enabled bottling managers to know their levels of water consumption. The toolkit also provided strategies that helped companies to know how to curb their water consumption. Coca- Cola also focused on treating wastewater so that it could be returned to the environment. Wastewater released as a by-product of manufacturing was also recycled to an acceptable level that supported aquatic life. In 2006, 83 percent of Coca-Cola‘s facilities met the wastewater standard.39 By 2010, the company aimed to comply with 100 percent standard.

In 2007, the Coca-Cola system had increased its level of water use efficiency by 21 percent since 2002 (Refer to Figure I for water use efficiency of Coca-Cola). However, the company‘s usage of water had increased by 4 percent in 2007 (Refer to Figure II for water usage of Coca-Cola).40 The increase in water usage was attributed to the company‘s change in product mix since Coca-Cola had launched its tea and coffee brands. In addition to this, Coca-Cola‘s acquisition of several beverage companies also resulted in an increase in water consumption.

35 2005, Environmental Report, www.thecoca-colacompany.com, 2005.

36 2005, Environmental Report, www.thecoca-colacompany.com, 2005.

37 2005, Environmental Report, www.thecoca-colacompany.com, 2005.

38 2006 Environmental Performance, www.thecoca-colacompany.com, 2006.

39 ―Plant Performance,‖ www.thecoca-colacompany.com.

40 ―Plant Performance,‖ www.thecoca-colacompany.com.

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Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9IFigure I

Water Use Efficiency of Coca-Cola

Water Usage vs. Unit Case Volume

-10

2002

-3

2003-7

Water Use Ratio (Efficiency)

Water Usage

2004-8

-13

2005

2006-6

-2

2007

-20

-10

-17

Unit Case Volume

-19

-21

-30

Water Usage vs. Unit Case Volume

-10

2002

-3

2003-7

Water Use Ratio (Efficiency)

Water Usage

2004-8

-13

2005

2006-6

-2

2007

-20

-10

-17

Unit Case Volume

-19

-21

-30

Source: 2007/2008 Sustainability Review, www.thecoca-colacompany.com.

Figure II

Water Usage of Coca-Cola

Water Use Total*

310

307

300

297

290

288

283

280

277

270

260

2002

2003

2004

2005

2006

2007

Water Use Total*

310

307

300

297

290

288

283

280

277

270

260

2002

2003

2004

2005

2006

2007

* Our 2007 water use increased because of organic growth and acquisitions. Source: 2007/2008 Sustainability Review, www.thecoca-colacompany.com.

Watershed Protection

Coca-Cola‘s watershed program adopted a hands-on approach that provided comprehensive solutions for water sustainability. The company in partnership with the government, NGOs, and several communities took active participation in educating communities and its bottling facilities

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Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9Ion the significance of preserving watersheds. Coca-Cola invested around US$ 20 million in the project and the water conservation efforts were focused on seven river systems that included China‘s Yangtze River, the Mekong River of Southeast Asia, Eastern Europe‘s Danube, the Rio Grande-Rio Bravo, and several other rivers of East Africa. The company also aimed to treat its wastewater in an efficient manner and reach a 100 percent standard by 2010.41 According to Isdell,

―By 2010, we will return all water that we use in our manufacturing processes to the environment at a level that supports aquatic life and agriculture.‖42

In 2005, Coca-Cola in partnership with the USAID initiated a ‗Global Community – Watershed Partnerships Program‘ (GCWPP) in a bid to support water-related programs in developing nations. Commenting on USAID‘s partnership with Coca-Cola, Andrew S. Natsios, USAID Administrator, said, ―Water projects help improve access to safe and adequate water supply and sanitation, improve irrigation technology, enhance natural environments, and develop better institutional capacity for water resources management. When we work together with our partners in the private sector, this important work can benefit even more people in developing nations.‖43 USAID and Coca-Cola worked in conjunction with the Global Environment and Technology Foundation44 to curb the impact of problems related to water in developing countries worldwide.

The GCWPP benefited from the strength of its partners during the water project implementation. For instance, in Mali, the alliance supported activities such as agriculture, water supply, and sanitation by utilizing recycled wastewater released from the company‘s bottling plant.

In the first year of operations, the community watershed programs involved combined investments of more than US$ 3.5 million.45 The community projects were funded by Coca-Cola, USAID, and the WADA. Since 2005, the combined investment was around US$ 13.8 million. With this investment, the WADA had successfully improved the lives of local communities in nearly 14 countries of Africa, Asia, and Latin America.46 In addition to these, the WADA had other funding sources (Refer to Table II for WADA funding sources).

Table II

WADA Funding Sources

Sources

Funding (in %)

Coca-Cola Bottling partners

Coca-Cola Africa Foundation

Coca-Cola Atlanta Foundation

Coca-Cola Corporate

USAID/Washington (GDA, Africa, LAC)

USAID/Missions

Adapted from “Coca-Cola and USAID: A Global Partnership on Water,” www.thecoca- colacompany.com, March 18, 2008.

41 ―Coca-Cola Joins International Water Conservation Campaign,‖ www.huliq.com, June 5, 2007.

42 ―Coca-Cola Joins International Water Conservation Campaign,‖ www.huliq.com, June 5, 2007.

43 ―USAID and Coca-Cola Announce Global Watershed Partnership Agreement,‖ www.cokefacts.com, September 14, 2005.

