By Stephan Przybylowicz
“It’s a promise to be a good citizen of the world, protecting the Earth’s natural resources through innovation and more efficient use of land, energy, water and packaging in our operations.” – PepsiCo, on their environmental sustainability promise Environmentalists and corporations have not always seen eye-to-eye on matters of how our natural resources should best be used. In fact, many people see corporate industry as inherently anti-environmental. However, without industry, we would not be able to enjoy many of the comforts of modern day living. Corporations have many responsibilities including: to gain profit for their investors, to keep costs low for their consumers, to use natural resources efficiently, and to maintain decent pay and working conditions for their employees. So, how should corporations balance these differing needs with protection of the natural environment? Many corporations now have developed multiple ways of creating this balance. These include water stewardship plans, partnerships between corporations and environmental groups that help both parties agree on a water management strategy, implementation of environmental best practices, and new ideas for the future of water accountability and transparency.
Water Stewardship Goals:
PepsiCo offers the world’s largest portfolio of billion-dollar food and beverage brands, with 19 different product lines that each generates more than $1 billion in annual retail sales. They have also developed a comprehensive environmental sustainability plan in order to guide their water use. In terms of water, PepsiCo commits to the principles of 1) respect for the human right to water through world class efficiency in their operations, 2) preservation of water resources, and 3) enabling access to safe water. To realize these principles, they have developed the following goals
- Improve water use efficiency by 20 percent per unit of production by 2015;
- Strive for “positive water balance” in operations in water-distressed areas;
- Provide access to safe water to 3 million people in developing countries by the end of 2015.
These goals were created in 2007 and as of 2010, the company has achieved more than 15 percent improvement in water efficiency. By 2011, they have provided access to clean water to one million people from the world’s most drought-stricken regions.
The Coca-Cola Company also has implemented water-related goals, in partnership with the World Wildlife Fund (WWF):
- Conserve seven of the world’s most important freshwater basins (includes the Yangtze, Mekong, Danube, Rio Grande/Rio Bravo, Lake Niassa, Mesoamerican Reef Catchments, and Southeast U.S. Rivers and Streams)
- Improve water efficiency in the company’s operations (a water-use ratio of 2.16 by 2012)
- Reduce the company’s carbon emissions (grow the business while keeping the carbon steady and a 5 percent absolute reduction in developed countries)
- Promote sustainable agriculture (sugarcane, oranges, and corn)
- Inspire a global movement to conserve water (media coverage, World Water Week, Keystone Youth Policy Summit, UN Climate Change Conference, Panama’s “Vigilantes del Agua,” Poland’s “Rivers for Life,” and Malaysia’s Protect “Our Water, Protect Our Lives” campaigns)
Partnerships are Key:
The Coca-Cola Company has already seen vast improvements since initiating their partnership with WWF in 2007. This includes a 12.6 percent improvement in water efficiency and 7.7 percent reduction in carbon emissions in developed countries (although the total greenhouse emission of the company has increased; they are working to address this disparity).
PepsiCo has been working with industry peers, governments, academia, nongovernmental organizations (NGOs) and local communities to help conserve water. Their partnership with Columbia University Earth Institute was launched in 2008 and has supported a range of projects that test novel methods of managing water. PepsiCo has also made significant monetary contributions to the work of water.org and the Safe Water Network.
The Nature Conservancy is an environmental group that has taken it upon themselves to reach out and work together with corporations to solve water issues. Natural bodies of water are becoming depleted, corporations are the world’s largest water users, and many corporations continue to pollute rivers and lakes. Instead of simply protesting, the Nature Conservancy strives to change corporate behavior through sound science and decades of experience on the ground. They are now working with a growing number of companies to quantify water usage, determine their vulnerability to water shortages, assess the potential ecological and social impacts of water use in local areas, and design and implement watershed projects that improve water conditions, ecological and social health, and lower corporate risks. They are also developing a global water certification program, based on a suite of “best practices standards,” and hope to enroll 100 companies by 2015 and move thousands of companies towards sustainable water use in their operations and supply chains by 2020. For the North American Initiative, A. O. Smith Corp., Badger Meter, Bucyrus International, Constellation Energy, Diversy, MillerCoors, Quad/Graphics and Veolia Water North America have all pledged support.
On the philanthropic end of the spectrum, Arizona Project WET (Water Education for Teachers), a program at the WRRC, is now partially funded by corporate sponsorship. Abbott, a global healthcare and medical research company with a facility in Casa Grande, approached Project WET in 2009 with hopes of becoming a water conservation leader in the community by supporting water education in addition to cutting their own corporate water use. The money comes primarily from the Abbott Fund, which is the philanthropic arm of the company, but the company itself has also contributed funds directly. In addition to financial support, Abbott has also committed a strong base of people power as volunteers during Project WET water festivals, science fairs, and SWAP (School Water Audit Program) projects in local schools.
