Investing Directly in Water Resource Management

By Greg Koch, Managing Director, Global Water Stewardship, The Coca-Cola Company

Investing Directly in Water Resource Management

This leadership perspective is part of a series on the theme of creating business value and development impact in the WASH sector. The series and accompanying discussion paper are co-produced by Water and Sanitation for the Urban Poor and Business Fights Poverty.

Water is central to The Coca-Cola Company’s business. Of course, water is the principal ingredient of most of our beverages; it used in manufacturing processes; and we are a major buyer of agricultural ingredients, which have a large amount of embedded water from cultivation and processing.

More importantly, our business model is dependent on local bottling and distribution—we sell our products in the communities where we make them, so we are very sensitive to local concerns around water and sustainability. The health of the local water system has a direct impact on our business—we do not have the luxury of making a car in Mexico and shipping it to Detroit or making a phone in China and shipping it to London. We share water resources with surrounding communities and economies and have a business interest in their sustainability.

Managing water supplies and stress is a vital commercial consideration. The Company and our bottling partners undertake quantitative water risk assessments for our operations and have formulated a global strategy for conservation and management within manufacturing plants and along our supply chains.

Beyond the plant level, we have also acknowledged that we need to participate more holistically in preserving and improving water resources in the regions where we operate and to help conserve the ecosystem services that are critical for the sustainability of our business. Whenever water is stressed in the markets that we operate in, we are at the table and seek to be a part of the solution.

Everyone has some motivation and interest in the quality and the quantity of water, and there is little that we can do ‘at the end of the pipe.’ Even if we could control our own water sources for our plants, that would not be enough. Our localised business model means that we are embedded in the community—we are selling our product to our neighbours, so the health of local communities and ecosystems is very important to us.

Our commitment to the Latin American Water Funds partnership emerged from this growing understanding that we needed to invest directly in water resources and ecosystem services.

The Coca-Cola Company Latin Center (the Coca-Cola business unit covering countries in Central America and Northern South America) and its local bottling partners, Arca Continental, BEPENSA, and Coca-Cola FEMSA, invested $7.4 million to replenish 6.9 million cubic metres of water in seven Latin American countries. The funds, which are managed through a partnership between The Nature Conservancy, Fundación FEMSA, the Inter-American Development Bank and FMAM, back a range of conservation projects, from reforestation through to community and farmer education initiatives.

The Company’s investments are large, and we expect results. We measure these in three distinct ways. The first is risk-based, tracking the extent to which environmental factors are managed within our operations.

The second is harder to quantify, but looks at the outputs, such as those of the Latin American Water Funds Partnership. Currently, this is a relatively straightforward comparison of costs and accomplishments—for example, the number of funds that have been established and their financial strength, critical source water areas preserved, the number of people with clean drinking water.

We hope that we will gradually be able to add a higher order of detail and look at the socio-economic outcomes in health and development that result from the water funds’ and our other investments.

Finally, we look for impact at a policy level, which speaks to the long-term sustainability of the projects that we invest in around the world. Whenever a project is established, it is vital that it is sustained by the local community long after the end of our direct intervention.

The ultimate goal is policy change. Water is the most necessary shared resource; it is a common good. The scale at which water resources are needed and moved through an economy makes it something that governments ultimately have to control.

Our goal in the water funds and other engagements is often to demonstrate success, so that governments codify, protect, and amplify water conservation initiatives.

This requirement for sustainability beyond the end of the life of any individual programme is also the motivation for seeking out partnerships with governments and civil society. Although we have built our own internal capacity to understand and measure water resources and risk, when we step outside the four walls of our plants, we want and need to partner.

Ultimately, we believe that the most effective way to address water concerns and conservation is collaboration at all levels from private sector to civil society and governments—every user and beneficiary of water needs to be a part of the solution.

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