44 The Global Environment and Technology Foundation promotes sustainable development in energy and water sectors by entering into partnerships with several institutions, promotes environmental practices and builds communities using information technology, and promotes the installation of new technology for the improvement and security of the environment (Source: www.getf.org).

45 ―USAID and Coca-Cola Announce Global Watershed Partnership Agreement,‖ www.cokefacts.com, September 14, 2005.

46 ―Partnership with USAID,‖ www.thecoca-colacompany.com.

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Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9ICommunity Water Initiatives

In 2006, Coca-Cola in association with its bottling partners established around 70 community- based water initiatives in over 40 countries.47 These projects focused on sanitation, hygiene, watershed protection, water supply, efficient water usage, and education and awareness. The company aimed to restore the water levels with the help of several initiatives such as reforestation, efficient use of water in agriculture, rainwater harvesting, watershed protection, etc. It carried out several rainwater harvesting projects in India (Refer to Exhibit V for rainwater harvesting initiatives of Coca-Cola in India).

The company forged Community Watershed Partnerships with more than 120 water projects in more than 50 countries. In collaboration with the USAID and its bottling partners, Coca-Cola formed the WADA and between 2005 and 2008 had invested US$ 13.8 million on protecting and improving the sustainability of watersheds, increasing access to water supply and sanitation, and enhancing productive use of water in 17 countries in Africa, Asia, Latin America, and the Middle East.

The company in conjunction with the United Nations Foundation48 (UNF) founded an initiative called the Global Water Challenge (GWC). The GWC aimed to increase awareness and invest in innovative solutions that would help in providing solutions to access to potable water and proper sanitation. In 2008, Coca-Cola donated US$ 1 million to the UNF‘s Better World Fund Inc.49 (BWF) to continue support for the GWC.

Global Awareness & Action

Coca-Cola in conjunction with the GWC developed a program called ‗Water for Schools‘ which aimed to provide safe drinking water to schools. In addition to providing potable water, GWC aimed to educate students in several schools worldwide about hygiene and sanitation. For instance, in 2006, the GWC launched Sustaining and Scaling School Water, Sanitation, and Hygiene Plus Community Impact (SWASH+) in the Nyanza Province, Kenya. Through applied research, this five-year program was to identify, develop, and test several innovative approaches to support hygiene interventions, access to water in schools, and sanitation.

Moreover, being a member of The CEO Water Mandate50, the company called upon the leaders of the Group of Eight (G8) countries to live up to their governments‘ responsibilities and commitments to make the emerging water crisis a global priority. It also lobbied with the US government in support of the ―Water for the Poor Act‖51.

CRITICISMS

Some analysts felt that the initiatives adopted by Coca-Cola were the need of the hour and such private sector expertise and interests could make real contributions to sustainable development. They felt that the company had set an example for other organizations to follow.

47 2006 Environmental Performance, www.thecoca-colacompany, 2006.

48 Established in 1998, the United Nations Foundation is a public charity organization. The UNF serves as a promoter of the United Nations and helps it solve global problems (Source: www.unfoundation.org).

49 Established in March 1998, Better World Fund is a sister organization of the UNF. The BWF raised funds from the general public for supporting charitable causes. It also educated people about the existence of United Nations and the works areas it supported (Source: www.globalproblems-globalsolutions-files.org).

50 The CEO Water Mandate was launched on July 5-6 July, 2006, at the Global Compact Leaders Summit in Geneva, by the UN Secretary-General and a group of business leaders. It represented both a call to action and a strategic framework for companies seeking to address the issue of water sustainability in their operations and supply chains. Coca-Cola joined the Mandate in 2008.

51 The Act, which was signed into law on December 1, 2005, makes access to safe water and sanitation for developing countries a specific policy objective of US foreign assistance programs.

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Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9IWhile its water sustainability initiatives earned Coca-Cola accolades from its collaboration partners and certain quarters, it failed largely to impress its critics. Despite several efforts by the company, it continued to face criticisms from several quarters. It was severely criticized for depleting groundwater tables, leaving the local communities with no access to drinking water, especially in India. However, Coca-Cola put up a brave front and said that in an attempt to replenish all the water consumed in beverage production, the company was implementing several rainwater harvesting projects in several places in India. According to Coca-Cola, ―As a business that depends on water, and has expertise in water resource management, we are already making a net positive contribution to the water levels through the rainwater harvesting structures that we have installed. We have already created a potential to recharge 15 times more water than we use. Going forward, we are exploring ways we can contribute to more efficient use of water in irrigation.‖52

In addition to groundwater depletion, the company was also criticized for releasing wastewater in the surrounding agricultural fields near its bottling facilities in several locations in India. The company was also accused of illegally seizing land from farmers and discharging hazardous material and sludge into the surrounding community in India. According to Amit Srivastava (Srivastava), India Resource Center, ―The Coca-Cola Company is announcing to the world that it is an environmentally responsible company, and it has partnered with UN agencies and NGOs to paint a pretty green picture of itself. But all that is corporate social responsibility gone wrong because the reality on the ground is different. It is littered with toxic waste and a complete disregard and destruction of the way of life as many people in rural India know it.‖53

In addition to the criticisms the company faced in India, several student activists at the University of Michigan criticized Coca-Cola‘s business practices in India since 2004. The students alleged that to run its business, Coca-Cola had depleted the groundwater levels, and this had hit the livelihood of farmers residing in nearby localities. Coca-Cola in conjunction with the University of Michigan initiated a third-party assessment of the company‘s bottling facilities in India.

