Presented by:

Practical aPPlication in corPorate Water steWardshiPsePtember 2010

• Watercoversabout70%oftheEarth’ssurface.

• Mostofthiswaterisundrinkablebecause97%issaltwater.

• Only1%ofwaterisfoundinriversandstreams.

• Approximately1billionpeopledonothaveaccesstosafedrinkingwater.

• About6,000childrendieeverydayfromdiseasesassociatedwithlackofaccesstosafedrinkingwater.

• Mostofthecitieswherelargenumbersofpeoplelivewithouttapsandtoiletshaveplentifulwatersupplies.

• Freshwaterfishandotheraquaticanimalsareconsiderablymoreimperiledthanthosethatliveonlandorintheoceans.

• Ittakes1,000timesmorewatertogrowfoodforanindividualthantomeetthatperson’sneedsfordrinking.

• Irrigationincreasesyieldsformostcropsby100to400%.

• About70%offreshwaterwithdrawalsareusedforirrigation.

• Waterwithdrawalsforagriculture,assumingnogainsinefficiencyofuse,areexpectedtoincreaseby45%by2030.

• TheEarth’swaterisfinite,butitisinfinitelyrenewable.

Water = LifeBut did you know…

ACKNOWLEDGEMENTS

ThisreportistheresultofcollaborationbetweenThe Nature ConservancyandThe Coca-Cola Company.Italsorepresentstheproductofsignificantcontributionsofindividualsfromanumberofotherorganizations:

• TheWater Footprint NetworkprovidedsupportforpilotstudyeffortsandguidancethroughpublicationoftheWater Footprint Manual.

• Coca-Cola Enterprises Inc. (CCE) wasakeypartnerfortheCoca-Cola®waterfootprintpilotstudy,providingsignificantdataandotherresources.

• ResearchersattheTwente Water Centre, University of Twente, The NetherlandsconductedthetechnicalworkfortheCoca-Colawaterfootprintpilotstudy.

• Denkstatt,incooperationwiththe Institute for Water Quality, Resources and Waste Management at the Vienna University of Technology,conductedthebeetsugarwaterfootprintpilotstudy.

• LimnoTechconductedtheorangejuicewaterfootprintpilotstudiesandcontributedtechnicalexpertiseandwritingsupportforthisreport.

—BenjaminFranklin

TA B L E O F C O N T E N T S

ExECUTIVE SUMMARy ES-1

1.0 INTRODUCTION 1

1.1 ObjectivesofthisReport 2

1.2 GlobalFreshwaterChallenges 3

1.3 TheNatureConservancy’sFreshwaterConservationGoals 5

1.4 TheCoca-ColaCompany’sWaterStewardshipGoals 6

1.5 TheWaterFootprintConcept 8

2.0 PILOT STUDIES 11

2.1 WaterFootprintof0.5LiterCoca-Cola®inPETBottle 11

2.2 WaterFootprintofBeetSugarSuppliedto theCoca-ColaSystem’sEuropeanBottlingPlants 15

2.3 WaterFootprintofOrangeJuiceProducts 20

3.0 PERSPECTIVES 25

3.1 SettingGoalsandScope 25

3.2 WaterFootprintAccounting 27

3.3 WaterFootprintSustainabilityAssessment 30

3.4 WaterFootprintResponseFormulation 32

4.0 LOOKING FORWARD 37

4.1 TheCoca-ColaCompany’sWaterStewardship andSustainableAgricultureStrategy 37

4.2 TheNatureConservancy’sWaterStewardship 37

EXEC

UTI

VES

UM

MA

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Whenproperlymanaged,evenlargevolumesofwaterusecanbesustainableinlocationswheretheresourceissufficienttosupporttheuse.Theimpactsofawateruseneedtobeassessedinthecontextofallwaterusesinthewatershedinordertodefinecumulativeimpacts,sharedrisksandappropriateresponsestrategies.

Traditionally,calculationsofhowmuchwaterabusinessuseshavebeenbasedonthequantitiesuseddirectlyinproducingthatcompany’sproducts.Inrecentyears,businesseshavebeenencouragedtolookattheirwaterusemorecomprehensivelyandinvestigatethewaterusedthroughouttheirsupplychains.TogetherwithTheNatureConservancy(“theConservancy”),TheCoca-ColaCompany(“theCompany”)hasbeenoneofthecompaniesleadingthewayondevelopinga“waterfootprintassessment”methodologythroughactiveparticipationintheWaterFootprintNetwork.

Aproductwaterfootprintisthetotalvolumeoffreshwaterconsumed,directlyandindirectly,toproduceaproduct.Afullwaterfootprintassessmentconsiderstheimpactsofthiswaterconsumption,aswellasappropriateresponsestrategiestominimizethoseimpacts.

Waterfootprintingandcarbonfootprintingareverydifferentassessments.Withcarbonfootprints,onecancomparesimilarproducts(ifthesameboundariesandmethodologyareused)knowingthatlowercarbon(orzerocarbon)isbetter.Ontheotherhand,waterfootprintshelpidentifywherewaterisusedintheproductionofaproductandwhattypeofwaterisused.Waterislocalandthuswaterfootprintnumbersmustbeconsideredinthecontextofthelocalwatershed.Thenumberassociatedwithawaterfootprintisnottheendgame,butratherastartingpointtoaddressingthesustainabilityofthewatersource.

Thisreport,preparedbyTheNatureConservancyandTheCoca-ColaCompany,examinestheconceptofproductwaterfootprintinganditspracticalapplicationforaddressingthegrowingchallengesrelatedtofreshwater.ThreewaterfootprintassessmentswereconductedfortheCompany:

• Coca-Cola®1ina0.5literPETbottleproducedbyCoca-ColaEnterprisesInc.(CCE) intheNetherlands; • BeetsugarsuppliedtoCoca-ColabottlingplantsinEurope;and • MinuteMaid®orangejuiceandSimplyOrange®producedfortheNorthAmericanmarket.

Waterfootprintassessmentscanbehelpfulinsupportingcorporatewaterstewardshipeffortsbyprovidingatooltomeasureandunderstandwaterusethroughoutthesupplychain.Theycan

ES-1

1Coca-Colareferstotheproductbrand.

providevaluableinsightintothelargestcomponentsandlocationsofwaterconsumption,thepotentialeffectsonlocalwatersheds,andfuturewateravailabilitytoservethecollectiveneedsofcommunities,nature,producers,suppliersandcompanies.Inthisway,waterfootprintassessmentscancontributetoanincreasedunderstandingofabusiness’water-relatedrisksandvulnerabilities.

Generalobservationsandimplicationsforproductwaterfootprintingfollow:

• Thevalueofproductwaterfootprintingisitsabilitytodisaggregatewater usebycomponent(i.e.,directandindirectuse;green,blueandgrey).Itisimportantto

keepthecomponentsofawaterfootprintseparatesothatimpactscanbeassessedinthecontextofthelocalwatershedswherethewaterisbeingsourced.

• Thelargestportionoftheproductwaterfootprintsassessedaspartofthesepilotstudiescomefromthefield,notthefactory.TheCoca-ColaCompanyseessignificantopportunitytoengagemoredirectlywithitsagriculturalsuppliersinadvancingsustainablewateruse.Guidedinpartbytheseassessments,theCompanyisfocusingitsinitialeffortsonsustainablesourcingofsugarcaneandoranges.

• Whiletheoperationalwaterfootprintassociatedwithproductionwasfoundtobeaverysmallpercentageofthetotalwaterfootprint,itremainsimportantforbusinessestomanagetheirdirect/operationalimpactsonlocalwaterresources.Thisisespeciallytruewithregardtowastewatertreatment.

• Toreallygainanunderstandingofwhetherwateruseishavinganimpact,thevolumeofwaterconsumptionmustbeconsideredwiththecumulativeeffectofallusesofthesharedwaterresource.

• Whilewaterfootprintsareanexcellenttoolforcompaniestobegintounderstandtheirwateruse,caremustbetakenwhencommunicatingaboutwaterfootprintassessments.Numericwaterfootprintsonlabelsdonotprovideinformationneededtomakeinformedchoicesamongproducts.

WaterfootprintingishelpingTheCoca-ColaCompanyrefineitsapproachtoglobalwaterstewardship.Thepilotstudieshaveverifiedtheimportanceofexaminingdirectandindirectwateruseseparately.TheCompanyisfocusingfirstonoperationalwaterusebytakingactiontousewatermoreefficientlyandtreatallmanufacturingwastewater.ThestudiesalsoaffirmedtheCompany’seffortstounderstandthehealthofwatershedseverywhereitoperates.Importantly,waterfootprintingprovidescompellingsupportfortheneedtoengagemoredirectlywithsuppliers,governmentsandotherstakeholdersonresponsiblewaterstewardship.

ES-2

—EmperorYuofChina,1600B.C.

2Hoekstra,ArjenY.,A.Chapagain,M.Aldaya,andM.Mekonnen.2009.Water Footprint Manual;StateoftheArt2009.PublishedbytheWaterFootprintNetwork.3www.waterfootprint.org4The“Coca-Colasystem”referstobothTheCoca-ColaCompany(alsoreferredtoas“theCompany”inthisreport)anditsmorethan300bottlingpartners.5LimnoTechandTheNatureConservancy.2010.QuantifyingWatershedRestorationBenefitsinCommunityWaterPartnershipProjects.

Waterfootprintingisayoungscience,andthemethodsforcalculatingwaterfootprintsareevolvingthroughtheeffortsoftheWaterFootprintNetwork(WFN)3andvariousotherinitiatives.TheNatureConservancyandTheCoca-ColaCompanyareactivelyengagedineffortstotestthepracticalapplicationofthewaterfootprintmethodologyandexploreopportunitiesforimprovement.Bothorganizationshaveengagedinseparateinitiativesrelatedtowaterstewardshipandwaterfootprintingandhavecollaboratedonprojectsofmutualinterest.

Overthepasttwoyears,theCoca-Colasystem4hasundertakenthreewaterfootprintpilotstudiestoassessthepracticalapplicationofthemethodstoitsproducts.TogetherwithTheNatureConservancyandtheconsultingfirmLimnoTech,theCoca-Colasystemalsohasbeenexploringandquantifyingthebenefitsofwatershedrestorationactionstorestoreandsustainadequatewatersuppliesforthefullrangeofbeneficialuses.5Becausewater-relatedimpactsarelocalinnature,effortstoreduceoreliminateadverseimpactsarebestimplementedinthewatershedsinwhichtheimpactsareoccurring.

TheNatureConservancyisdrawntothiscollaborationbecauseitiscommittedtohelpingbuildsolutionstotheworld’swaterproblemssotherewillalwaysbeenoughforpeopleandnature.Helpingcorporationsfindbetterandmoreresponsiblewaysofusingwaterisanessentialsteponthepathwaytowatersustainability.TwosimplefactsdriveTheNatureConservancy’sinterest:

• Tremendousopportunitiesexisttoimprovethewaywaterisusedandmanaged,andtherebyalleviatewaterscarcityproblemsthataffectbothpeopleandnature.FosteringsuchimprovementsisahighpriorityfortheConservancy,becauseunsustainablewateruseisaleadingcauseofdeclinesinfreshwaterbiodiversity.

• Corporationscanprovideleadershipinimplementingsustainablewaterpractices.Theseimprovedwaterpracticesmakegoodsenseforbusinessesandcanbringsubstantialbenefitstofreshwaterecosystems.

TheCompanyisdrawntothiscollaborationbecauseitrecognizesthatengagingexternalpartnersisessentialtoitscommitmenttohaveapositiveimpactonthewaterchallengesfacingcommunitiesandnature.TheConservancybringsfocusedexpertiseinfreshwaterconservationscienceandanin-depthunderstandingoftheinterrelationshipsbetweenhealthyecosystemsandthecommunitiestheysustain.Throughthecollaboration,bothorganizationsareabletoleveragetheirstrengthstoaddresswaterchallengeslocally,ataglobalscale.

1

“People use lots of water for drinking, cooking and washing, but even more for producing things such as food, paper, cotton clothes, etc. The water footprint is an indicator of water use that looks at both direct and indirect water use of a consumer or producer. The water footprint of an individual, community or business is defined as the total volume of freshwater that is used to produce the goods and services consumed by the individual or community or produced by the business.”

Water Footprint Manual: State of the Art 20092

1.0

INTR

OD

UCT

ION

1.1 OBJECTIVES OF THIS REPORTThisreportwaspreparedforwaterresourcemanagers,waterfootprintpractitioners,partnersoftheWaterFootprintNetworkandothersinterestedinhowwaterfootprintingcanhelpinformacompany’swaterstewardshipprogram.Thepurposeistosharelessonslearnedandobservationsrelatedtowaterfootprintassessmentsandtheirpracticalapplication.TheNatureConservancyandTheCoca-ColaCompanyhopethattheinformationsharedinthisdocumentwillmakeapositivecontributiontotheongoingdevelopmentofthewaterfootprintassessmentmethodologyanditsapplication.

2

Maps such as this one show

the degree of stress for

different regions based on the

ratio of water use to water

availability (water replenished

naturally by precipitation

and snow melt). Water stress

indices are calculated in

different ways, as discussed

later in this report.

Degree of Water StressbyFreshwaterEcoregion

extreme stresshigh stressmoderate stresslow or no stressminimal water useUnassessed

1.2 GLOBAL FRESHWATER CHALLENGESWateristhecoreofourbeing.Two-thirdsofthehumanbodyismadeupofwater,andwemustcontinuallyreplenishit.Analogoustolosingoilinanautomobile,beingdownonlyafewquartsofwatercanbefatal.Butittakesalotmorethandrinkingwatertokeepushealthy.Weneedwaterforcookingandbathing.Weneedwatertogrowfoodandgenerateelectricity,toproducetheclothesonourbacksandthecountlessothergoodsweuseinourdailylives.