How is this partnership good for Abbott? Water responsibility is important to the bottom line and becoming engaged in the community is a good marketing strategy to associate the brand name with doing good work.
How is this partnership good for the community? Abbott’s partnership with Arizona Project WET has resulted in over 2.3 million gallons of annual water savings, more than 20 community partnerships, the engagement of some 5,000 students in effective water education programs, and the start of 10 community action projects. The combination of the Abbott’s investment in the community and Project WET’s effective programming has resulted in measurable positive impacts in Southern Arizona communities.
Saving Water is Good Business:
One key component of PepsiCo’s water plan is recognition that water stewardship is good for business. PepsiCo Chairman and CEO Indra Nooyi states, “[The] successful company in 2030 will be the one that recognizes the possible outcomes of the global crises we face, and one nimble and tenacious enough to embed this recognition into their strategy and business processes.”
Water scarcity poses great business risks, especially to those companies that rely heavily on consistent access to fresh water. In Casa Grande, Arizona, Frito Lay (now owned by PepsiCo) has equipped their facility with a state-of-the-art water filtration and purification system to recycle and reuse approximately 80 percent of the water used in production. This initial investment will save both water and money in the long run.
In 2007, The Pacific Institute, a non-partisan researach institute, released “At the Crest of a Wave: A Proactive Approach to Corporate Water Strategy,” which outlines best practice guidelines for corporate water use. Phase I includes establishing a corporate water strategy, including water use measurements, water-related risk, assessment and prioritization of issues. Phase II includes implementation and innovation by following 3 steps:
- Identify process and product innovations. This includes decreasing water use and impacts, increasing water recycling and reuse, managing priority supply chain issues, and designing “water-savvy” products.
- Invest in water-related environmental services. This includes identifying opportunities, assessing potential markets for watershed services, and restoring ecological systems.
- Align corporate goals with policy advocacy efforts and multi-stakeholder initiatives. This includes collaborations among business, communities, national, and international associations, and government agencies and nongovernmental organizations (NGOs).
In Arizona, Intel has invested over $30 million in state-of-theart water conservation technologies. It also implemented water recycling through a reverse osmosis system in New Mexico, which improved its water use efficiency. As a result, the site saves 500 million gallons of water per year. The Abbott facility in Casa Grande is saving almost 3 million gallons of water per year since implementing reuse and recycling programs in 2008. This results in a total cost savings of $16,900 per year, helping the company keep costs low and contribute to environmental sustainability.
New Accountability and Transparency Strategies:
Can the rules for carbon reporting be applied to water? The Carbon Disclosure Project now has its eye on water and has asked major companies to disclose their water use in addition to their greenhouse gas emissions. The campaign includes an 11- page questionnaire that asks companies to specify to what extent they operate in water-stressed areas. Unlike carbon emissions, water use is a local issue. “You can’t offset a water shortage in one region with credits in another region,” states Bart Alexander, Vice President for Global Corporate Responsibility at Molson Coors.
Another relatively new concept is the water footprint. We may be familiar with water footprinting for countries, products, and individuals, but it has yet to be meaningfully applied to companies as a whole. In the context of business, the water footprint is the total volume of fresh water used to produce the goods and services produced by a business. PepsiCo has been active with the Water Footprint Network, a Netherlandsbased nonprofit, and has identified a key factor in water footprint recording: unlike carbon reporting, a single, aggregate number for a water footprint is of little material value. They believe that what is truly important is the impact of their water use and shifting the discussion from “water footprint as a number” to the “components of water that have the most impact.”
Another innovation in water reporting comes from the Minnesota Water Sustainability Framework, recommending a web-based water reporting and permitting database. Carolyn Sampson, Environmental Manager for the Innovation, Technology, and Quality Division at General Mills, was a member of the Framework’s project synthesis team and explains some of the problems of the current tracking and reporting process: “My time and that of others could be much better spent solving technical problems. Not only is the reporting and permitting process onerous, but there’s no statewide waterrelated database that allows companies to easily track trends, model performance, or plan for the future.” The Framework’s proposed system would not only make it more efficient for industry to file reports, but could help businesses and communities plan for the future.
Looking Towards the Future:
It is clear that corporations have made progress in water sustainability, but there is still a long way to go. As the first phase targets are approached, companies will have to work closely with the environmental community in order to develop new targets for the next 10-15 years. New strategies will have to be developed. Clear and measurable goals, key partnerships, proactive best practices, and new strategies for accountability and transparency will contine to be important, as will corporate commitment to sustainability through resource conservation and service to the global community.