On January 14, 2008, The Energy and Resource Institute54 (TERI) released a report giving a clear picture of Coca-Cola‘s environmental practices in India. The report was an outcome of a relentless campaign by several students in the UK, Canada, and the US. More than 20 universities and colleges had imposed a ban on Coca-Cola and its products being sold on their campuses since the company was responsible for causing water shortages and increasing pollution in India. The report concluded that no traces of pesticides were found in the treated water and intake water that the company used to make beverages. It also said that the company had complied with the norms of the Indian regulatory environment. However, TERI recommended that Coca-Cola India take steps in areas such as water resource management and curbing the presence of bacteria in effluent water.

The TERI report did little to staunch the flow of criticism directed against the company. Coca-Cola continued to receive negative publicity since the report was commissioned by the company itself. A few activists of Plachimada Solidarity Committee55 said Coca-Cola India‘s plans to revive its image by gaining a clean chit from TERI had backfired since the report that surveyed six plants out of the 60 bottling facilities of Coca-Cola in India concluded that two bottling facilities located at Kaladera and Nabipur fell in the overexploited zones of groundwater depletion; three facilities located at Mehdiganj, Pirangut, and Sathupalle fell in the safe zones, while one facility Nemam fell in the critical zone. The report also said that Coca-Cola India had exploited the groundwater resources by giving precedence to its own business over the rights of farmers. The sites on which

52 ―Coke Blamed for Depleting Water Resources,‖ http://southasia.oneworld.net, February 22, 2008.

53 ―WWF and Coca-Cola Embark on Water Conservation Initiative,‖ www.ens-newswire.com, June 5, 2007.

54 Based in India, The Energy and Resource Institute was established in 1974 to deal with the issues of depletion of earth‘s resources and develop solutions to problems related to environment, energy, etc.

55 Plachimada Solidarity Committee was established by 32 organizations based in Kerala for fighting against a just issue.

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Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9Iplants were located also exceeded parameters related to alkalinity and the content of lead, coliforms, iron, fluorides, etc. A few plants also had a high content of nitrates, aluminum, manganese, chloride, nickel, turbidity, etc. The bottling facilities at Kaladera also reported that the groundwater contained pesticides. The local communities had asked the company to shut down its plant since it was affecting the livelihood of farmers. The report also highlighted the fact that some of the bottling facilities of Coca-Cola India had failed to maintain the mandatory standards concerning waste management.

Some critics criticized Coca-Cola‘s much acclaimed TCCC standards56 that boasted of the standards the company set for waste management. According to the TERI report, none of the six plants surveyed met the TCCC standards.

COCA-COLA‘S RESPONSE

Coca-Cola opened an exclusive website, www.cokefacts.org, which addressed the allegations related to India and other countries. Also, the company issued an official statement rebutting the charges against its bottling plant at Plachimada. It said the plant was not responsible for the depletion of the underground water table. In support of its statement, the company quoted a study conducted in October 2002 by Dr. R.N. Athvale, emeritus scientist at the National Geophysical Research Institute57 (NGRI), which had concluded that there was no field evidence of overexploitation of the groundwater reserves in the area surrounding the plant. The report added that any underground depletion could not be attributed to water extraction in the plant area.

Coca-Cola also quoted another report prepared by the Palakkad District Environmental Protection Council and Guidance Society in June 2002. The report had concluded that the factory had not caused any environmental damage at any level. Coca-Cola claimed that rainfall in Kerala over the previous two years had decreased by 60 percent and this was the reason for the depletion of water tables.58 A report prepared by the Kerala State Groundwater Department too had rejected these allegations and attributed the depletion to a decrease in rainfall over the years. The company also rejected the allegation that its factory had released untreated industrial effluents. Coca-Cola stated that the technology used for wastewater treatment at the plant was among the most advanced in the world, equivalent to the technology used at its bottling plants in America and Europe. Moreover, the procedures for treatment and discharge of effluents complied with the standards and norms set by the Kerala State Pollution Control Board59 (KSPCB). Coca-Cola set up a few standards for water management that enabled the company to take measures to sustain water and set up its plant after assessing whether the region was water-stressed. The company also said that it had standards to treat wastewater effluents (Refer to Box I for Coca-Cola‘s water management standards and guidance).

56 TCCC standards are Coca-Cola‘s standards related to waste management.

57 The NGRI, based in Hyderabad, India, is an institute dedicated to basic and applied research in the field of geophysics, groundwater exploration, environmental information, etc.

58 Jonathan Hills and Richard Welford, ―Coca-Cola and Water in India,‖ Corporate Social Responsibility & Environmental Management, September 2005.

59 The Kerala State Pollution Control Board is an agency in the Department of Health and Family Welfare under the government of Kerala. The responsibility of the board includes enforcement of laws related to the protection of the environment (Source: http://en.wikipedia.org).

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Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9IBox I

Source Water Protection: This standard helped the company‘s plants to safeguard, maintain, and improve water sustainability. This was achieved with the help of a hydro geological and surface hydrology assessment that was conducted on water sources.

Effluent Quality: The company treated the effluents, i.e wastewater, released from the bottling facilities to a level that was in accordance with the laws and regulations and also supported aquatic life.

Water Scarcity: This was an important component that helped the company assess the region before siting60 a plant, plant consolidation and expansion, and operations in water-stressed regions.

