Remarks by Sanjay Guha at the Chatham House 2009 Corporate Responsibility Conference: "Building a New Corporate Agenda"

Sanjay Guha, President, Coca-Cola Great Britain & Ireland
The Coca-Cola Company
London, England
March 30, 2009

I am very pleased to be here with you -- and delighted that, through our sponsorship, Coca-Cola is helping to support both these discussions and the work of Chatham House.

Our links with Chatham House are relatively new, but not our interest in global affairs. There should be no surprise in this. We operate as a business in some 200 countries and territories -- more than the membership of the United Nations.

While our reach is global, we are also very much a local business operating in a local community. Our business model relies on creating and supporting independent enterprises for making, bottling and distributing our drinks. So what happens in these countries matters to us -- and that includes what happens to their natural resources.

For a company like Coca-Cola, this is especially the case with water. It is the main ingredient in every beverage we make. It is essential for the production of sugar and other crops we rely on. Without water, we simply don't have a business.

But the importance of water for us as a company goes beyond this direct relationship with our products. We recognise, for instance, that shortage of water is a major break on economic growth and prosperity. It's why reports last week that half the world's population could be living in areas running short of water by 2030 were a real concern to us, as a business and as individuals sharing this planet.

So is the fact that we each use six times as much water than a century ago -- something that, without action, will only increase as we become more prosperous.

It is why helping preserve water supplies is now a business priority for us. It's not altruism. It is simply self interest. The sceptics are right that companies like ours have not overnight become charities. Our aim remains to sell more drinks. But if we intend to keep growing, this growth has to be achieved in a sustainable way.

Sustainability is key to our long term success. Without sustainable communities, we don't have a sustainable business. And you can't have sustainable communities without access to water resources.

This is also why I believe that those who think the global downturn will see environmental concerns downgraded by companies have got it wrong. Indeed, in tough times when controlling costs moves right to the top of the agenda, reducing energy and water bills becomes more, not less, important. So, I believe sustainability itself will remain a driver of business behaviour. And certainly for Coca-Cola, that's the case.

We have, for example, just published, in conjunction with the Carbon Trust, the carbon footprint of our most popular drinks. We are not the first company to do this, but it has never before been attempted on such a scale.

It will help us identify where we can have the most impact in reducing our carbon emissions. It showed us that it is packaging which can account for up to 65% of the carbon footprints of our drinks. And that this could be cut by a third by increasing the use of recycled material.

Carbon is critical, but it's water which is at the top of our agenda.

We made a public pledge in 2007 to return to nature water equivalent to everything we use in our beverages and their production. When you sell 1.5 billion servings of our drinks every day across the world, this is not something we can achieve overnight. But the goal is for us to be a truly water-sustainable business on a global scale.

Setting goals is obviously the easy part. Meeting them is much harder. So how are we going to do this? The answer is by reducing, recycling and replenishing.

In many ways, cutting our own direct water consumption is the easy part. Through more efficient practices, our water consumption fell by 2% between 2002 and 2007 while the global volume of drinks we produced grew by more than 20%. In the UK, for example, we have improved our water use ratio by 21% since 2001 -- to a level which is now among the best in the business.

But we intend to go further here and across our global operations. We have set ourselves a global target of improving our water use efficiency by 20% by 2012. On recycling, our aim is to return to nature all the water we use in our manufacturing processes in a state which can support aquatic life and agriculture. We already achieve this in 85% of our bottling plants around the world and intend to match this performance everywhere by the end of next year.

But while six litres of water out of every 10 we use is part of the manufacturing process, the other four litres are actually the main ingredient of our drinks. Now, of course, these drinks play an important role in re-hydration. But with the best will in the world, it is beyond even the power and reach of Coca-Cola to return this water to nature ourselves. So to meet our water neutral pledge, we are stepping up efforts across the world to replenish and improve aquifers, lakes and rivers to balance out this water use.

We work with a whole range of partners, from schools to the United Nations, to husband and build up water resources, to clean up supplies and provide communities access -- often for the first time -- to fresh water. We are now involved in more than 120 projects in some 60 countries, from helping build small community reservoirs in India to cleaning up Lake Malawi. We have just committed ourselves to spend another $30 million dollars to provide clean water and proper sanitation to two million more people in Africa.

We accept we have a wider community responsibility. There is little point in cleaning our plant's water only to pump it back into a stream which is already heavily polluted. It might allow us to tick our own corporate box but it does nothing to solve the problem of water scarcity.

This is a real challenge. In some towns -- indeed some countries -- our plant might be the only water treatment plant there is. It is why, for example, in Mozambique, it was easier for us to rebuild an entire town's water system than just concentrate on our own plant.

But we also recognise that we simply don't have the expertise in house to do all that we want. This is why we have formed a global partnership on water with the WWF -- so we can tap into their experience and knowledge. With the WWF, for example, we are working to protect and improve some of the world's most important freshwater sources. They include the Danube, the Yangtze, the Rio Grande and Mekong, spanning in all some 20 countries.

I believe this collaboration points the way to how private and non-profit sectors can and must work together to help tackle the world's water challenges. We know, however, we have to go further. We know as well that we haven't got everything right in the past.

Along with the 3 Rs -- reduce, recycle and replenish -- we could add a fourth: Re-appraise.

Water sustainability is now central to our investment decisions. Potential markets and ease of distribution were once the key factors in deciding where to build plants. Now it is the long-term supply of water. We consult widely with community groups, as well as local and central government, before going ahead. We are employing more hydrologists and running, with WWF, more training for plant managers.

We also understand that water challenges are local. It is not like reducing carbon emissions, which you can see in a global context. The problem is not a lack of water everywhere, but a lack of water in many areas. So it's no good pointing to the progress you are making in Scotland, where there is plenty of rainfall, if you are doing too little to protect aquifers in drought-hit Africa.

We are also looking at our indirect use of water with WWF in order to manage our overall water footprint. This is a more complex and difficult challenge.

For example, we only use around one and half litres of water to make a litre of Coke. But if we add in the indirect use of water, particularly for thirsty crops such as sugar cane, that figure soars to roughly 150 litres.

What matters is whether the water used falls from the sky as rain or is pumped up hundreds of feet from a rapidly diminishing aquifer. And while 150 litres of water appears to be a great deal, it is actually a lot less than the 4,000 litres needed to produce a cotton shirt or 15,000 for a kilo of beef.

But it is an area we and everyone else must begin to address if we are going to help husband scarce water resources. So we are already reviewing with WWF how best practices can be applied to irrigated sugar within our supply chain. And we are focusing first in water stressed regions and where water is withdrawn from aquifers.

Actually, we are not the only ones. Many other companies are taking a similar approach in other areas. There will always be critics, of course, who remain wary, even hostile, to the intentions and efforts of global companies like ourselves. But I am pleased to see that this view is now being seen more and more as rooted in the past.

And the Millennium Development Goals point the way towards the kind of approach and framework we need across the private, public and third sectors working jointly together to address the challenges we face which are big and urgent. The more we talk to each other, the quicker we can help achieve them.

I am delighted that Chatham House gives us the opportunity to expand and deepen this dialogue.