Therewouldbeenoughwatertosupportallofhumanity,nowandfordecadestocome,ifitwereevenlydistributedaroundtheglobeanddeliveredfromtheskiesataconstantrate.Ataglobalscale,weconsumelessthan10%ofallthewaterthatreplenishesrivers,lakesandaquiferseachyear.

3

Map from TheAtlasofGlobalConservation(University of California Press, 2010). For more information, please go to: The Nature Conservancy, www.nature.org/atlas.

Butalltoooften,raincomesasadelugeornotatall,makingitscaptureandstorageelusive.Italsoisnotdistributedevenly.TheAtacamaDesertinnorthernChilemaygoformorethan20yearswithoutrain,whereasMt.WaialealeonKauaiintheHawaiianIslandsaveragesmorethan12metersofrainayear.Perhapsmostimportantly,thegrowthofourglobalpopulationhasnotfollowedtherain.

Thesefactsoflifeexplainthepatchinessofwaterscarcityandabundance.Today,nearly1billionpeoplelackaccesstocleanwater.Ifcurrentwaterconsumptionpatternscontinue,two-thirdsoftheworld’spopulationwillliveinwater-stressedconditionsby2025.

Thehighlyvariabletapestryofwaterscarcityandtheconflicts,impactsandrisksthatderivefromitmustultimatelybeaddressedinlocalwatersheds.Governancepoliciesatvariousgeopoliticallevelscancertainlyinfluencehowwaterisused,butthegreatspatialvariabilityinwateravailabilityanduse,alongwithotherinfluencesonhydrologicsystems,includinglocallanduse,demandthatanyassessmentofpotentialimpacts,risksandsustainabilityofwaterusebeframedbythephysicalboundsofthewatershed.

ThisexplainstherecenttrendwithintheWaterFootprintNetworktowardafocusonevaluatingtheconsequencesofwaterfootprintsinlocalwatersheds.Ongoingcalculationsofthewaterfootprintsofindividualproductsorwholenationshaveincreasedawarenessthatwaterisconsumedthroughoutthesupplychainintheproductionofallconsumergoods.Thisinformationwillcontinuetoserveanimportantroleininformingpublicpolicyaroundwateruseandmanagement.Withinthecorporateworld,waterfootprintsenableagreaterunderstandingofthevolumeofwaterembeddedinproducts,thepotentialeffectsonlocalwatershedscausedbythewateruseandtheprobabilitiesoffuturewateravailabilitytoservethecollectiveneedsofthecompany,communitiesandnature.Notunderstandingthecollectiveimpactsofwateruseonthelocalwatershedscanincreaseriskstothebusiness.Asdiscussedlaterinthisreport,boththeConservancyandtheCompanyhaveembracedandcontinuetosupportthisimportantevolutioninwaterfootprinting.

Fromacorporateperspective,growingwaterscarcityandtheneedtousewaterinbusinessoperationsandsupplychainsposerisksofvarioustypes.Thesebusinessriskscanbeviewedfromtwoperspectives:onelooksat“upstream”risks,andtheotherfocuseson“downstream”risks.

4

Upstreambusinessrisksaregenerallycenteredonthequestionofwhetherornotacompanycanexpecttohavesufficientsuppliesofcleanwaterinthefuturetosupportitsbusiness.Thisareaofriskcanbeinfluencedbyincreasingcompetitionforwaterresources,growingwaterscarcity,drought,climatechange,watersourcecontamination,infrastructurefailure,poorlymanagedwaterallocationsystems,ineffectivepublicsectormanagementcapacity,insufficientwaterresourcemanagementpolicyandotherfactors.Downstreambusinessrisksstemfromthefactthatacompany’swateruseandwastewatertreatmentpracticesmayimpactotherwaterusersandstakeholders.

Water-relatedrisksmustbeaddressedwithinthecontextofthelocalwatersheds.Itisimportanttoconsidertheimpactofacompany’swateruseinconjunctionwiththeimpactsfromallwaterusersinthewatershed,asimpactsarecumulative.Theriskofwaterscarcityand/orpoorqualityisnotonlyabusinessrisk,butarisksharedwiththecommunityandotherusers.Efficiencyimprovementsareimportant,butthemostappropriateresponseactionsmaynotalwaysinvolvereductionofthewaterfootprint(sometimesareductionofawaterfootprintisnotpossible).Inmanycases,policyandregulatoryengagementtosupportimprovedmanagementofthesharedresourcemaybeamoreappropriateresponse.

Whenwaterresourcesareadverselyaffectedbythecumulativeimpactsfrommultipleuses,whetherthoseimpactsarearesultofacompany’suse,realorperceived,itcanaffectthatcompany’ssociallicensetooperate.Italsomaytriggerregulatoryresponsesfromgovernments.Thesesocialandpoliticalreactionscanleadtoincreasedwateracquisitionandtreatmentcosts,reducedwatersupply,morestringentwastewatertreatmentrequirements,riskierinfrastructureplanningandcapitalinvestmentsandpotentialreputationdamage.Inrarecases,thebusinessmaybeshutdownbythelocalgovernmentormayotherwisenolongerbeviableandvoluntarilyshutdown.

TheConservancyandtheCompanyhavebeencollaboratingonanexplorationofvariousapproachesandtoolsforassessingandmanagingwater-relatedrisk.Wearelearningaswego.Thisreportsummarizessomeofourearlyfindings.

1.3 THE NATURE CONSERVANCy’S FRESHWATER CONSERVATION GOALSTheNatureConservancyisaninternationalnon-governmentalorganizationdedicatedtotheconservationofbiologicaldiversity.TheConservancy’smissionistopreservetheplants,animalsandnaturalcommunitiesthatrepresentthediversityoflifeonEarthbyprotectingthelandsandwaterstheyneedtosurvive.TheConservancy’son-the-groundconservationworkiscarriedoutinall50statesintheU.S.andinmorethan30othercountries,anditissupportedbyapproximatelyonemillionindividualmembers.TheNatureConservancyhasprotectedmorethan47millionhectaresoflandandhundredsofriversandlakesaroundtheworld.

WhiletheConservancy’smissionisfocusedonsustainingtheEarth’sdiversityofplantsandanimals,theorganization’sbroadercontributiontosocietyisintheprotectionofthelifesupportsystemsofourplanet–wecannotprotectthediversityoflifeonthisplanet,includinghumanlife,withoutprotectingtheecosystemsthatsustainusall.Naturalecosystemsprovidehumanitywithcleanwater,foodandfiber.Naturalresourcesderivedfromecosystemssupportmajorsectorsofoureconomy,whetherintheformoffisheriesthatsustaincoastalcommunitiesorthroughtourismeconomiesthatrelysoheavilyuponnature-basedrecreation.Healthynaturalecosystemsperformanarrayofvaluableserviceswithsubstantialeconomicvalues,includingpurifyingourwatersupplies,sequesteringcarbonandhelpingtoregulatetheclimateandhydrologiccyclesofourplanet.

5

6

Throughitsworkonmorethan600freshwaterprojectsaroundtheworld,theConservancyhaslearnedwhatittakestomakeriversandlakeshealthyandkeepthemhealthy.Theorganizationhasdeeprootsincommunitiesaroundtheworld,bringingresources,expertiseandtoolsthatempowerpeopletoprotectwatersthatsustainfamilies,livelihoodsandwaysoflife.Especiallyfortheworld’spoor,partneringwiththemtopreservetheirnaturalsourcesofwater,foodandothernecessitieshelpspreservetheircultures,theireconomicpotentialandtheirpowerofself-determination.Someofthesefreshwaterprojectsfocusoniconicwatersthatarethelifebloodofnations,liketheGreatLakesandYangtzeRiver.Somearelesserknown,yetarehubsofinnovation,likethePenobscotRiverinMaine,whichisaprovinggroundforsolutionsthatcanaccelerateandimproveprotectionofriversandlakesaroundtheworld.

TheConservancyunderstandsthattoreachitsgoals,theorganizationmustalsoequippeoplewithbetterwaystousethewaterresourcesnaturegivesus.DoingsobenefitsnotonlytheConservancy’sfreshwaterprojects,italsocreatesaripple-effectthatbenefitscountlessotherriversandlakesaroundtheworld.Therefore,akeyaspectoftheConservancy’sworkisgivingleadersingovernmentandbusinesspragmaticalternativestowastefulanddestructivewaysofusingriversandlakes.TheConservancy’scommitmenttotheadvancementofwaterfootprintingsupportstheseobjectives.

Throughitsworkinwatershedsaroundtheworldandcollaborationswithgovernments,corporationsandlocalcommunities,theConservancyexpectsthatby2015,itwillbringenhancedprotectionandrestorationtomorethan1.5millionkilometersofriverandimprovedwater,foodandelectricitysecuritytomorethan200millionpeople.

1.4 THE COCA-COLA COMPANy’S WATER STEWARDSHIP GOALSWaterisakeyingredientinalloftheCompany’sproducts.ItisessentialtotheCompany’soperationsandthewell-beingofthecommunitiesandecosystemswheretheCompanyoperates.Inresponsetotheveryrealandgrowingvulnerabilityofthefreshwaterthatsustainsthebusiness,theCompany’saimistoestablishatrulywater-sustainablebusinessonaglobalscalethroughacommitmenttowaterstewardship.

TheCompany’swaterstewardshipjourneybeganwithafocusonwateruseinitsownoperations,whereithasgreaterinfluence.In2005,theCompanyconductedglobalwaterriskassessmentstogainabetterunderstandingofthepotentialwaterrisksfacingthebusiness,localcommunitiesandecosystems.ThisledtotheestablishmentoftheCompany’swaterstewardshipframework,whichfocusesonplantperformance,watershedprotection,sustainablecommunitiesandraisingglobalawarenessandactionaroundwaterchallenges(Figure 1).

Riskassessmentswereupdatedin2008,andasystem-widerequirementwentintoeffectthatallCoca-Colasystembottlingplantsevaluatethesustainabilityofthewaterresourcesusedtoproducetheirbeverages,aswellasthesustainabilityofthewaterresourcesusedbythesurroundingcommunity.Theseevaluationsincludedetailedassessmentsofthevulnerabilitiesassociatedwithquantityandqualityoflocalwaterresources,andtheyresultinthedevelopmentofsourcewaterprotectionplansinpartnershipwithcivilsocietyandgovernments.Allplantsarerequiredtocompletethisprocessandbeactivelyimplementingtheirprotectionplansby2013.Thesesourcewaterprotectionplansaddresscriticalwaterchallengesatawatershedlevel,fromhydrologicalvulnerabilitiestolocalgovernmentmanagementcapacity.

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Inaddition,theCompanysetanaspirationalgoalin2007tosafelyreturntocommunitiesandnatureanamountofwaterequivalenttowhatisusedinallofitsbeveragesandtheirproduction.Theformulationofthistargetcamefromdialoguewiththeinternationalwaterstakeholdercommunityandsetmetricsforwaterstewardship.

the company has set targets to guide its water stewardship in three areas:

• REDUCEtheCompany’swateruseratiowhilegrowingtheunitcasevolume,withatargettoimprovewaterefficiencyby20%over2004levelsby2012.By2009,theCompanyhadachieveda12.6%improvementoverthe2004baseline.6

• RECyCLEthewaterusedinoperationsbyreturningtreatedprocesswatertotheenvironmentatalevelthatsupportsaquaticlifebytheendof2010.In2009,89%ofCoca-Colasystemfacilities(approximately95%ofreportedvolume)wereincompliancewiththeCompany’swastewatertreatmentstandards.6

• REPLENISHthewaterusedinfinishedbeveragesbyparticipatinginlocallyrelevantprojectsthatsupportcommunitiesandnature,andmeetandmaintainthisgoalby2020.Estimatesarethatbytheendof2009,theCompanywasreplenishingapproximately22%ofthewaterusedinitsfinishedbeveragesthroughthesupportofsome250communitywaterprogramsinapproximately70countries.6,7,8,9

TheCompany,recognizingthatwateruseinagricultureisasignificantcomponentofthewaterfootprint,hasestablishedasustainableagricultureprogram.Thestrategyextendsbeyondwaterresourcesandconsidersenvironmentalimpacts,socialimplicationsandeconomicpressures.TheCompany’sapproachtosustainableagricultureismulti-dimensionalandfoundedonprinciplestoupholdworkplacerights,protecttheenvironmentandhelpbuildsustainablecommunities.

PLANT PERFORMANCE

WATERSHEDPROTECTION

SUSTAINABLECOMMUNITIES

GLOBALAWARENESSAND ACTION

Figure 1. The Coca-Cola Company’s Water Stewardship Framework

6SupportingdocumentscanbefoundonTheCoca-ColaCompany’swebsite:www.thecoca-colacompany.com/citizenship/community_initiatives.html.7TheCoca-ColaCompany.2010.ReplenishReport.8LimnoTechandTheNatureConservancy.2010.QuantifyingWatershedRestorationBenefitsinCommunityWaterPartnershipProjects.9GlobalEnvironment&TechnologyFoundationwithDr.AlbertWright.2009.QuantifyingWaterAccessBenefitsinCommunityWaterPartnershipProjects.