Water Scarcity: This was an important component that helped the company assess the region before siting60 a plant, plant consolidation and expansion, and operations in water-stressed regions.Coca-Cola‘s Water Management Standards and Guidance

Adapted from “The Coca-Cola Company Global Water Management Standards and Practices,” www.cokefacts.com, 2008.

In response to the allegations that it had supplied toxic sludge to farmers as fertilizer, Coca-Cola maintained that the dry sediment slurry waste or sludge, a by-product of its operations, was not harmful. The sludge was made up of organic and inorganic material that would not contaminate the land, it said, adding, that it was used around the world, including by Coca-Cola, as a soil enhancer. The generation of sludge in all the company‘s plants was monitored for composition and was disposed of properly. Further, the KSPCB had concluded in a detailed study that the concentration of cadmium and other heavy metals in the sludge were below prescribed limits and therefore could not be considered hazardous, the company said.

Furthermore, the company quoted a study conducted by the Department of Family and Child Welfare, Central Government of India, after the allegations were made in August 2003, which had found that the products sold by the company were perfectly safe. Coca-Cola said that it was a responsible corporate citizen in India and mentioned that it had won many awards with regard to its environment responsibility initiatives in several countries (Refer to Exhibit VI for the list of awards and recognition received by Coca-Cola).

In response to the issues related to its bottling partner at Panama, the company reaffirmed that the bottling partner would abide by the environmental standards and safeguards set by the Coca-Cola system. Coca-Cola also gave the assurance that it would take steps so that similar incidents would not occur in the future. The company had also designed a new facility for treatment of wastewater at the Panama plant that was made operable in 2005.61

The company claimed that the TERI report had confirmed that it met Indian regulations on an overall basis while also identifying some areas of improvement. 62 Reacting to criticism that the report sponsored by the company was critical of Coca-Cola, Deepak Jolly, Vice President, Public Affairs and Communication, said, ―It doesn‘t blame us even once. It blames the farmers and agriculture. It also does not even once suggest that we should pack up and leave those areas. It says that there are four or five options for bring up the water levels and if nothing is possible then alone we should go. These options are helping farmers with reducing water consumption, or creation of ponds, and so on. Anything but closure.‖63

60 The Coca-Cola Company prior to setting up a bottling facility assessed the environmental and occupational safety and health issues that also included efficient supply of water. The siting standards also required the company to discuss issues related to water and effluents with the local authorities and approvals from the local regulatories (Source: www.cokefacts.com).

61 2003 Environmental Report, www.thecoca-colacompany.com, 2003.

62 ―TERI Gives Clean Chit to Coca Cola,‖ www.saharasamay.com, January 14, 2008.

63 ―Coke Gets CSR Award Amidst Protests,‖ www.business-standard.com, February 19, 2008.

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Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9ILOOKING AHEAD

As of 2008, Coca-Cola had successfully carried out its sustainable water management initiatives in 20 countries of Africa, Asia, Latin America, and the Middle East. In June 2007, the company had improved its water use efficiency by 18.6 percent and in the last five years, the company had decreased water consumption for beverage production by 5.6 percent. The company also planned to recycle all the water it used in its manufacturing processes and return it to the environment by 2010.64

Coca-Cola aimed to replenish the water by several means such as community water initiatives and rainwater harvesting projects. By mid-2007, the company had established around 320 rainwater harvesting projects in developing countries worldwide.65 However, Coca-Cola was criticized for its rainwater harvesting projects in India. M S Rathore, hydrologist, Institute of Development Studies66, said, ―Coca-Cola is bluffing people with its rainwater harvesting. The problem is that the rainfall in the area is too low, and the amount of rainfalls fluctuates a lot from year to year and within every year. We get a maximum of 30 days of rains every year, and eighty percent of those rains come in just two or three days. Rainwater harvesting is simply not efficient.‖67

Some critics opined that Coca-Cola‘s efforts toward launching several rainwater harvesting projects in India was part of its public relations (PR) strategy as these were not enough to offset the water used up by its operations. They pointed out that Coca-Cola had an annual advertising budget of US$ 2.4 billion, and an investment of US$ 20 million for its water conservation projects was a mere 1 percent of this budget.68 They also opined that Coca-Cola spent more on advertising its efforts toward water conservation than on water resource management itself.

Many environmental experts opined that Coca-Cola‘s water sustainability initiatives were nothing short of greenwashing. Srivastava, criticizing Coca-Cola said, ―We call this ‗greenwashing‘. An attempt by the Coca-Cola company to manufacture a green image of itself that it clearly is not, as their practice in India shows.‖69 Moreover, critics said that very few people know what Coca-Cola meant by the term ‗water neutral‘ and the environmental claims made by the company were not verifiable. According to Polaris‘ Richard Girard, ―there is no way to verify the amount of water this company uses, when in many cases Coke‘s bottlers do not disclose how much water they are taking. The claim of a 4 percent reduction is strictly an exercise in public relations.‖70 They criticized the company for trying to project its water sustainable initiatives while not making any changes in its operations.

