The scenario: Water is a primary ingredient in virtually every Coca-Cola product and is fundamental to its agricultural supply chain. Even in locations where Coca-Cola does not consume local water resources, the brand’s prevalence drives the perception that the company is a large water consumer.
Facing social and environmental challenges regarding its water stewardship in India and elsewhere, Coca-Cola initiated a risk assessment, interviewing constituents inside and outside of the company — customers, supply chain partners, academics, NGOs, governments and industry peers — which led to the “co-discovery” that company action on the state of water was necessary. The risk assessment considered everything associated with water well beyond the factory footprint. In addition to water quality and quality infrastructure, the assessment considered rule of law, freedom of the press and other factors that could influence stresses around water.
More than a technical risk assessment, this was also a social risk assessment. Even in communities using a water source separate from a local Coca-Cola bottler, local franchise management had to understand community water concerns in their source-water protection plans.
The resolution: Atul Singh, a key player in India during the Kerala controversy who became one of Coca-Cola’s group presidents, recommended that the company help build water infrastructure in communities near Coca-Cola plants as well as in places where the company did not operate. “We need to be Coca-Cola — we need to do more than is expected,” Singh explained. Coca-Cola did not mark the new water facilities with the company logo.
Beyond India, Coca-Cola committed to fully replace the water it uses in its finished products across the globe, a goal it set for 2020 and met in 2015.
The lesson: Coca-Cola recognized that a sustainable approach to water is not “nice to have” but essential to its business. Today, escalating public expectation for businesses to address social concerns is resetting the relationship between business and society. The challenges like climate change, obesity and dwindling natural resources are so complex they demand “we” solutions that go well beyond a company’s four walls.
Carmichael is a fellow and Moriarty is a professor at the University of Virginia Darden School of Business. The case is drawn from “Reset: Business and Society in the New Social Landscape,” by Carmichael and Darden Prof. James Rubin (1951-2016).