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WaterfootprintassessmentscanbehelpfulinsupportingthesewaterstewardshipeffortsbyprovidingatoolforunderstandingandmeasuringwaterusethroughouttheCoca-Colasystem’sdirectoperationsanditssupplychain.TheCompanyhasbeenactivelyinvolvedintheexplorationoftheconceptofwaterfootprintingforseveralyears,anditwasinstrumentalinformingtheWaterFootprintWorkingGroup(WFWG)thatcommissionedseveralearlystudiesaddressingwaterfootprintsandwateroffsets.TheWFWGevolvedintotheWaterFootprintNetwork(WFN)in2008,andtheCompanycontinuestobeanactivememberofandanintegralcontributortothedevelopmentprocess.

TheCompanyalsoisengagedinactivitiesoftheBeverageIndustryEnvironmentalRoundtable(BIER),acoalitionofglobalbeveragecompaniesworkingtogethertodrivecontinuousimprovementinwaterconservationandresourceprotection.TheCompanyisamemberofaworkinggroupofBIERthatisdevelopingsector-specificguidelinesforcalculatingthewaterfootprintofabeverageproductorenterprise.

Inaddition,TheCoca-ColaCompanybecameoneofthefirstcompaniestocommittotheUnitedNationsGlobalCompact’sCEOWaterMandate.Thisprogramisdesignedtohelpcompaniesbettermanagewateruseintheirdirectoperationsandthroughouttheirsupplychains.TheCompanyisanactiveparticipantinthreeworkstreamson:ResponsibleBusinessEngagementwithWaterPolicyandManagement,WaterandHumanRights,andCorporateWaterDisclosure.

1.5 THE WATER FOOTPRINT CONCEPTWaterfootprintingbuildsontheconceptof“virtualwater,”whichreferstothewater“embedded”inaproduct;thatis,waterthatisconsumedindirectoperationsandthroughoutthesupplychain.Awaterfootprintofaproductconsidersbothdirect(operational)andindirect(supplychain)wateruse.Italsoreferstowhereandwhenthewaterwasused.Awaterfootprinthasthreecomponents:

• Thegreen water footprintreferstoconsumptionofgreenwaterresources(rainwaterstoredinthesoilasmoisture);

• Theblue water footprintreferstoconsumptionofbluewaterresources(surfaceand groundwater);

• Thegrey water footprintreferstopollutionandisdefinedasthevolumeoffreshwaterthatisrequiredtoassimilatetheloadofpollutantsbasedonexistingambientwaterqualitystandards.

Theterm“consumption”withrespecttogreenwaterreferstorainwaterlosttotheatmospherefromthelandsurfacewhenitistakenupandtranspiredbyplants(“evapotranspiration”),plusrainwaterincorporatedintotheharvestedcrop.Theterm“consumption”withrespecttobluewaterreferstosurfacewaterorgroundwaterthatisevapotranspired,incorporatedintoaproduct,returnedtoadifferentwatershedorreturnedduringadifferenttimeperiod.Together,thegreenandbluewaterfootprintsmakeupthe“consumptive”waterfootprint.Thiswaterisnotavailabledownstreamforotheruses.

Greywaterresultsfromgreenorbluewaterthatisnotconsumed.Forinstance,whenrain(greenwater)fallsonagriculturallandandthenrunsoffthefield,itmaycarryerodedsoilorchemicals,suchasfertilizers,intoanadjacentwaterbody,therebycreatinggreywater.Whenbluewateriswithdrawnfromariver,lakeoraquiferandusedinmanufacturingprocesses,itmaybereturnedtoawaterbodyasgreywater,containingmoreorlesspollutantsthanthewaterthatwasoriginallywithdrawn.Thecalculationofagreywater

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footprintisbasedonthequantityofwaternecessarytodiluteorassimilatepollutantsinthegreywatertosuchadegreethatthewaterbecomessuitableasbluewaterforotherdownstreamuses.Green,blueandgreywaterfootprintsareallrepresentedaswatervolumes.

Figure 2depictsthecomponentsofawaterfootprint.Foraproduct,thedirectwaterfootprintreferstowaterconsumedinoperations.Indirectwaterusereferstowaterconsumedinthesupplychaintoproducethematerialspurchasedbytheproducer.10Bothdirectandindirectwaterfootprintsarecomprisedofgreen,blueandgreywaterfootprints.Waterfootprintaccountingdiffersfromthetraditionalstatisticsonwateruse,whichaccountonlyfordirectbluewaterwithdrawalsand/ornon-consumptivewateruse(returnflow).

TheWaterFootprintNetworkhasdevelopedmethodsforcalculatingwaterfootprints,andithasbeguntoformulateapproachesforassessingtheirpotentialimpactsanddesigningresponsestrategies.ThesemethodsaredocumentedintheWater Footprint Manual.AsdescribedinthemanualandshowninFigure 3,awaterfootprintassessmentisconductedthroughfourphases.

Duringthefirstphase,thescopeoftheassessmentisdefinedbasedongoalsandobjectives.WaterfootprintaccountingisconductedduringPhase2.Thesustainability11ofthewaterfootprintisevaluatedduringPhase3,andresponseactionstomitigateimpactsareformulatedduringPhase4.

ThreewaterfootprintassessmentpilotstudiesfortheCoca-Colasystem’sproductsaredescribedinthefollowingsection.

WaterConsumption

WaterPollution

DIRECT WATER

FOOTPRINT

INDIRECT WATER

FOOTPRINT

GREEN WATER FOOTPRINT

GREEN WATER FOOTPRINT

BLUE WATER FOOTPRINT

BLUE WATER FOOTPRINT

GREY WATER FOOTPRINT

GREY WATER FOOTPRINT

Non-consumptive water use (return flow)Water Withdrawal

Figure 2. Components of a Water Footprintsource: Water Footprint Manual (2009)

Figure 3. Phases of a Water Footprint Assessmentsource: Water Footprint Manual (2009)

setting goals and scope

Water footprint

accounting

Water footprint

sustainabilityassessment

Water footprint response

formulation

10Theendusewaterfootprint,waterusedbyaretailerand/orconsumer,mayalsoberelevanttosomeproductwaterfootprints(e.g.,soaps,detergents).11Thisphasewasnamed“ImpactsAssessment”atthetimeofthethreepilotstudiesdiscussedinSection2.

—JacquesCousteau

11

Thethreepilotstudiesdescribedinthissectionwereconductedfrom2008to2010followingthemethodologyoftheWaterFootprintNetwork.Thestudieswereundertakenearlyinthewaterfootprintdevelopmentprocesswiththeintenttotestthemethodology,informthescienceandhelpincreaseunderstandingofthewaterfootprintconcept.

ThefirstwaterfootprintassessmentfocusedontheCompany’smostpopularsparklingbeverage,Coca-Cola.Akeyfindingofthisstudywasthatthewaterfootprintofsugarisasignificantcomponentofthetotalwaterfootprint.Basedonthisresult,thesecondstudyexaminedthewaterfootprintofrefinedsugarfromsugarbeetssuppliedtotheCoca-Colasystem’sEuropeanbottlingplants.ThethirdpilotstudyexploredthewaterfootprintoftwoorangejuiceproductsproducedfortheNorthAmericanmarkettobetterunderstandwaterusethroughoutthesupplychainforanon-sparklingbeverage.

2.1 WATER FOOTPRINT OF 0.5 LITER COCA-COLA® IN PET BOTTLEAlogicalchoiceforthefirstwaterfootprintassessmentwastheCompany’ssignaturedrink,Coca-Cola.ThestudywasconductedbyresearchersattheUniversityofTwenteintheNetherlandsincollaborationwithCoca-ColaEnterprisesInc.(CCE)andCoca-ColaEurope.Theproductselectedforstudywasa0.5literPET-bottleofCoca-ColaproducedatCCE’sDongenbottlingplantintheNetherlands.Thespecificproductselectedforthispilotstudywasdrivenbytheresearchers’proximitytoandfamiliaritywiththelocalindustriesandthesupportofthelocalbottlerandbusinessunit.

Water Footprint AccountingAwaterfootprintofCoca-Colaisthesumofindirectwateruseinthesupplychainplusdirectoperationalwateruse(Figure 4).

Indirect Water Use in the

Supply ChainDirect Operational

Water Use Water Footprint

Bottling Plant

Ingredients

Packaging

PET Bottle, Closure, Label,

Tray Carton, Tray Shrink Film,

Pallet Stretch Wrap, Pallet

Beet Sugar, Phosphoric Acid,

Caramel, Caffeine, C02

Cleaning, Mixing, Blending, Filling

Figure 4. Indirect and Direct Water Footprint Components

2.0

PIL

OT

STU

DIE

S

12

Theaccountingprocessbeganwithwaterusedinthesupplychaintoproduceingredientsandothercomponents(e.g.,bottles,labels,packingmaterials).IngredientsincludesugarmadefromsugarbeetsgrownintheNetherlands,carbondioxide(CO2),caramel,phosphoricacidandcaffeine.Thenamesandquantitiesofingredientsinnaturalflavoringsaretradesecretsandwerenotincludedintheassessment,buttheabsenceofthesedatashouldnotimpactthecasestudyorrelatedconclusionsbecausethewaterfootprintsassociatedwithsuchnaturalflavoringarenotexpectedtobematerialinnature.12Thesupplychainwaterfootprintalsoincludesoverhead,whichaccountsforwaterusedtoproducetheenergythatpowerstheplants,buildingmaterials,officepaper,vehicles,fuelandotheritemsnotdirectlyrelatedtooperations.

Waterusedinoperationsconsistsofthewaterincorporatedintotheproductasaningredientandwaterusedinproductionprocesses.ThroughouttheCoca-Colasystem,theprocesswateristreatedtorigorousstandardsbeforeitisreusedinsideaplantorreturnedtocommunitiesandnature.

Theestimatesarethatthegreenwaterfootprintofthe0.5literCoca-Colabeverageis15liters,thebluewaterfootprintis8litersandthegreywaterfootprintis12liters.Thegreenandblue(consumptive)waterfootprintsareprimarilyassociatedwithsugarbeetproduction.Thesugarbeetsarelargelyrainfed(green),andsomeexternal(blue)watersupplyisrequiredforirrigation.TheblueplusgreenwaterfootprintsforDutchsugarbeetsfromdifferentregionsareshowninFigure 5.Greenwatermakesupapproximatelytwo-thirdsoftheconsumptivewaterfootprint.

Noordelijke klei

Noordelijk dal/veen

Gelderland

Limburg

Oost-BrabantWest-Brabant

Zeeuws-Vlaanderen

Zeeuwse-Eilanden

Noord en Zuid-Holland

Oost en Zuid Flevoland

Noordoostpolder

Noordelijk zand

1531

1429

1530

1533

1738

1223

1323

1119

1119

818

816

510

Figure 5. Consumptive Water Footprints for Dutch Sugar Beets

12Naturalflavoringsreportedinarecentreporttitled“APilotinCorporateWaterFootprintAccountingandImpactAssessment:TheWaterFootprintofaSugar-ContainingCarbonatedBeverage”(Ercin,etal.2009.UNESCO-IHEInstituteforWaterEducation,ValueofWaterResearchReportSeriesNo.39)arenotbasedonappropriateassumptionsforCoca-Cola.

13

Thegreywaterfootprintisassociatedwiththesupplychain.Aportionofthenitrogenappliedasfertilizertothesugarbeetfieldsisreleasedtoreceivingwaters.CoolingwaterassociatedwithPETbottleproductionresultsinathermalload,whichisconsideredinthegreywatercomponent.

Theoperationalwaterfootprint(0.4liters)isentirelybluewater,representingwateraddedasaningredient.Theoverheadwaterfootprintassociatedwithoperations(waterusedfordomesticpurposesintheDongenplant)wasdeterminedtobezerobecauseallwastewateristreatedinapublicwastewatertreatmentplantandreturnedtotheenvironment.13Thesupplychainoverheadwaterfootprintwasalsocalculatedandfoundtobenegligible.Theoverallresults,includingallcomponents,areshowninFigure 6.14

Impacts AssessmentToassesspotentialimpactsfromthesewaterfootprints,theresearchersfocusedonthelargestcomponent:sugarbeetsgrownintheNetherlands.Dutchsugarbeetsaregrowninaregionofrelativewaterabundance,andthecropsareprimarilyrain-fed.Theneedforexternalwatersupplyislow,sotheuseofbluewaterisminimal.Forthesereasons,thereappearstobenosignificantadverseimpactsofgreenandbluewateruseassociatedwithsugarbeets.

13Thegreywaterfootprintmethodologyisevolving;theseresultsreflecttheapproachatthetimeofthisstudy.14Asubsequentmoredetailedstudyofthesugarbeetwaterfootprint(describedinsection2.2ofthisreport)indicatesthatinfactthebluewaterfootprintismuchsmaller,reflectingactuallowirrigationwateruseintheNetherlands.