Coca-Cola was also criticized for its sustainability review report for the year 2007-2008 which omitted the environmental issues faced by the company and several community campaigns that accused the company of depleting groundwater levels and causing pollution in India. They added that the company was painting a green image of itself rather than narrating the challenges it faced related to its business practices in India. Srivastava added, ―The media, the corporate social responsibility movement, and everyone concerned with transparency and good corporate practices needs to take a good look at Coca-Cola‘s Sustainability Review. What kind of a review has Coca- Cola conducted by conveniently forgetting to mention its ongoing trouble spots where its operations are hugely unsustainable? This is an attempt by the company, once again, to mislead the public.‖71

64 ―Coca-Cola Essay,‖ http://sgu05ysw.wordpress.com.

65 ―Coca-Cola Essay,‖ http://sgu05ysw.wordpress.com.

66 Founded in 1966, Institute of Development Studies is a leading organization that conducts research and communicates issues related to international development (Source: www.ids.ac.uk).

67 ―Coca-Cola Continues Unethical and Dishonest Practices in India,‖ www.commondreams.org, September 12, 2008.

68 ―Indian Campaign Forces Coca-Cola to Announce Ambitious Water Conservation Project,‖ www.indiaresource.org, July 30, 2007.

69 ―Coke Faces New Charges in India, Including ‗Greenwashing‘,‖ www.polarisinstitute.org, June 11, 2007.

70 ―Coca-Cola Company Wins Corporate Greenwashing Award,‖ www.polarisinstitute.org, April 16, 2007.

71 ―Coca-Cola Omits Issues in Sustainability Review,‖ www.scoop.co.nz, October 29, 2008.

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Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9ICoca-Cola maintained that many of the allegations leveled against it were false and that it was being targeted as it was the world‘s leading beverage company. Criticisms notwithstanding, the company said it would go ahead with its water sustainability initiatives. In October 2008, the company announced that the Coca-Cola system would improve its water efficiency by 20 percent by 2012, compared to a baseline year 2004.72 The company contended that the goal of achieving water neutrality was indeed daunting and required a lot of time and effort.73 Jeff Seabright, Vice President, Environment & Water Resources, at Coca-Cola, commented: ―We recognize the challenge in a goal as complex as ‗water neutrality‘ and have sought extensive external input from other companies, non-governmental organizations and universities as to how it might be defined. We‘re focusing on quantifying our global water footprint so that we can develop a process to return an amount of water equal to what we use in our operations.‖74

72 ―The Coca-Cola Company Announces New Global Targets for Water Conservation and Climate Protection in Partnership with WWF,‖ www.thecoca-colacompany.com, October 30, 2008.

73 ―The Coca-Cola Company ‗Replenish Report‘,‖ www.thecoca-colacompany.com, January 2008.

74 ―New Study Sets Out Coca-Cola‘s Water Strategy,‖ www.waterbriefing.org, March 25, 2008.

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Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9IExhibit I Importance of Water to Coca-Cola

Water is an essential ingredient for Coca-Cola to run its business operations. Water is an important component for the company‘s supply chain since water is a key element in sugar production. However, water usage was being exploited due to over consumption, poor management, and increasing pollution. Hence, water stewardship was essential for sustaining the operations of the company and the health of communities in which the company operated.

According to estimates by Coca-Cola, over 1 billion people lacked access to potable water and over 2.6 billion people did not have basic water sanitation.75 In view of these estimates, Coca-Cola initiated several community projects that aimed to provide local communities with improved access to water, sanitation, and hygiene.

Adapted from “The Coca-Cola Company Global Water Management Standards and Practices,” www.cokefacts.com, 2008.

Exhibit II

Selected Financials of Coca-Cola: 2003-2007

(In millions except per share data)

Year ended December 31

2007

2006

2005

2004

2003

SUMMARY OF OPERATIONS

Net operating revenues

28,857

24,088

23,104

21,742

20,857

Cost of goods sold

10,406

8,164

8,195

7,674

7,776

Gross profit

18,451

15,924

14,909

14,068

13,081

Selling, general and administrative expenses

10,945

9,431

8,739

7,890

7,287

Other operating charges

254

185

480

573

Operating income

7,252

6,308

6,085

5,698

5,221

Interest income

236

193

235

157

176

Interest expense

456

220

240

196

178

Equity income – net

668

102

680

621

406

Other income (loss) – net

173

195

(93)

(82)

(138)

Gains on issuances of stock by equity

investees

—

Income before income taxes

7,873

6,578

6,690

6,222

5,495

Income taxes

1,892

1,498

1,818

1,375

1,148

Net income

5,981

5,080

4,872

4,847

4,347

Average shares outstanding

2,313

2,348

2,392

2,426

2,459

75 2006 Corporate Responsibility Review, www.thecocacolacompany.com, 2006.

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Year ended December 31

2007

2006

2005

2004

2003

Average shares

outstanding assuming dilution

2,331

2,350

2,393

2,429

2,462

PER SHARE DATA

Basic net income

2.59

2.16

2.04

2.00

1.77

Diluted net income

2.57

2.16

2.04

2.00

1.77

Cash dividends

1.36

1.24

1.12

1.00

0.88

Closing market price on December 31

61.37

48.25

40.31

41.64

50.75

TOTAL MARKET VALUE OF COMMON STOCK

142,289

111,857

95,504

100,325

123,908

BALANCE SHEET DATA

Cash, cash equivalents and current marketable

securities

4,308

2,590

4,767

6,768

3,482

Property, plant and equipment –net

8,493

6,903

5,831

6,091

6,097

Depreciation

958

763

752

715

667

Capital expenditures

1,648

1,407

899

755

812

Total assets

43,269

29,963

29,427

31,441

27,410

Long-term debt

3,277

1,314

1,154

1,157

2,517

Shareowner‘s equity

21,744

16,920

16,355

15,935

14,090

NET CASH PROVIDED BY OPERATING

ACTIVITIES

7,150

5,957

6,423

5,968

5,456

Certain prior year amounts have been reclassified to conform to the current year presentation.

