The Wall Street Journal-20080116-Coke Makes Cleanup Gains
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Coke Makes Cleanup Gains
A new report assessing Coca-Cola Co.'s water-management practices in India says the beverage giant is generally in compliance with government standards but that it needs to do more to help improve local water supplies, particularly in areas with chronic shortages.
The study also didn't detect pesticides in the water at six Coca- Cola bottling plants, despite testing in recent years from an Indian environmental group that showed dangerous levels of pesticides in some Coke drinks.
The report, released Monday in New Delhi by the Energy and Resources Institute, known as TERI, a nonprofit organization that researches and promotes sustainable development, comes as criticism from activists and student groups has presented challenges to Coke's thirst for growth in an emerging market. Coke has invested more than $1 billion in India over the past decade and has said it plans to invest $250 million more over the next three years.
The TERI report is the result of an inquiry started by the University of Michigan after students there filed a complaint arguing that the company's water-management practices violated the university's code of conduct for vendors. The university and Coke agreed together to commission TERI to conduct a third-party assessment of Coke's practices. Coke paid for the $2 million, 16-month study, and communicated with TERI through an outside facilitator.
TERI assessed Coke's practices at six of the company's more than 50 bottling plants in India. While the study found the plants to be complying overall with government regulations, it said Coke needed to take community water needs more fully into account when deciding where to locate and operate bottling plants.
For example, a watershed in Kaladera where one plant is located has been so "overexploited" that Coke should consider either transporting water from another aquifer to that plant, using stored water, relocating the plant, or shutting it down, the report said.
Coke "should try to be net water positive with respect to its own operations from a watershed perspective, especially in stressed areas," the report concluded.
TERI also recommended that Coke improve its standards for treating effluent from its plants, after testing at some plants detected excess levels of some bacteria and other pollutants.
Coke said it is making changes to address the report's concerns. "We take this report very seriously," said Atul Singh, president of Coca- Cola's India operations. "We need to go beyond compliance and continuously improve our management practices and standards."
In a letter Friday to the University of Michigan, Coke said it is setting global guidelines for plants operating in areas with chronic water shortages, investing $10 million to support sustainable development in India, improving its wastewater-treatment standards, and plans to reach a "zero water balance" in India by 2009, meaning that the company will refill groundwater aquifers with as much water as it extracts from them.
Peggy Norgren, assistant vice president for finance at the University of Michigan, said the university is "very pleased with the report overall" and will continue to do business with Coke. The university is also awaiting an assessment of Coke's labor practices in Colombia.
Amit Srivastava, director of the India Resource Center, a critic of Coke's water use in India, said the TERI report validates his organization's belief that Coke plants are contributing to local water shortages. "We will demand the closure of the plant in Kaladera," he said. "There's not enough rain there, and they can't bring in enough water."