Figure 6. Water Footprint of a 0.5 liter of Coca-Cola® in Dongen, the Netherlands

Packaging(7 Liters)

Ingredients(28 Liters)

Supply Chain Water Footprint

Operational Water Footprint

Total Water Footprint

PackagingBlue | 100%

Grey | 83%

Green | 13%Blue | 4%

Grey | 20%

Blue | 28%Green | 52%

Grey | 34%

Blue | 23%

Green | 43%

(12 Liters)(15 Liters)

(8 Liters)(0.4 Liters)

14

Intermsofgreywater,iftheappliedratesofnutrientsarehigherthantheuptakeofthecrop,excessfertilizerscanrunoffandleadtoeutrophication,theenrichmentofsurfacewaterswithnutrientsthatpromoteexcessivegrowthofalgae.Potentialconsequencesincludefishkillsanddegradationofthewaterqualityofrecreationalsurfacewaterssuchasswimmingareas.Nitrateleachingfromfarmlandcanalsocontaminatedrinkingwatersupplies.TheaveragefertilizerapplicationrateintheNetherlandsisoneofthelowestamongtheEuropeansugarbeetproducingcountries15,andthegovernmentregulatesfertilizerapplication16,minimizingtheriskofexcessiveapplication.Nevertheless,accordingtotheNetherlandsEnvironmentalAssessmentAgency17,eutrophicationisaconcernintheNetherlands.Theimpactsassessmentindicatedthattheremaybeaneedtoengagewithgovernmentsandotherstakeholderstodiscussbettermanagementmeasurestoaddressthisissue.

What was learned from the Coca-Cola water footprint study?

• More than two-thirds of the total water footprint of a 0.5 liter PET bottle of Coca-Cola from the Netherlands comes from blue and green water used in the supply chain to grow sugar beets.Nearlyhalfofthetotalwaterfootprintisrainwater(green)usedbysugarbeetsinthiswater-richtemperateclimate.Bluewateraccountsforapproximatelyone-quarterofthetotalwaterfootprint.18

• Approximately one-third of the total water footprint is grey water associated with the supply chain.Somenitrogenassociatedwithfertilizerusedonsugarbeetfieldsisreleasedtotheenvironment.ThegreywaterfootprintalsoisassociatedwithcoolingwaterforPETproduction,whichresultsinathermalload.

15FAO(FoodandAgricultureOrganization).2008.FERTISTATDatabase-Fertilizerusebycropstatisticsdatabase.16InternationalInstituteforBeetResearch(IIRB).2004.SugarbeetinEurope:Anenvironmentallyfriendlycropforsustainableplantproductionsystems.17NetherlandsEnvironmentalAssessmentAgency.2008.EnvironmentalPressureintheNetherlands,EutrophicationTheme:IntroductionandPolicy.18Asubsequent,moredetailedstudyofthesugarbeetwaterfootprint(describedinsection2.2ofthisreport)indicatesthatinfact,thebluewaterfootprintismuchsmaller,reflectingactuallowirrigationwateruseintheNetherlands.

• The operational water footprint comprises only about 1% of the total water footprint. Theoperationalwaterfootprintisallblueandrepresentswateraddedasaningredient.Theoperationalgreywaterfootprintiszero,becausethewastewateristreatedtomeetorexceedwastewatertreatmentstandards.UnderTheCoca-ColaCompany’s“Recycle”commitment,allplantswillattainlocalandtheCompany’srigorousglobaltreatmentstandards.

• The overhead water footprint for the products evaluated is negligible.Thiswasoneofthefirststudiestoquantifytheoverheadwaterfootprintofaproduct.Priortothestudy,therewasrecognitionthattheoverheadcomponentisapartoftheoverallwaterfootprintofaproduct,butitwasunclearhowrelevantitwas.

What are the implications for the Coca-Cola system?

• The results of this pilot study suggest that a closer look at the water footprints of sugar produced from sugar beets, as well as other sweeteners supplied to the Coca-Cola system across Europe, is warranted.ThesugarbeetpilotstudydescribedinthefollowingsectionwasconductedwiththeintenttoincreaseunderstandingofwateruseassociatedwithsugarbeetsproducedinEurope.

• This study highlighted the need to look at the components of water footprints separately, because an aggregated number can hide the importance of reducing the direct water footprint.TheCoca-Colasystemwillcontinuetofocusonimprovingwaterefficiencyandensuringthatallprocesswateristreatedtorigorouswastewatertreatmentstandardswithindirectoperations.Theseactionshaveapositiveimpactonthewaterfootprint.

• Beyond sugar beets, the Company has established a sustainable agriculture program.Thispilotstudyreaffirmedtheimportanceofincludingagriculturalingredientsinawaterfootprint.TheCompanyisactivelyengagedwithWorldWildlifeFund(WWF)andothersintheBetterSugarcaneInitiative(BSI),amulti-stakeholderinitiativeworkingtodevelopacertificationforsustainablysourcedsugarcane.

2.2 WATER FOOTPRINT OF BEET SUGAR SUPPLIED TO THE COCA-COLA SySTEM’S EUROPEAN BOTTLING PLANTSBasedontheresultsofthefirstwaterfootprintassessmentofa0.5literPETbottleofCoca-ColaintheNetherlands,Coca-ColaEuropewasinterestedinexaminingthewaterfootprintandassociatedimpactsfornaturalsweetenerssuppliedtoits112Europeanbottlingplants.ThisongoinganalysisisbeingconductedbydenkstattincooperationwiththeInstituteforWaterQuality,ResourcesandWasteManagementattheViennaUniversityofTechnology.

Todate,thewaterfootprintaccountingforsugarbeetshasbeencompleted.Workonsugarcaneandhighfructosecornsyrup(HFCS)isunderway.Approximately70%ofrefinedsugarpurchasedfortheCoca-ColasysteminEuropeisfromsugarbeetsgrownin19Europeancountries.

15

16

Water Footprint AccountingAllrelevantactivitiesthatusewaterintheproductionofbeetsugarwereaddressedintheaccountingprocess,asshowninFigure 7.Rawbeetsareprocessedatsugarbeetrefiningfactoriesintoseveralproducts,includingbeetpulp,molassesandsucrose.

ThemethodologyoutlinedintheWater Footprint Manualwasfollowedwithsomemodifications.Inparticular,thebluewaterfootprintwascalculatednotasthedifferencebetweenthecropwaterrequirement(CWR)andgreenwater,butratherthroughsite-specificdataprovidedbythesugarcompanies.Theresultsindicatethatlesswaterisactuallyappliedforirrigationthanprojected,afindingconsistentwithirrigationstrategiesfocusedonmaintainingconsistentharvestsratherthanmaximumyields.

Thegreywaterfootprintforsugarbeetswascalculatedbasedonthepollutantloaddividedbythemaximumacceptableconcentrationfornitrogen,consideredanindicatoroftheimpactoffertilizeronwaterquality.19Itwasassumedthat10%oftheappliednitrogenfertilizerleachestogroundwater.TheamountofdilutionwaterwascalculatedusingthewaterstandardoftheU.S.EnvironmentalProtectionAgency(EPA)fornitrogen(10mg/liter)20,whichiswellwithintherangeofacceptableground/drinkingwaterrequirements

19Aldaya,M.M.andA.Y.Hoekstra.2010.TheWaterNeededtoHaveItaliansEatPastaandPizza.AgriculturalSystems.103:351-360.20NationalPrimaryDrinkingWaterRegulations.CodeofFederalRegulations(CFR)Title40;Part141.

Cultivation of main raw materials (sugar beet)

Transport of main raw materials to the sugar plant

Sugar production

Transport of sugar toCoca-Cola system bottling plants

Figure 7. Beet Sugar Water Footprint Calculation Stages

17

forEuropeminusanassumednaturalbackgroundconcentration.Forsugarrefineries,EuropeanUnionBestAvailableTechnique(BAT)emissionvaluesforthefoodindustry21wereusedtocomputethegreywaterfootprint.

TheaveragegreenwaterfootprintforsugarfromsugarbeetsacrossallregionsofEuropeisestimatedtobe375liters/kgsugar,or67%ofthetotalwaterfootprint.Theaveragebluewaterfootprintis54liters/kg,or10%ofthetotal.Theaveragegreywaterfootprintis128liters/kg,comprising23%ofthetotalwaterfootprint.Themagnitudeandcolorcompositionofthewaterfootprintdependsonthesourcingregion,asshowninFigure 8.Theresultsinthefigureareclusteredaccordingtoclimate.TheamountofwaterrequiredbysugarbeetsishighestinGreece,Romania,ItalyandSpain.Threeofthesecountrieshavesignificantlylargerbluewaterfootprints(associatedwithirrigation)thantheothergrowingregions.

Thisstudyalsoevaluatedthewaterconsequencesofusingthelandforagriculturalpurposesascomparedtonaturalforest.Thiscaninformtheimpactsassessment,becauseitprovidesinformationontheevapotranspirationdemandfromnativevegetationifthesugarbeetcropswerenotcultivated.Thenaturalvegetationaroundthesugarproductionareasismostlyforest,buttheresearchersdeterminedthatthestandardapproachforwaterfootprintcalculations(Penman-Monteith22)isnotsuitableforforestsbecausetranspirationandinterceptionevaporationcannotbedefinedappropriately.Inordertoconductthecalculation,thestandardgrasssurface23wasusedasareferenceratherthanthenaturalvegetation.Thisisaconservativeassumption,becausethewaterdemandforforestsishigherthanforgrasslands.Theresultssuggestthatuseofthelandforgrowingsugarbeetsconsumeslesswaterthanwouldbeconsumedbynaturalvegetation.

ThewaterfootprintofsugarfrombeetsgrownintheNetherlands(incombinationwithBelgiumandtheUK)isapproximately12%lowerthantheestimatemadefortheCoca-Colawaterfootprintstudy.Thelargerestimateassumesthatthedifferencebetweencropwaterrequirementandavailabilityofgreenwateriscoveredbyirrigation(bluewater).Instead,theinputsusedforthesugarstudyarebasedonactualirrigation

Lite

rs/K

g S

ugar

1 , 200

1 ,000

800

600

400

200

0

Austria, Hungary

SerbiaRomania

Poland

Czech Republic, LithuaniaGreece

France

Finland, SwedenSpain Italy

Denmark

Switzerland, Germany

Belgium, Netherlands, United Kingdom

= Transport/Energy = Grey Water = Blue Water = Green Water

Figure 8. Water Footprints of Beet Sugar Across Growing Regions

21EuropeanCommission.2006.IntegratedPollutionPreventionandControl:ReferenceDocumentonBestAvailableTechniquesintheFood,DrinkandMilkIndustries.22Allen,R.G.,L.S.Pereira,etal.1998.Cropevapotranspiration-Guidelinesforcomputingcropwaterrequirements.FAOIrrigationanddrainagepaper56.23Ibid.

18

dataobtainedfromthesugarindustry,whichindicatedthatalmostnobluewaterisusedtoproducebeetsugarintheNetherlands.Thebluewatercomponentwasfoundtocompriselessthan1%ofthetotalwaterfootprintofDutchsugarbeets,comparedtothe28%estimatefromtheCoca-Colastudy.

Whenthelowerestimatesfromthebeetsugarstudyareusedtocomputethewaterfootprintofa0.5literPETbottleofCoca-ColaproducedintheNetherlands,thebluewaterfootprintdecreasesfrom8litersto1liter,andthetotalwaterfootprintdecreasesby9%.Theseresultshighlighttheimportanceofobtainingsite-specificdatawherepossible.AsFigure8indicates,thewaterfootprintofthisproductwillbehighlydependentonthelocationwherethesugarissourced.

Uncertainty AssessmentThispilotstudyidentifiedachallengeassociatedwithgreywaterfromsugarrefineries:apartfromastandardfornitrogen,thereisnocommonreceivingwaterstandardforthebeet-growingcountriesinEurope.Theresearchersexploredthesensitivityofthegreywaterfootprintcalculationbasedonthreedifferentwaterqualitystandards.Thisexerciseshowedthatthetypeoftreatmenthasasignificantimpactonthegreywaterfootprint,asexpected.Forsugarfactorieswithlowlevelsoftreatment(i.e.,mechanicalornotreatment),thechoiceofstandardwasfoundtohaveaverysignificantinfluenceontheresult.Forsugarplantswithadequatetreatment,thechoiceofstandardwasfoundtohavelesserinfluenceonthegreywaterfootprint.Thisexercisedemonstratesthesensitivityofthegreywaterfootprintcalculationtothechoiceofstandard.

Why did the water footprint of Coca-Cola decrease?ThewaterfootprintofCoca-ColadescribedinSection2.1wasrecalculatedbasedontherefinedwaterfootprintestimatesfromthesugarbeetpilotstudy.Theresultingtotalwaterfootprintwasfoundtobesmallerthantheoriginalestimate,andtheblue(irrigation)waterfootprintdecreasedsignificantly.Thedifferenceisduetotherobustnessoftheinputs.Forthesugarbeetwaterfootprintstudy,completedquestionnaireswerereceivedfrom65EuropeansugarplantsthatsupplytheCoca-Colasystem.Questionnairesrequesteddetailedinformationonsugarbeetcultivationandsugarfactoryoperations.Incontrast,theoriginalestimateswerebasedonpublicdatasets,anditwasassumedthatthedifferencebetweenthecropwaterrequirementandtheavailabilityofgreenwaterwascoveredbyirrigation(bluewater).Themorerobustdatasetindicatedthatisnotthecaseandthatlessirrigationwaterisactuallyapplied.

-9%

19

What was learned from the beet sugar water footprint study?

• The water footprint associated with beet cultivation is the largest component of the total water footprint of beet sugar.Onaverageacrossthegrowingregions,thewaterfootprintofthebeetcropsmakesup97%ofthetotalwaterfootprintofbeetsugar.

• European sugar beets are generally grown in water-rich temperate climates using mainly green water.MostEUcountriesuseverylittleirrigation(blue)watertogrowsugarbeets,withsomenotedexceptionsintheMediterraneanregion.

• Differences in the consumptive (green plus blue) water footprint between countries can be more than three-fold.Thetotalconsumptivewaterfootprintsrangefrom279liters/kg(France)to974liters/kg(Greece).Thecountrieswiththelargestconsumptivewaterfootprinthavehighevapotranspirationratesand/orlowyields.