In 2007, we adopted Financial Accounting Standards Board (―FASB‖) Interpretation No. 48, ―Accounting for Uncertainty in Income Taxes‖ and recorded an approximate $65 million increase in accrued income taxes in our consolidated balance sheet for unrecognized tax benefits, which was accounted for as a cumulative effect adjustment to the January 1, 2007 balance of reinvested earnings.

In 2006, we adopted Statement of Financial Accounting Standards (―SFAS‖) No.158,

―Employers‘ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R).‖

We adopted FASB Staff Position (―FSP‖) No. 109-2, ―Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004‖ in 2004. FSP No. 109-2 allowed the Company to record the tax expense associated with the repatriation of foreign earnings in 2005 when the previously unremitted foreign earnings were actually repatriated.

We adopted FASB Interpretation No. 46(R), ―Consolidation of Variable Interest Entities,‖ effective April 2, 2004.

Source: The Coca-Cola Company, 2007 Annual Review, www.thecoca- colacompany.com/investors/pdfs/2007_annual_review.pdf.

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Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9IExhibit III

Coca-Cola‘s Initiatives in Other Countries

AFRICA

Coca-Cola in partnership with USAID had launched 9 water projects in Africa with a combined investment of US$ 7 million in 2007. These projects focused on addressing issues related to improving quality of water and providing basic water and sanitation to communities which lacked access to these services. The projects benefited around 250,000 people in Kenya, Tanzania, Angola, Uganda, Ivory Coast, Ethiopia, Nigeria, Ghana, and Mozambique

EURASIA

Coca-Cola in partnership with the Nepalese Department of Water Supply and Sewerage and UN-HABITAT launched a campaign called ‗Partnership for Safe Water‘ in Nepal. The campaign aimed to develop access to potable water and curb the emergence of waterborne diseases. The campaign aimed to generate awareness of household water treatment (HWT) and safe water. With this campaign, Coca-Cola aimed to provide access to clean and safe drinking water to the local communities in Nepal.

In partnership with the United Nations Development Program (UNDP), Coca-Cola launched a US$ 7 million project in 2006 to provide potable water to communities of Croatia, Kazakhstan, Romania, and Turkey.76

Coca-Cola India in association with the government combated water shortages by implementing rainwater harvesting projects in a bid to restore the depleted groundwater tables. By 2007, Coca-Cola India had installed over 300 rainwater harvesting systems.

In Greece, the Coca-Cola Hellenic Bottling Company (HBC) launched a program to alert the public of the significance of water conservation. The program aimed to generate awareness among the public on the critical global water challenges and to take a proactive approach to treat wastewater in an efficient manner and minimize wastage of water.

In Spain and Poland, Coca-Cola in conjunction with the WWF aimed to protect watersheds and minimize water shortages.

LATIN AMERICA

Coca-Cola in partnership with SEMARNAT (Natural Resources and Environment Secretary) agencies aimed to reduce, recycle, and replenish water for its own use in Mexico. The project also involved reforestation and restoration for over 25,000 hectares that included planting of around 30 million trees. In a span of two years, Coca-cola had been able to save over 258 million liters of water. 77

PACIFIC

In Thailand, Coca-Cola sponsored a program called, ‗RAKNAM‘ to generate awareness among the public for sustaining water as an importance resource. RAKNAM focused on watershed protection, community initiatives, and plant performance. By 2007, the company benefited around 2 million people in Thailand.

In China, Coca-Cola launched a rainwater harvesting project in partnership with Soong Ching Ling. The project was implemented in two phases. In the first phase, water pipes, water storage pools, and water pump stations were installed and built. This provided an improved supply of

76 ―Community Water Initiatives,‖ www.thecoca-colacompany.com, 2008.

77 2007/2008 Sustainability Review, www.thecoca-colacompany.com.

potable water to over 3,000 residents. In the second phase, Coca-Cola built 27 facilities for gathering rainwater and water storage in five villages. These storage wells stored around 2.4 billion gallons of water per year.

In Malaysia, Coca-Cola donated US$ 28,600 to Raleigh International, a UK-based NGO for supplying clean drinking water to around 10,000 villagers.78

Compiled from various sources.

Exhibit IV

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Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9ICoca-Cola‘s Global Water Sustainability Goals

Reduce, Recycle, and Replenish

In June 2007, Coca-Cola aimed to focus on three core objectives of reducing, recycling, and replenishing water used in its beverage production.

Reduce

Coca-Cola planned to set targets for water efficiency. Between 2002 and 2007, Coca-Cola‘s unit case volume went up by over 21 percent while its global consumption of water reduced by over 2 percent. The company‘s water use efficiency was around 2.47 liters for every liter of product it produced in 2007.79 Around 1 liter of water was used in the beverage while the remaining 1.47 liters was used in the manufacturing processes.