• Grey water footprints in the sugar beet supply chain come mainly from the field, not the factory.However,sugarplantsinsomecountrieshavelargegreywaterfootprintsduetolowlevelsofwastewatertreatment.Almostthree-quartersofthewaterfootprintforsugarfactoriesisgrey.

• The use of supplier-based data provides a more realistic picture of water use in the supply chain compared to footprints based on public data.Publicdataarebasedonassumptions,whereassupplierdataarebasedonactualperformance.ActualcropmanagementpracticesforsugarbeetsgrowninEuropeutilizedlessirrigationwaterthanindicatedbypublicdata.Thisisbecauseperiodsofsoilmoisturedeficitduringthelastmonthsofgrowthareallowedinordertooptimizeyields.

• In the cultivation areas, natural vegetation uses as much as or more green water than sugar beets.Thereplacementofnaturalvegetationwithsugarbeetcropsappearstoresultinlowerwaterconsumption.

What are the implications for the Coca-Cola system?

• Sugar beets grown in the Netherlands are a water-efficient crop. Thislocalsourceisgrowninawater-richtemperateclimateusingmainlygreenwater.

• There is a wide variation in the water footprint of sugar beets grown in different regions.Theremaybeopportunitiesinsomegrowingregionsforbetteruseofwaterresourcesassociatedwithwatersupplyforbeetcultivation.Theanalysisalsohighlightspotentialopportunitiestoaddresspoorwastewatertreatmentandassociatedwaterqualityproblemsforsomesugarprocessingplants.

• The findings of this pilot study helped define future actions related to supply chain sustainability.TheCompanyhasnowinitiatedfurtherworkinEuropetotrialawaterfootprintsustainabilityassessmentcoveringenvironmental,socialandeconomicimpactsforrefinedsugarmadefromsugarbeets.TheCompanyisengagingwithselectedEuropeanstakeholders,includingbeetsugarsuppliers,forconsultationandadviceduring

theproject.

20

2.3 WATER FOOTPRINT OF ORANGE JUICE PRODUCTSTheCoca-ColaCompanyistheworld’slargestproducerofjuiceandjuicedrinks,with100brandsofjuiceand1,100juiceproductssoldin145countries.HavingrecentlycompletedawaterfootprintoftheCompany’ssignaturesparklingbeverage(Coca-Cola)andawaterfootprintofakeysweetener(sugarbeets),theCompanyalsowantedtoexplorethewaterfootprintofajuicebeverage.TwoorangejuiceproductsproducedfortheNorthAmericanmarketwereselectedforthewaterfootprintpilotstudy:

• SimplyOrange(notfromconcentrate)in59oz.PETcarafe

• MinuteMaidOriginal(reconstitutedfromconcentrate)in64oz.fiber-basedboardgable-topcarton

Thecalculationsconsiderallwaterconsumedingrowingorangesandwaterconsumedinprocessingandpackagingthefinalorangejuiceproducts(Figure 9).TheorangesforSimplyOrangearegrowninFloridaandthestateofSaoPaulo,Brazil.TheorangesforMinuteMaidOriginalaregrownprimarilyinFloridaandCostaRica.Theprocessingoforangesintojuiceorconcentrateoccursintheregionswheretheorangesaregrown.Thepercentoforangessourcedfromeachregionvariesbyyear,anddifferentsourcingscenarioswereevaluatedtoreflectthisvariability.BothproductsarepackagedintheU.S.atmultiplelocations.Datawerenotavailableforwateruseassociatedwithmanufacturingofthepackagingmaterialsinthesupplychain,soonlyoperationalwaterusewasaccountedforinthepackagingplants.Admittedly,thesemissingdatamayormaynotmateriallyimpactthecasestudyortherelatedconclusions,sofuturefollow-uptoincludeandreflectsuchdataiswarranted.

Water Footprint AccountingWaterfootprintswerecalculatedaccordingtotheaccountingmethodoutlinedintheWater Footprint Manualandbasedonavailableinformation.PublicdatawereusedforBrazilandtofillotherdatagapswheresupplierdatawerenotavailable.

Thewaterfootprintassociatedwithorangegrowingmakesupapproximately99%ofthetotalwaterfootprintforbothproducts,andtheremainderisassociatedwithprocessingandpackaging.Thegreen,blueandgreywatercomponentsforeachproductareshowninFigure 10.

Indirect Water Use in the

Supply ChainDirect Operational

Water Use Water Footprint

Packaging Plant

Ingredients

Packaging

Container (PET bottle or fiber-

based board gable top carton),

closure, label, packaging

materials to ship products

Oranges and processing

of frozen concentrated and not-from-

concentrate juice

Cleaning, Blending, Filling

Figure 9. Indirect and Direct Water Footprint Components

21

MostoftheorangesaresourcedfromFlorida,sotherelativeproportionsofgreen,blueandgreywaterfootprintsforeachproductshowninFigure10aresimilar.Thewaterfootprintoforangesvariesacrossgrowingregions,asshowninFigure 11.Basedonthisanalysis,thetotalwaterfootprintappearstobelargestinBrazil.However,consideringonlythetotalwaterfootprintcanbemisleading.Theresultsshowthatintermsofconsumptivewateruse(greenplusbluewater),Floridahasthelargestwaterfootprint.Mostimportantly,FloridahasasignificantlylargerbluewaterfootprintthanBrazilandCostaRica.ThisisbecausethecalculatedcropwaterrequirementsaresubstantiallygreaterforFloridacomparedtoCostaRicaandBrazil.ThesedifferencesreflectthehigherevapotranspirationratesinFloridaandexplainwhyirrigationisanecessityinmostFloridagroves.

Asecondandimportantreasonforthedifferencesinconsumptivewaterfootprintrelatestothevarianceincropyieldsbetweengrowingregions.AveragecropyieldsforFloridaare18%greaterthanCostaRicaand86%greaterthancropyieldsinBrazil.Therecanbemanyreasonsfortheseloweryields,includingdisease,lackofirrigationand/orfertilization,soilconditions,speciesoforangesandlengthofthegrowingseason.Cropyieldswereidentifiedasanareaofuncertaintyintheanalysis,andtheseresultsillustratewhyaccuratecropyieldinformationiscriticaltocalculatingwaterfootprints.

Grey | 16%

Blue | 24%

Green | 60%Grey | 18%

Blue | 20%

Green | 62%

Simply OrangeFlorida

Simply OrangeFlorida and Brazil

Minute Maid OriginalFlorida and Costa Rica

Grey | 16%

Blue | 22%

Green | 62%

(100 Liters)

(386 Liters)

(154 Liters)

(117 Liters)

(407 Liters)

(127 Liters)

(84 Liters)

(319 Liters)

(115 Liters)

Figure 10. Water Footprint for a Liter of Orange Juice Product

Cub

ic M

eter

s P

er T

on

5 00

450

400

350

300

250

200

150

100

50

0

= Grey Water = Blue Water = Green Water

Florida Brazil Costa Rica

Figure 11. Water Footprints for the Three Growing Regions

22

Thegreywaterfootprintforgrowingorangesrelatestofertilizerapplicationandassociatedexcessnutrientsreachingsurfacewaterorgroundwatersupplies.Nitrogenwasconsideredthemostcriticalpollutant.PollutantloadinformationwasavailableforFloridaorangegroves,andsimilarratesoffertilizerapplicationwereassumedforBrazilandCostaRicainordertoestimatethegreywaterfootprintforallregions.Intheabsenceofsite-specificinformationforleachingratesandpollutantloadsinrunoff,a10%leachingratewasassumedforalllocations,asrecommendedintheWater Footprint Manual.Themagnitudeofthegreywaterfootprintisstronglyinfluencedbythecropyieldsthatwereassumedfortheanalysis.ThelargergreywaterfootprintshownforBrazilisadirectfunctionoftheloweryieldsusedforBrazil,comparedtoyieldsusedforFloridaandCostaRica.

Impacts AssessmentThiswaterfootprintpilotdifferedfromtheothertwostudiesinthattheCompany’sorangejuiceproductshavelargeandcomplexsupplychains.Theorangegrovesandprocessingplantsarespreadacrossvastareasinnumerouswatershedsofthreecountries.Forthisreason,therewasaneedforascreeningtooltohelpfocustheimpactsassessmentonprioritywatersheds,andtheutilityofwaterstressindicesforthispurposewasexploredaspartofthestudy.

Avarietyofwaterstressindiceshavebeenusedtoreflectthescarcityofwaterinaregion,basedonvariousmetricsthatcanbecalculatedindifferentways.Theycanbeusedasindicatorsoflocationswhereacloserlookmaybewarranted.Theindicesarebasedonfactorssuchaspopulationandtotalrunoff,volumeofwaterwithdrawals,andvariationinprecipitation.

Waterstressindiceswerecalculatedforthethreecitrusgrowingregions,becauseitwasdeterminedduringtheaccountingphasethatthelargestwaterfootprintisassociatedwiththeorangegroves.TheresultssuggestedthatthegreenandbluewaterfootprintimpactsarepotentiallymostsignificantforgrowingorangesinFlorida.However,theseindicesareonlyindicativeofpotentialimpacts.Amoredetailedanalysisrevealedthat,ingeneral,wateruseassociatedwithcitrusgrowinginFloridaismanagedthroughtheWaterManagementDistricts’strongenvironmentalflowandwaterqualityprotectionprograms,andthereislittleevidenceofsignificanthydrologicimpactfromcitrusgrowinginFlorida.Thewaterstressindicesthatwereevaluateddonotrecognizethesewaterresourcemanagementmeasures,whicharedesignedtoprotectwaterquantityandwaterquality.However,waterstress,climatefactorsanddevelopmentpressuresareanongoingconcerninFlorida.Policyandregulatoryengagementwillbeimportanttoensurethesustainabilityofthewaterresource.

23

Uncertainty AssessmentConductingwaterfootprintassessmentsforproductswithcomplexsupplychainsrequiressignificantdata.Inordertofocuseffortsonthekeydatarequirements,anuncertaintyassessmentwasconductedtohighlightthosefactorsthathavethegreatestinfluenceonthewaterfootprint.Bycalculatingwaterfootprintsoverarangeofreasonablevariabilityforselectedinputparameters,theuncertaintyininputparametersthatmattermosttothecalculationresultscanbeidentified.Theuncertaintyassessmentcanhelpinunderstandingwhatthenumbersmeanandhowrobusttheyare,focusingfuturedatacollectionandmanagementeffortsonthosefactorsthathavethegreatestinfluenceonthewaterfootprints.

Twoinputparameterswereidentifiedthatsignificantlyaffecttheoverallmagnitudeofthewaterfootprintsoforangejuice,bothrelatedtothesourcecrops:cropyieldsandparametersforgreywaterassociatedwithgrowingtheoranges.

What was learned from the orange juice water footprint study?

• Approximately 99% of the total water footprint for both orange juice products is associated with orange growing.TheCoca-Colasystem’spackagingoperationscontributeinsignificantly(<1%)totheoverallwaterfootprint.Thepackagingplantsthatwerepartofthispilotstudyhaveadoptedsignificantwaterefficiencymeasures,andallprocesswaterisreturnedtotheenvironmentatalevelthatsupportsaquaticlife.

• Florida orange trees require approximately 70% more water than trees grown in Costa Rica and twice as much water as trees grown in Brazil.Floridaissunnierandwindierandhashigherevapotranspirationrates.Floridaalsohaslessrainfallandasignificantlylargerbluewaterfootprint(associatedwithirrigation)thanBrazilandCostaRica.

• The calculations are highly sensitive to crop yields.EstimatedyieldsforFloridaare18%greaterthanCostaRicaand86%greaterthanBrazil.Thedifferencesinthewaterfootprintbetweenregionsreflectthesedifferencesinyields.

• Uncertainty in the grey water calculation is large.Thiscomponentisthefocusofongoingdebate,andtheresultsmaychangeasthemethodologymatures.

• A full understanding of impacts requires an assessment of cumulative impacts on shared resources.Waterstressindicescanhelpfocusstudyonareaswithpotentialimpacts,butmoredetailedassessmentisrequiredtofullyunderstandwhetherthewateruseiscontributingtocumulativeimpactsinawatershed.

What are the implications for the Coca-Cola system?

• The study highlights potential opportunities for improvement related to orange growing.Thesensitivityofthewaterfootprintcalculationtocropyieldssuggeststheneedforgreaterunderstandingofthefactorsimpactingyieldsacrossgrowingregionsinordertotakeadvantageofopportunitiesforimprovement.

• Despite tight management and controls, the greatest water-related risks may be associated with oranges sourced from Florida.WhileimpactsarenotreadilyapparentinFlorida,factorsincludingwaterstress,competingandincreasingpressuresforwaterresources,andclimatechangemayaffectsupply.Engagementwithotherstakeholderstohelpensurethatthesharedwaterresourceismanagedsustainablywillcontinuetobeimportant.

—AmericanIndianProverb

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Thethreepilotstudiesdescribedintheprevioussectionprovideinsightintoseveralimportanttopicsrelatedtowaterfootprinting.Theprimarylessonslearnedandobservationsarediscussedbelow,organizedaccordingtothefourphasesofawaterfootprintassessment.

3.1 SETTING GOALS AND SCOPEWaterfootprintstudiescanbetimeconsumingandresourceintensive,andbeforeembarkingonastudy,itisimportanttobeclearaboutthegoalsofthestudy.TheCompanyinvestedinwaterfootprintpilotstudiesformultiplereasons.Broadlyspeaking,theCompanywasinterestedingainingabetterunderstandingofthemethodologyandhowitmightsupportitsaimtoestablishatrulywater-sustainablebusinessonaglobalscale.TogetherwithTheNatureConservancy,therewasinterestinexploringtheutilityandpracticalityofthemethodologyforunderstandingwaterusethroughoutthevaluechainandtheimpactsthatusemayhaveonlocalwatersheds.Italsowasanticipatedthattheknowledgegainedthroughwaterfootprintpilotsmightidentifylocationswhereresponseeffortsshouldbedirectedatmoresustainableagriculturalpractices.Thepotentialvalueofwaterfootprintingasanexternalcommunicationtoolwasalsoofinterest.Finally,TheNatureConservancyandtheCompanyhopethattheoutcomesofthepilotstudieswillcontributetogreaterunderstandingofthewaterfootprintassessmentmethodology.

Twoperspectivesrelatedtothesegoalsweregainedthroughthepilotstudies,asdiscussedinthefollowingsections:

• Waterfootprintassessmentscanimproveinternalunderstandingofwateruse.

• Externalengagementandcommunicationsaboutwaterusecanbeinformedbywaterfootprintanalysis.

Water footprint assessments can improve internal understanding of water use.

Theknowledgegainedthroughthethreepilotstudiesprovidesvaluableinsightintothelargestcomponentsofwaterconsumptionintheproductionoftheproductsselectedforstudy.Theassessmentresultsdemonstratethatfocusingonoperationalwateruseisimportant,butitprovidesanincompletepictureofaproduct’sfullwateruseandimpact.Itisimportanttoaddressfreshwaterusethroughoutthesupplychain.

Waterfootprintaccountingcanprovideusefulknowledgeandinsightsaboutwateruseandthegreen,blueandgreycomponents.Theresultscanalsobeusedtohelpdirectacompany’seffortstoencourageimprovedwaterstewardshipinthesupplychain.Forexample,thesugarbeetpilotstudyindicatedthatsomesugarprocessingplantshavelargegreywaterfootprintsduetolowlevelsoftreatment,highlightingapotentialareaforfutureengagementwithsuppliers.Theassessmentalsocanhelpidentifytheneedformoresustainableagriculturalpracticesrelatedtowaterusebyprovidinginformationonwherethemostwaterisusedandwheretheremaybethegreatestpotentialforadverseimpactsonwaterresources.

Waterfootprintingisahelpfultooltobegintoidentifypotentialwater-relatedissuesandrisks.Toreallygainanunderstandingofwhetherwateruseishavinganimpact,thevolumeofwaterconsumptionmustbeplacedinthecontextofthelocalwatershed,andthecumulativeeffectofallusesofthesharedwaterresourceneedstobeconsidered.Thestateofthescienceatthepresenttimeisstillinsufficienttoaddressthefullarrayofwater-relatedimpacts,butthewaterfootprintmethodologyisexpandingtoincludeamorerobustimpactsassessment.

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TheCompanyreliesonitsriskassessmentprogramtounderstandandmanagewater-relatedissuesandrisksforitsdirectoperations.TheriskassessmentprogramhasbeeninstrumentalinshapingtheCompany’swaterstewardshipframework,whichincludesrequirementsforthedevelopmentofSourceVulnerabilityAssessmentsandSourceWaterProtectionPlansforallbottlingfacilities.

External engagement and communications about water use can be informed by water footprint analysis.

Discussionsaroundwaterareevolvingrapidlyacrossmanyaudiences,includingpolicymakers,corporateinvestorsandshareholders,NGOs,communitiesandothers.Waterisacomplexresourcetounderstandandmanage,andwaterimpactsdifferfundamentallyfromcarbonemissions,wherelocalreleasescanhaveglobalimpacts.Whentalkingaboutawaterfootprint,itisimportanttorecognizethattherearevariedapplicationsofitsuseandtobeclearaboutthetypeofwaterfootprintinvolved,aswellastheneedsoftheaudience.

Thevalueofproductwaterfootprintingisitsabilitytoexaminedisaggregatedwaterusebycomponent;thatis,bysupplychainandoperationaluse,andbygreen,blueandgreywater.Itisimportanttokeepthecomponentsofawaterfootprintseparate,sothattheycanbeassessedinthecontextofthelocalwatershedswherethewaterisbeingsourced.Whiletheconceptofwaterfootprintinghassuccessfullyraisedpublicawarenessofthevariousdimensionsofwateruse,consumersandmanyopinionleadersoftenfocusonlyontheaggregatednumbers,withanaturalreactionthattheyneedtobemadesmaller,regardlessofthecontext.However,aproductwaterfootprintnumberbyitselflacksimportantcontext,andthiscansendthewrongmessagethatanywateruseisbad,whichmayleadtoaninappropriateresponsestrategy.Asmallwaterfootprintinadrought-pronewatershedmayhaveasignificantimpact,whilealargewaterfootprintinawater-richregionmayhavelittleornoimpact.

Thereisaperceptionbysomethatwaterfootprintsonproductlabelscanbeusedtohelpconsumersmakeproductchoices.Whilewaterfootprintsareahelpfultoolforcompaniestobegintounderstandtheirwateruse,numericwaterfootprintsonproductlabelsdonotprovidetheinformationthatconsumersneedtomakeinformedchoicesamongproductsandconsumptionpractices.Awaterfootprintlabelwouldprovide“anumber,”butitwouldnotreflectthecomplexitiesbehindit,orconveytheimpactthatthewaterusedtoproducethatproductishavingonthelocalwatershed.

Caremustbetakenwhencomparingwaterfootprintstoensurethattheyreflectthesamescope(operationaland/orsupplychain).Furthermore,whensite-specificdataarelimited,asisoftenthecase,theuseofpublicdatasourceswillleadtothesamewaterfootprintsforsimilarproducts.Asanexample,intheabsenceofsite-specificdata,orangejuiceproducedbytwocompaniesthatsourcefromthesamecountrieswillhavethesamewaterfootprintbecauseoperationalwaterfootprintsaresmall,andanydifferenceswillbeoverwhelmedbythecropwaterfootprint.

ThewatercertificationprogramunderdevelopmentbytheAllianceforWaterStewardship(AWS)24anddiscussedinSection4.2holdspromiseasamoreeffectiveandappropriatecommunicationtool.Thisprogramwillrecognizecompaniescontributingtosustainablewaterpracticesandoperatinginhealthywatersheds.BothTheNatureConservancyandTheCoca-ColaCompanyareparticipatingintheactivitiesoftheAWS.

24www.allianceforwaterstewardship.org

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3.2 WATER FOOTPRINT ACCOUNTINGThecoreofthewaterfootprintassessmentisaccounting.Duringthisphase,thesupplychainismappedout,relevantdataarecollected,andthecolorsofthewaterfootprintarecalculated.Ingeneralandacrossallthreepilotstudies,theaccountingprocessprovidedanincreasedunderstandingofthegreen,blueandgreycomponentsofthewaterfootprint.Theprimarylessonslearnedandobservationsrelatedtotheaccountingphasearediscussedbelow:

• Supplierinformationiscriticaltoconductingawaterfootprintassessment;

• Thewaterfootprintsfortheproductsstudiedcomemainlyfromthefield,notthefactory;

• Thespatialandtemporalresolutionofthebluewaterfootprintiscritical;

• Waterfootprintsarehighlysensitivetojustafewinputparameters;

• Furtherdevelopmentandstandardizationofthemethodologyforcalculatingthegreywaterfootprintisneeded;and

• Theoverheadwaterfootprintwasfoundtobeaninsignificantcomponentoftheproductwaterfootprints.

Supplier information is critical to conducting a water footprint assessment.

Waterfootprintaccountingrequiresasignificantamountofdata.ManyoftheCompany’sproductsareproducedthroughcomplexsupplychainsinvolvingnumerousgrowers,processorsandbottlersspreadacrossmultiplecontinents.Consequently,noonepersonhasaccesstoalloftherequireddata.Itcanbeextremelydifficulttomapthesupplychaintothefieldlevel,duetothefactthatcertainingredientsarepurchasedfromdistributorsorcooperativesthatstockpileproductsfromhundredsoffarms.Furthercomplicationderivesfromthefactthatthelocationsofwateruseorfarmingcanchange,meaningthattheflowofmaterialsisever-changing.Thischallengewasaddressedintheorangejuicewaterfootprintassessmentbyselectingrepresentativefarmsandplantsforanalysis.Whiledataneedswerestillsubstantial,thishelpedfocustheanalysis.

Foragriculturally-derivedproducts,mostofthedatarequiredforanassessmentresideswithsuppliers.Thisinformationmaybeconsideredconfidentialforcompetitivereasonsorbecauseofconcernsaboutcomparisonwithintheirindustry.Forexample,cropyields,whichcanhaveasignificantimpactonthemagnitudeofthewaterfootprint,alsohaveimplicationsforsuppliersalesandpricingstrategies.Specificinformationaboutinternalprocessesatmanufacturingplantsmayalsobeconsideredproprietary.Somesupplierswerewillingtoshareinformationwiththethirdpartythatconductedthewaterfootprintassessmentafteraconfidentialityagreementhadbeensigned.Othersuppliersexpressedmorewillingnesstoworktogetherthroughanindustryassociationtodevelopawaterfootprintforaregion.Ineithercase,gettingtheneededdataistime-consumingandmayincreaseprojectcosts.Thisfactorcanalsolimitthelevelofinformationdetailthatcanbeshared.

Whenitisnotpossibletoacquiresite-specificdata,regionalaveragesfromglobaldatasetsmaybetheonlyavailablesourceofinformation.Forexample,intheabsenceofdataforthecitrus-growingregionofBrazil,datawereobtainedfromreadily-availabledatasets.25,26,27Thisraisesthequestionofwhetherallwaterfootprintswilllookthesameforsimilaragriculturally-derivedproductswhensite-specificdataareunavailableandinputsaredrawnfromthesameglobaldatabases.

25FoodandAgricultureOrganization(FAO).2009.FAOSTATDatabase.FoodandAgricultureOrganization.Rome.http://faostat.fao.org26FAO,2009.CLIMWAT2.0model,Rome.www.fao.org/nr/water/infores_databases_climwat.html27USDA(UnitedStatesDepartmentofAgriculture)ForeignAgriculturalService.2008.GAINReportNo.BR8021.BrazilCitrusAnnual2008.December19,2008.http://www.fas.usda.gov/gainfiles/200812/146306943.pdf

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The water footprints for the products studied come mainly from the field, not the factory.

Theresultsofthethreepilotstudiesrevealthatthegreen,blueandgreywaterfootprintsforCoca-Cola,Europeansugarbeetsandorangejuicecomemainlyfromthefield.Thelargestcontributortothebluewaterfootprintisirrigationwaterusedtogrowthecrops.Thegreywaterfootprintstemsprimarilyfromfertilizerandpesticideuse,withsomegreywaterassociatedwiththemanufacturingofpackagingmaterials.Thisgeneralfinding,withrespecttotheratioofoperationaltosupply-chainwaterfootprintsandtherelativeimportanceofingredients,packagingandoverhead,canlikelybeextendedtoothersimilaragriculturally-derivedproducts.

Theseresultshighlighttheimportanceofincludingthefullsupplychaininawaterfootprintassessment.Foragriculturally-derivedproducts,companieswithacomprehensiveoperationalwaterusemanagementprograminplacemaybeabletofocustheireffortsonencouragingmoresustainablepracticesforkeycropsinthesupplychain.

The spatial and temporal resolution of the blue water footprint is critical.

Toaccuratelyassessthepotentialforimpacts,itisimportanttounderstandhowwaterscarcityinawatershedvariesthroughouttheyearanditsrelationshiptothecropwaterneeds/use.Thebluewaterfootprintiscommonlypresentedasasinglenumberthatcanmaskimportantspatialandtemporalconsiderations.Forinstance,todevelopappropriateresponsestrategies,itwillbenecessarytounderstandwhetherthebluewateriscomingfromandbeingdischargedtoariver,lake,aquiferormultiplesources.Thevariabilityofthebluewaterfootprintisalsoobscuredwhenonlyanannualaveragenumberispresented.Particularlyforagriculturalproductsoringredients,waterusecanvaryconsiderablyoverthecourseofayear,ascanwateravailability.Insum,thevalueofwaterfootprintingforimpactandriskassessmentswillincreasegreatlywhenfootprintcomponentsaredisaggregatedbywatersource.Further,understandingtheseasonalityofwateruseandavailabilityhelpsprovideabasisfordevelopingappropriateresponsestrategies.

Water footprints are highly sensitive to just a few input parameters.

Sensitivityanalyseswereconductedaspartoftwoofthethreepilotstudiestoidentifytheuncertaintyininputparametersthatmattermosttothecalculationresults.Asensitivityanalysisthatcalculateswater

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footprintsoverarangeofreasonablevariabilityforselectinputparameterscanbeusedtofocusfuturedatacollectionand/ormanagementeffortsonthosefactorsthathavethegreatestinfluenceonthewaterfootprints.