Recycle

The water used in the company‘s manufacturing operations was recycled in a bid to return it to the environment. The company had to abide by the laws and regulations while treating this wastewater. It had a standard that would ensure water treatment to the extent it would support aquatic life. However, in certain communities, wastewater treatment was not practiced or the water could not be treated to an acceptable standard. In such cases, the bottling partners created their own water treatment system that cleaned the water and discharged it into a polluted waterway. In 2007, around 85 percent of the bottling partners met the acceptable level of standards. However, the company planned to adopt stringent water standards and comply with 100 percent recycling by 2010.80

Replenish

In 2007, Coca-Cola had utilized around 122 billion liters of water. In a bid to counterbalance, Coca-Cola planned to launch several projects that helped in water conservation and improvement in sanitation and access to safe and clean water. These projects were carried out with the help of initiatives like agriculture water use efficiency, rainwater harvesting, reforestation, watershed protection, etc. By 2007, Coca-Cola had launched more than 120 community water projects in over 50 countries. These projects were conducted in partnership with organizations like USAID, WWF, CARE81, UNDP, government, NGOs, and several local communities. By 2007, the company had set up over 300 rainwater harvesting structures worldwide.

Source: “The Coca-Cola Company Pledges to Replace the Water it Uses in its Beverages and their Production,” www.thecoca-colacompany.com, June 5, 2007 and Our Water Conservation Goal, www.thecoca-colacompany.com, 2007.

78 ―Community Water Initiatives,‖ www.thecoca-colacompany.com, 2008.

79 2007/2008 Sustainability Review, www.thecoca-colacompany.com.

80 2007/2008 Sustainability Review, www.thecoca-colacompany.com.

81 CARE is a humanitarian organization that works to serve poor communities. Its community-based initiatives include providing access to potable water and sanitation, basic education, protecting natural resources, expanding the economic opportunity for the underserved. It also provides emergency aid to victims of natural disasters (Source: www.care.org).

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Exhibit V

Rainwater Harvesting Projects in India

In August 2002, Coca-Cola India launched a rainwater harvesting project in Delhi as part of its sustainability initiatives.82

In January 2006, Coca-Cola India as part of its commitment to water conservation restored a 400-year old Kale Hanuman Ki Bawari83 in Rajasthan. This initiative was implemented in conjunction with the Rajasthan Ground Water Department, several NGOs, local communities, and villagers. Around 10,000 local people were benefited by this initiative.

Coca-Cola in association with the Central Groundwater Authority (CGWA), communities, and the government aimed to combat the water problem and restore the depleted groundwater. The government in conjunction with several NGOs identified several critical areas and set up rainwater harvesting projects in India.

The project was funded by Coca-Cola while the project execution and community participation was handled by the NGOs. The CGWA provided technical expertise in the project while the Coca-Cola System was responsible for project coordination, vendor selection, project execution, and maintenance.

In 2006, Coca-Cola India completed a rainwater recharge initiative at its Kaladera plant in Rajasthan. As part of the project, the company built around 110 recharge shafts that collected rainwater. The collected rainwater was then passed back to the ground through a reverse filter system. This process helped in restoring the depleted groundwater tables.

The company also initiated rooftop rainwater harvesting projects at various bottling facilities in an effort to save millions of gallons of water. In March 2007, Coca-Cola India launched a rooftop rainwater harvesting initiative at Varanasi. This project was expected to recharge more than 4,900 cubic meter of groundwater.84

In March 2007, Coca-Cola India in association with FORCE organized an event called, ‗Jal Tarang‘ as part of the company‘s initiative to commemorate World Water Day. The event announced the launch of rainwater harvesting project at Greater Kailash, in New Delhi. The project aimed to recharge around 4 million liters of water every year.85

In June 2007, Coca-Cola India in association with Rotary International86 announced the establishment of 10 rainwater harvesting projects in different schools of Jamshedpur city.87

Adapted from “Coca-Cola India Rainwater Harvesting Project Extends Commitment to Enrich Water Resources,” www.thecoca-colacompany.com, January 6, 2006.

82 ―Rain Water Harvesting Project Launched in GK-I,‖ http://timesofindia.indiatimes.com, August 3, 2002.

83 Bawari is a watering hole that collects water.

84 ―Hindustan Coca-Cola Unveils its Water Initiatives for 2007,‖ www.thecoca-colacompany.com, March 19, 2007.

85 ―FORCE in Association with Coca-Cola India and GKII Welfare Association Organizes Jal Tarang as Part of World Water Day Celebrations,‖ www.thecoca-colacompany.com, March 24, 2007.

86 Rotary International is an organization that consists of Rotary Clubs that are located worldwide. These service clubs provide humanitarian service to professional and business leaders over the world and encourage people to follow ethical standards in all occupations.

87 ―Hindustan Coca-Cola Celebrates World Environment Day,‖ www.thecoca-colacompany.com, June 5, 2007.

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Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9IExhibit VI

List of Awards and Recognition

2008

Coca-Cola receives the USAID‘s ‗2007 Alliance of the Year‘ award for its

water sustainability initiatives in developing countries worldwide.

Coca-Cola India receives the Golden Peacock Award for water management

initiatives in India.

2007

Coca-Cola India receives the National Award for Excellence in Water

Management.

Coca-Cola receives the Bhagidari Award from Chief Minister of Delhi Sheila

Dikshit for the company‘s efforts and contributions toward community development programs.

2005

Coca-Cola India is recognized with the Golden Peacock Environment Management Award 2005 (GPEMA) for its outstanding environmental

practices.

2004

Coca-Cola‘s Dasna88 plant in India receives the Golden Peacock Environment

Management Award 2004.

2003

Coca-Cola receives a water conservation and pollution control award from the

Andhra Pradesh Government on World Environment.

2002

Coca-Cola receives the Environmental Protection Agency‘s (EPA)

Environmental Achievement Award for its excellence in environmental practices.

2001

Coca-Cola is recognized as the company carrying out most of the environmental initiatives by a Spain-based magazine, Dossier del Medio

Ambiente.

*The list is not exhaustive.

Adapted from “Coca-Cola Awards & Recognition,” http://www.cokefacts.org.

88 Dasna is a city in the state of Uttar Pradesh in North India.

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Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9IReferences & Suggested Readings:

―Coke CEO Roberto C_ Goizueta Dies at 65,‖ www.money.cnn.com, October 18, 1997.

―Rain Water Harvesting Project Launched in GK-I,‖

http://timesofindia.indiatimes.com, August 3, 2002.

―Struggle against Coca-Cola in Kerala,‖ www.zmag.org, September 10, 2002.

2003 Environmental Report, www.thecoca-colacompany.com, 2003.

2003 Citizenship Report, www.thecoca-colacompany.com, 2003.

―Toward Sustainability, 2004 Citizenship Report,‖ www.thecoca- colacompany.com, 2004.

2004, Environmental Report, www.thecoca-colacompany.com, 2004.

―USAID and Coca-Cola Announce Global Watershed Partnership Agreement,‖

www.cokefacts.com, September 14, 2005.

Jonathan Hills and Richard Welford, ―Coca-Cola and Water in India,‖ Corporate Social Responsibility & Environmental Management, September 2005.

2005, Environmental Report, www.thecoca-colacompany.com, 2005.

―Dangerous Pesticides in Coca-Cola and Pepsi in India,‖ www.indiaresource.org, August 3, 2006.

2006 Environmental Performance, www.thecoca-colacompany.com, 2006.

2006 Corporate Responsibility Review, www.thecocacolacompany.com, 2006.

―Hindustan Coca-Cola Unveils its Water Initiatives for 2007,‖ www.thecoca- colacompany.com, March 19, 2007.

―FORCE in Association with Coca-Cola India and GKII Welfare Association Organizes Jal Tarang as Part of World Water Day Celebrations,‖ www.thecoca- colacompany.com, March 24, 2007.

―Coca-Cola Company Wins Corporate Greenwashing Award,‖

www.polarisinstitute.org, April 16, 2007.

―Coca-Cola Joins International Water Conservation Campaign,‖ www.huliq.com, June 5, 2007.

―WWF and Coca-Cola Embark on Water Conservation Initiative,‖ www.ens- newswire.com, June 5, 2007.

―Hindustan Coca-Cola Celebrates World Environment Day,‖ www.thecoca- colacompany.com, June 5, 2007.

―Coke Faces New Charges in India, Including ‗Greenwashing‘,‖

www.polarisinstitute.org, June 11, 2007.

―Indian Campaign Forces Coca-Cola to Announce Ambitious Water Conservation Project,‖ www.indiaresource.org, July 30, 2007.

2007/2008 Sustainability Review, www.thecoca-colacompany.com.

―TERI Gives Clean Chit to Coca Cola,‖ www.saharasamay.com, January 14, 2008.

Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I

Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I―The Coca-Cola Company ‗Replenish Report‘,‖ www.thecoca-colacompany.com, January 2008.

―The Coca-Cola Company ‗Replenish Report‘,‖ www.thecoca-colacompany.com, January 2008.

―Coke Gets CSR Award Amidst Protests,‖ www.business-standard.com, February 19, 2008.

―Coke Blamed for Depleting Water Resources,‖ http://southasia.oneworld.net, February 22, 2008.

―New Study Sets Out Coca-Cola‘s Water Strategy,‖ www.waterbriefing.org, March 25, 2008.

Ling Woo Liu, ―Water Pressure,‖ www.time.com, June 12, 2008.

Ling Woo Liu/Shanghai, ―Is Coca-Cola Serious about Conserving Water?‖

www.indiaresource.org, June 12, 2008.

―Coca-Cola Continues Unethical and Dishonest Practices in India,‖

www.commondreams.org, September 12, 2008.

―Coca-Cola Omits Issues in Sustainability Review,‖ www.scoop.co.nz, October 29, 2008.

―The Coca-Cola Company Announces New Global Targets for Water Conservation and Climate Protection in Partnership with WWF,‖ www.thecoca- colacompany.com, October 30, 2008.

―Around the World: Our Global Operations,‖ www.cokefacts.com, 2008.

―Community Water Initiatives,‖ www.thecoca-colacompany.com, 2008.

―Coca-Cola Essay,‖ http://sgu05ysw.wordpress.com.

―Partnership with USAID,‖ www.thecoca-colacompany.com.

―Coca-Cola Essay,‖ http://sgu05ysw.wordpress.com.

―W.C. Bradley Co.,‖ www.fundinguniverse.com.

―Plant Performance,‖ www.thecoca-colacompany.com.

www.cokefacts.com

www.care.org

www.polarisinstitute.org

www.usaid.gov

www.worldwildlife.org

www.ids.ac.uk

www.getf.org

www.unfoundation.org

www.globalproblems-globalsolutions-files.org

http:en.wikipedia.org

www.rinya.maff.go.jp

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