Cropyieldwasfoundtobethesinglemostimportantparameteraffectingthewaterfootprintcalculations.Yieldscanvarywidelyfromyeartoyear,asaresultofclimate,disease,speciesoforangesandotherfactorsthatintroduceyear-to-yearvariability.Yieldsalsoareconsideredconfidentialbysuppliers,aspreviouslynoted,andpublicly-availableaveragescanintroducelargeuncertaintyintotheresults.Thesensitivityanalysesalsoindicatedthatchangesininputdataforthegreywaterfootprintcanhaveasignificanteffectonthewaterfootprintresults.Dataonfertilizerapplicationandleachingandrunoffratesforgrowingoperationswerenotgenerallyavailableforthepilotstudies,sosimplifyingassumptionsweremade.Therefore,thegreywatercomponentsrelatedtotherunoffandinfiltrationofpesticidesandfertilizersarehighlyuncertain.Thechoiceofwaterqualitystandardforgreywaterfootprintcalculationsrelatedtooperationscanalsohaveasignificantimpactontheresults,asdemonstratedbythesensitivityanalysisconductedaspartofthesugarbeetstudy.

Further development and standardization of the methodology for calculating the grey water footprint is needed.

AtechnicalworkinggroupoftheWaterFootprintNetworkiscurrentlyfocusingonthistopic,andtheCompanyisactivelyengagedintheprocess.Importantquestionsarebeingexplored,includingtheplaceofthegreywaterfootprintinwaterfootprintaccounting,theselectionofnaturalandmaximumcontaminantconcentrationsforthecalculation,theempiricalformulasusedtodetermineleachingandrunoff,andpollutantimpactsinreceivingwaterbodies.Thefindingsofthistechnicalworkinggroupwillbeaddressedinthe2010revisedversionoftheWater Footprint Manual.

WherescreeningcalculationsusingtheWFNmethodindicatethatthegreywaterfootprintofaproductislargeandmaybehavinganimpact,furtherevaluationusinglocation-specificwaterqualitystudiesanddataisrecommendedtoconfirm(orrefute)thepreliminaryconclusionsandtodevelopabetterunderstandingoflocalizedwaterqualityimpactsandtheeffectivenessofpossiblemanagementpracticesinreducingimpacts.

The overhead water footprint was found to be an insignificant component of the product water footprints.

Overheadinthesupplychainincludeswaterconsumptionassociatedwithconcreteandsteelusedinbuildings,energyproduction,vehicles,officesuppliesandothermaterials.Operationaloverheadincludesdomesticwateruse(e.g.,forcleaning,toilets,kitchenuse,gardens).Overheadwasfoundtobeaverysmallcomponentofthetotalwaterfootprintinthepilotstudieswhereitwasaddressed.Bothsupplychainandoperationaloverheadwerecomputedaspartofthepilotstudyfora0.5literbottleofCoca-Colaandfoundtobeanegligiblecomponentofthetotalwaterfootprint.Forthesugarbeetpilotstudy,thewaterfootprintrelatedtofuelconsumptionforagriculturalmachineryandenergyconsumptioninthefactorieswasincludedintheanalysis,aswellastransportfromthefieldtothesugarfactoriesandfromthesugarfactoriestothebottlingplants.Thesecomponentswerefoundtobenegligiblecomparedtothetotalwaterfootprints.Energyusewasexcludedfromtheorangejuicestudybecausebiofuel,biomasscombustionandhydropowerwerenotidentifiedsourcesofenergyfortherepresentativefacilities.28InformationondomesticwateruseattheFloridaprocessingplantwasavailableandwascalculated,butitwasdeterminedtobeinsignificant.Discussionswithothersinthewaterfootprintcommunitysuggestthatthesefindingsmayapplytoagriculturally-derivedproductsingeneral.

28TherecommendationintheWater Footprint Manualisthatthewaterfootprintofenergyshouldbeaccountedforiftheenergyissourcedfrombiofuelsorfromelectricityfrombiomasscombustionorhydropowerbecausethoseformsofenergyhavearelativelylargewaterfootprintperunitofenergy.

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3.3 WATER FOOTPRINT SUSTAINABILITy ASSESSMENTWaterisafiniteresource,butitisinfinitelyrenewable.Whenproperlymanaged,evenlargevolumesofwaterusecanbesustainableinlocationswheretheresourceissufficienttosupporttheuse.Theimpactsofwateruseneedtobeassessedinthecontextofallwaterusesinthewatershedinordertodefinecumulativeimpacts,sharedrisksandappropriateresponsestrategies.Improvedefficienciesandwastewatertreatmentareimportantwherepossible,butimpactscanalsobeaddressedthroughpolicyandregulatoryengagementtosupportimprovedmanagementofthesharedwaterresource.

Methodsforidentifyingimpactsofwaterfootprintsonwaterresourcesareevolvingandthesubjectofmuchattention.ASustainabilityAssessmentWorkgroupoftheWaterFootprintNetwork(hereafter,WFNworkgroup)iscurrentlyfocusingonthistopic.TheNatureConservancyandTheCoca-ColaCompanyareactiveparticipants,drawingfromconsiderablereal-worldexperienceinwatershedprotectionandrestoration.Twokeyrecommendationsarediscussedbelow:

• Impactsshouldbescreenedatmultiplelevelsofspatialandtemporalresolution.

• Theboundariesofanimpactassessmentneedtobeclearlydefined.

Impacts should be screened at multiple levels of spatial and temporal resolution.

Asdiscussedearlier,aproductwaterfootprintanalysisenablesonetotracewaterthroughoutthesupplychaintothelocalwatershed.However,forproductwaterfootprintswithhighlycomplexsupplychains,itcanbeoverwhelmingtoassesseverysinglewatershed.Therefore,itisnecessarytobeabletoscreenthisinformationtodeterminewhereacompanyshouldfocusitseffortsandfurtherresearch.RecentdiscussionswithintheWFNworkgroupsuggestthatathree-stepprocessforassessingpotentialriskscanhelpmaximizetheefficiencyofscreeningefforts.

Atthecoarsestlevel,aglobalscreeningexercisecanbeconductedusingindicatorsofstressandvulnerabilityattheriverbasinleveltoprioritizeareasfordeeperanalysis.TheWorldBusinessCouncilonSustainableDevelopmenthasdevelopedaGlobal Water Tool29thatisappropriateforsuchhigh-levelglobalscreening.Asthisandsimilarglobaltoolsareimprovedwithfiner-scaleriverbasindelineation,month-by-monthwaterscarcityanalysis,andadditionalindicatorsofwaterstressandsustainability,theywillbecomeever-moreusefulforimpactandriskscreening.TheWater Footprint Assessment Tool,nowunderdevelopmentbytheWaterFootprintNetwork,isexpectedtoprovidesuchenhancedcapabilities.

Thesecondstepshouldbeconductedatthelocalwatershedlevelforwatershedsprioritizedinthefirststep.Inthisstep,threepossibleindicatorsareexamined,dependinguponwhichwatersourcesareinfluencedbythecompany’swaterconsumptionandpollutiondischarge:

• historicalchangesinriverflow;

• changesinlakeoraquiferlevels;and

• violationsofwaterqualitystandards.

TheproposeddesignoftheWater Footprint Assessment Toolwillgreatlyfacilitateassessmentsofthesethreeimpactindicators.

29TheWBCSD’sGlobalWaterToolisavailableat:http://www.wbcsd.org.

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Thosewatershedsthatappeartobeadverselyimpactedbasedontheseindicatorswillrequirefurtheranalysistodetermineappropriateresponsestrategies.Thethirdstepinvolvesasite-specificassessmentofnotonlywaterquantityandqualityimpacts,butalsoecologicalandsocialimpacts.Suchassessmenttypicallyemployscomputerizedhydrologicsimulationmodelsand/ormulti-disciplinaryteamsofexperts(e.g.,eco-hydrology,socialscienceandeconomics).

Thislevelofdetailedassessmentmaybedoneaspartofawaterfootprintassessmentorasaseparateeffort.Asanexample,TheCoca-ColaCompanyhasinitiatedpilotprojectsinpartnershipwithWorldWildlifeFund(WWF)forsustainableagriculturalmanagementpracticesforsugarcane.Improvedpracticesfromthisandotherpilotprojectswillinformthedevelopmentofbettermanagementpractices,helpingtoensureamoresustainablesupplychain.

The boundaries of an impact assessment need to be clearly defined.

Theimpactscreeningprocessdescribedaboveisbasedonthepremisethatwater-relatedimpactsmustbeevaluatedonawatershedbasisforthereasonsdiscussedinSection1.2.Forcoarse-levelimpactscreening,pre-determinedriverbasinboundaries,suchasthoseemployedintheWBCSD Global Water Tool,maysuffice,butaccurateimpactassessmentwillrequiremoredetailedanalysisofthelocalwatershed.

DraftguidancefromtheWFNworkgrouprecommendsthatthelocalwatershedand“areaofinfluence”bedelineatedasdepictedinFigure 12.Thepointatwhichacompanyisextractingwaterordischargingwastewaterdefinesa“pointoforigin”fromwhichacontributingwatershedcanbedelineatedupstreamofthispoint.The“areaofinfluence”depictstheboundarywithinwhichpotentialecologicalandsocialcumulativeimpactsshouldbeassessed.Whilethisexampledepictsawatershed-basedassessment,similarlogiccanbeappliedtowaterextractionsfromanaquiferorlake.

Watershed contributing to company’s water supply

Area of influence extending downstream from point of origin

Location of company’s water extraction or return flow = point of origin for area of influence

Figure 12. Conceptual Diagram of Impact Assessment Boundaries

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3.4 WATER FOOTPRINT RESPONSE FORMULATIONTheresponseformulationphaseaddressesthequestion:What can be done about the impacts caused by a water footprint?Clearly,alllifetakeswater,anditisvitalforcommunities,industry,powergeneration,navigation,recreationandotherpurposes.Whereawaterusehasbeendeterminedtobeunsustainable,theoptionsforaddressingthischallengeinclude:minimizingwaterusethroughimprovedefficiencymeasuresandreuseofprocesswater;treatingprocesswatersothatitcanbereturnedtotheenvironmentsafely;andengagingwithcommunities,governmentsandotherstakeholdersoneffectivemanagementofthelimitedresourcetohelpensureanadequatesupplyofcleanwaterforallusers.

TheCoca-ColaCompany’swaterstewardshipframeworkstartswithensuringthesustainableuseofwaterwithinthewatershedswhereitsplantsarelocated.Specificengagementactionsassociatedwithmanagingabottlingfacility’soperationalwaterfootprintmaybeinsidetheplantorontheplantgrounds,ortheymayaddresscommunityorwatershedissues.Priorityforengagementisgiventobottlingfacilitieslocatedinwater-stressedregionswheresocialandecologicalimpactsmaybeoccurring.TheCoca-Colasystemalsoistakingactiontoensurethesustainabilityofagriculturalpracticesforitskeyingredients.

Twospecificobservationsrelatedtoresponseformulationfromthewaterfootprintpilotsandwaterstewardshipstrategyarediscussedbelow:

• Responseactionsshouldstartwithacompany’sownoperationsandincludecollaborativeeffortstohelpprotectthelocalwatershedswhereitoperates.

• Companiesthatproduceagriculturally-derivedproductsneedtounderstandwateruseinthesupplychainandsupportsustainablepractices.

Response actions should start with a company’s own operations and include collaborative efforts to help protect the local watersheds where it operates.

Avaluablecharacteristicofthewaterfootprintmethodologyisthatitbreaksoutoperationalandsupplychainwateruseandexaminesthethreecolorsofawaterfootprintseparately.Bykeepingthesecomponentsseparateratherthancombiningthemintooneaggregatedwaterfootprintnumber,operationalwateruseandefficiencymeasuresremainvisibleandarenotoverwhelmedbythecropwaterfootprint.Initscommitmenttowaterstewardship,theCoca-Colasystemhasfocusedfirstonitsglobaloperations,meaningnotonlyitsbottlingplantsbutalsothewatershedsandcommunitieswheretheCoca-Colasystemoperates.AllplantsintheCoca-Colasystemarerequiredtodeterminethesourceoftheirwaterandthatofthesurroundingcommunity,assessthevulnerabilitiestothequalityandquantityofthiswater,andworkingwithcivilsocietyandgovernments,developandimplementasourcewaterprotectionplan.

Thefirstandmostimportantactionacompanyshouldtakeistoaddressitsownwateruseinoperationswhereithasdirectinfluence.Waterconsumptioninoperationsshouldbeminimizedandallprocesswatertreatedtowaterqualitystandardsbeforeitisreturnedtotheenvironment.Forindustrieswhereproductiongenerateswastematerial,productiveuseofthewastethroughproductionofbyproductsisanothermeansofreducingtheoperationalwaterfootprint.Asanexample,allpartsofanorangeareusedintheproductionoforangejuiceanditsbyproducts,andthewaterfootprintisallocatedacrossbyproductsaccordingtotheirweightandvalue.

UnderstandinganylocalimpactsoftheCoca-Colasystem’swateruseandensuringsustainablesuppliesofwaterforallstakeholdersisintegraltothiseffort.Theremaybeaneedforwateraccessprojectstohelp

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providecleanandreliablesourcesofdrinkingwaterorrestorationmeasuresthataddresswaterquantityandwaterqualityissuesinawatershed.Thesetypesof“Replenish”activitiesarebeingimplementedaspartoftheCoca-Colasystem’sCommunityWaterPartnership(CWP)30projects.TheConservancyandtheCompanyhaveidentifiedninecategoriesofactionsthatmaybeimplementedaspartofitsCWPprojectsoranywaterstewardshipprogram.Scientificallycrediblemethodsforquantifyingtheeffectsofthesemeasuresonwaterquantity(hydrologicalpathwaysandstorage)andwaterqualityhavebeenidentifiedanddocumented,andthebenefitsgeneratedbytheseactivitieshavebeenquantifiedtoassessprogressinattainingtheCompany’sReplenishtarget.

30TheCoca-ColaCompany.ReplenishReport.January2010.

COCA-COLA SySTEM WATER RESOURCE SUSTAINABILITy

Coca-ColasystembottlingfacilitiesworldwidearerequiredtohaveformalWaterResourceSustainabilityprogramswithSourceWaterProtectionPlansthatareauditedthroughtheglobalgovernanceprogram.

Program Goals • Topromoteandsupportthesustainabilityandsupplyreliabilityofwaterresourcesinthe

watershedsandcommunitieswheretheCoca-Colasystemoperates; • Tounderstandandaddressenvironmental,social,political,regulatoryandeconomicissues

associatedwithsecuringsufficientfreshwatertomeetcurrentandfuturebusinessandlocalcommunityneeds;and

• Tohelpprotectproductqualityandsafety.

Eachfacilityisrequiredtoconductanin-depthSourceWaterVulnerabilityAssessmentanddevelopandimplementaSourceWaterProtectionPlanforthebusinessandlocalcommunitywatersources,ifsuchsourcesaredifferentfromtheplant’ssourceofwater.

Source Water Vulnerability Assessments • Conductarigoroustechnicalassessmentoflocalwaterresourcesustainability,including

detailedwatershedmappingandhydrologic/hydrogeologicmodelingoflocalwatershedandgroundwaterbasin.

• Identifycontributingareas,rechargeareas,protectionzonesandthreatstotheavailabilityandqualityofwaterresources.Thisincludesdevelopmentofwatershed“budgets”tounderstandwatersupplyanddemand,andbasininflowsandoutflows(includinginter-basintransfers).

• Engagewaterresourcemanagementagencies,localcommunitiesandenvironmental organizationstounderstandcommunityneedsandlocalwaterresourcemanagement policiesandregulations. • DeterminethepotentialimpactofCoca-Colasystemfacilitiesontheavailabilityorqualityof

waterforthepeopleinthelocalcommunity.

Source Water Protection Plans • Developandimplementaplantoaddresschallengestolocalwaterresourcesustainability;

includingengagementandcollaborationwithlocalcommunities,stakeholdersandimplementingpartners.

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Companies that produce agriculturally-derived products need to understand water use in the supply chain and support sustainable practices.

ThepilotstudiesconductedbytheCoca-Colasystemandotherstodatehaveindicatedthatthelargestcomponent(approximately80%ormore)ofthewaterfootprintforagriculturally-derivedproductsisassociatedwithgrowingthecrops.Forthisreason,andwhetherornotawaterfootprintassessmentisconducted,itisimportanttoconsiderthesustainabilityofagriculturalinputs.

Appropriateresponsemeasuresinthesupplychainmaybelessclearthanmeasurestoaddresswaterefficienciesandwastewaterinoperationalwateruse.Ifingredientsaresourcedfromawater-stressedregion,acompanyneedstocarefullyexamineitsoptionsandthebusinessimplicationsofvarioussourcingalternatives.Whereacompanycaninfluencesuppliers,importantquestionsincludewhethertosourcefromadifferentregionorinsteadworktoimprovehowthewaterresourceismanaged.Thesechoiceshavesocialandeconomicimplicationsthatareimportanttoconsideralongwithenvironmentalimpacts.

Thegreenwaterfootprintcanbealargecomponentofthetotalwaterfootprint,andtheremaybeopportunitiestoreduceit.31Whilefarmershavenocontroloverthequantityofrainthatfallsontheirland,theefficiencyoftheuseofthatwatermayinsomecasesbeimproved.Forexample,improvedsoilmanagementorbettercovercropsmaydecreaseevaporation.Agriculturalpracticesthatincreasecropyields(forexample,plantingdifferentvarietiesorplantingtreesclosertogether)may,insomecases,decreasethegreenwaterfootprint.Ifproductivity(tonsperacreorperliter)isincreased,therewillbelessofaneedtoproduceelsewhere,therebyreducingthepressureonlandandpotentiallyreducingthebluewaterfootprintforcropproduction.However,therearelimitationstowhatcanbedoneinthisregard.Forexample,productioncontrolsmaynotbedesignedformaximumyields,asisthecaseforsugarbeetsgrowninsomeregionsofEurope.Consumertasteswillconstrainthevarietiesoforangesgrownfororangejuice,andcropdiseasesmaykeepyieldslowerthandesired.

TheCoca-ColaCompanyisfocusingonkeyagriculturalinputsinthesupplychainandtakingaholisticapproach.TheCompany’ssustainableagriculturestrategyextendsbeyondwaterresourcesandaddressesthethreepillarsofsustainability:environmentalimpacts;socialimplications;andeconomicpressures.Thestrategyevaluateskeyagriculturalinputs,withaninitialfocusonsugarcane.Sugarcaneisamongthegroupofcropsnotedforitssubstantialwaterconsumption.TheCompany’sapproachtosustainableagricultureismulti-dimensionalandfoundedonprinciplestoupholdworkplacerights,protecttheenvironment,andhelpbuildsustainablecommunities.Moreinformationontheseactivitiesisprovidedintheboxonthefollowingpage.

31Seeforexample,InternationalWaterManagementInstitute(IWMI).2007.WaterforFood;WaterforLife.AComprehensiveAssessmentofWaterManagementinAgriculture.DavidMolden,editor.

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THE COCA-COLA COMPANy’S FRAMEWORK FOR SUSTAINABLE AGRICULTURAL INGREDIENTS

TheCompany’ssustainableagriculturestrategyfocusesonagriculturalcommoditieswithintheCompany’ssupplychain.TheCompany’ssustainableagricultureframeworkseeksto:

• MITIGATE RISKSbyworkingwithpartnersandsupplierstoaddressenvironmentalandsocialchallengestoingredientavailability,qualityandsafety;

• MEET CUSTOMER AND CONSUMER DEMANDSforlifestylesofhealthand sustainability;and

• MANAGE COSTS AND REALIzE NEW OPPORTUNITIESbyleveragingrelationshipswithsuppliersandcommunities.

Thestrategyisbuiltonthreeelements:

• PARTNER ENGAGEMENT:IdentifykeypartnersandamplifyresourcesinordertoidentifyrisksandopportunitieswithintheCompany’ssupplychain.

• FOSTER INNOVATION: Initiatepilotprojectsinkeymarketstoaddresspresentandfuturechallengesandcreateopportunities.

• SUPPLy CHAIN SUSTAINABILITy VALIDATION:Engageinvalidationmechanisms,includingcertificationinsomecases,toverifyandvalidateapplicablecriteria,gaincredibilityandmeetcustomerrequirements.

TheCompany’sglobalpartnershipwithWorldWildlifeFund(WWF)isacriticalpartofitssustainableagriculturestrategy.Thepartnershipteamisfocusedonconservingfreshwaterandfosteringbetterperformancefortargetedagriculturally-derivedingredientswithinthesupplychain,withaninitialfocusonsugarcane,orangesandcorn.

Currently,thereareanumberofsugarcanepilotprojectsunderwayinAustralia,Belize,Brazil,ElSalvador,Guatemala,HondurasandSouthAfrica.Asanexample,theGreatBarrierReef(GBR)SustainableFreshwaterRevitalizationProject(ProjectCatalyst)isafive-yearinitiativedirectedatinnovativepracticestosustainablyimprovethequalityandquantityoffreshwateracrosstheMackay/Whitsundaycatchments,whichflowdirectlyintotheGreatBarrierReef.Todate,19canegrowershaveadoptedimprovedsoil,nutrient,pesticide,irrigationandstormwatermanagementon4,800hectaresofcaneproduction.Morethan24,000MLofrunoffanddrainagewaterhasimprovedwaterqualityduetotheseimprovedpractices.

ThepartnershipteamisworkingwiththeBetterSugarcaneInitiative(BSI)toimprovetheglobalperformanceofthesugarcaneindustry.BSIisacollaborationofsugarretailers,investors,traders,producersandNGOscommittedtoreducingthesocialandenvironmentalimpactofsugarcaneproduction,whileenhancingtheeconomicstatusoffarmers.Theinitiativeworkstoestablishstandards,evaluatesuppliersandsetmeasurablegoalswithagriculturepartnerstoreduceimpactstoacceptablelevels.

—JohnF.Kennedy

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Thewaterfootprintpilotstudiesprovideimportantinsightsintowaterusethroughoutthesupplychainandhighlightthatwateruseassociatedwithagriculturalingredientsisthelargestcomponentoftheproductwaterfootprintsassessedinthisreport.Intheyearsahead,TheNatureConservancyandTheCoca-ColaCompanywillcontinuetoworktogethertowardanimprovedunderstandingofwater-relatedimpactsinlocalwatersheds,appropriateresponseactionstoaddressadverseimpacts,andthemethodsforquantifyingReplenishbenefits.

TheCoca-ColaCompanyandTheNatureConservancyalsowillcontinuetoengagewiththeWaterFootprintNetworkandcontributetotheadvancementofthescienceofwaterfootprintinganditspracticalapplicationforbusinesses.Eachorganizationalsowillsupportseparateinitiatives,asdescribedinthefollowingsections.

4.1 THE COCA-COLA COMPANy’S WATER STEWARDSHIP AND SUSTAINABLE AGRICULTURE STRATEGyTheCompanywillcontinuetoactivelyworktowarditsaimtoestablishawater-sustainablebusinessonaglobalscale.TheCompany’swaterstewardshipstrategywillremainfocusedfirstonminimizingitsoperationalwaterfootprintbymeetingorexceedingitswaterefficiencyandwastewatertreatmenttargets.SourceVulnerabilityAssessmentsandSourceWaterProtectionPlansarebeingdevelopedforeachplanttoidentifyandaddresslocalwaterresourceissuesandrisks.

TheCompanywillcontinuetoinvestinandquantifythebenefitsoflocallyrelevantReplenishprojectsthataredirectedatrestoringandsustainingadequatewatersuppliesforthefullrangeofbeneficialuses.ThisquantificationworkiscontributingtotheWaterFootprintNetwork’songoingdevelopmentofmethodologiesrelatedtosustainabilityassessmentandformulationofresponsestrategies.

TheCompany’sresponsetosupplychainwaterfootprintassessmentswillfocusonkeyagriculturalingredientsasanintegralpartofitssustainableagricultureprogram.Therearesignificantopportunitieswithintheglobalsupplychaintodevelopandencouragemoresustainablepracticestobenefitsuppliers,customers,consumersandlocalwatersheds.Thecurrentareasoffocusincludesugarcane,orangesandcorn.Coca-ColaEuropewillcompleteitsstudyofsweetenerssuppliedtoitsEuropeanbottlingplantsoverthenextsixmonths.

4.2 THE NATURE CONSERVANCy’S WATER STEWARDSHIP PROGRAMTheNatureConservancyisfocusingonthreestrategiesdesignedtodriveadoptionofsustainablewaterpracticesbycorporations.

First,theConservancywillcontinuetoworkwiththeWaterFootprintNetworkandotherpartnerstofurtherdevelopassessmentmethodologiesandtoolstosupportwaterfootprintassessmentsandguidecompaniestowardappropriateandeffectiveriskmanagementandwatershedrestorationactivities.

Second,theConservancywillcontinuetoworkwithindividualcorporationsandpublicandprivatewaterutilitiestoapplynewapproachesandtoolsinthewatershedsinwhichtheyoperateorfromwhichtheysourcetheirsupplychainingredients.Thiswatershed-basedworkenablestheConservancytorigorouslytesttheefficacyandpracticalityofvarioussustainabilityapproachesandbestpracticesforimprovingwaterflows,waterquality,andecologicalandsocialwell-being.Disseminatinglessonslearnedwillbekeyinmotivatingothercompaniestoapplythemostpromisingapproaches.

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Third,thelessonslearnedfromtheConservancy’son-the-ground,watershed-basedworkwillfeeddirectlyintodiscussionsaboutsustainabilitystandardsandcertificationbeingfacilitatedbytheAllianceforWaterStewardship(AWS).ThemissionoftheAWSistopromoteresponsibleuseoffreshwaterthatissociallyandeconomicallybeneficial,aswellasenvironmentallysustainable.TheAWS,workingwithstakeholdersfromaroundtheworld,isprovidingaplatformforthedevelopmentofaglobalwaterstewardshipprogram.Attheheartofthisworkisthedevelopmentofstandardsandacertificationprogram.TheAWSintendstocreateaprogramthatrecognizesandrewardswaterusersandmanagerswhotakemajorstepstominimizetheimpactsoftheirwateruseandmanagement.TheConservancy,afoundingpartneroftheAWS,believesthatawell-designedcertificationprogramwillmotivatecompaniesandutilitiesaroundtheworldtoimplementsustainablewaterpractices,therebybringingtremendousbenefittoecologicalhealthandsocialwell-being.

What is the Alliance for Water Stewardship?The Alliance aims to establish a global water stewardship program that will recognizeand reward responsible water managers and users by creating opportunities for enhancedcommunitystandingandcompetitiveadvantage.

Over the next few years, the Alliance will work with water authorities, companies, localcommunities and environmentalists to establish a voluntary certification program for watermanagersandusersbasedonthefollowing:

• Internationalstandardsdevelopedthroughanequitable,transparent, science-based,multi-stakeholderprocess.

• Verificationtodeterminewhetherthesestandardshavebeenmet.

• Aglobalbrandthatallowsmanagers,usersandorganizationsto demonstratetheircompliancewithorsupportforwaterstewardship.

• Trainingandeducationtopromoteachievementofwaterstewardship.

Moreinformationcanbefoundat:www.allianceforwaterstewardship.org

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