Climate change poses several risks to Coca-Cola’s sustainable manufacturing process and operating model. These include:
- The increasing scarcity of water, the main ingredient in substantially all of Coca-Cola’s products
- Disruptions in the supply of key agricultural commodities integral to the production process (e.g. corn, sugarcane, sugar) caused by shifting weather patterns and decreased land productivity
- Carbon footprint and other environmental impact of Coca-Cola’s manufacturing and transportation operations
- Impact of climate change on the resilience in communities where water availability and food security are critical to the prosperity of Coca-Cola’s customers .
These risks present long-term implications that may impact the Company’s manufacturing processes, disrupt their supply chain, alter end-consumer demand, and adversely affect Coca-Cola’s bottom line.
Over the years, Coca-Cola has undertaken several efforts to address the increasing threat of climate change, primarily in the areas of water conservation and energy efficiency.
Through a series of robust water stewardship and management programs to-date, Coca-Cola has invested $2 billion to reduce water use and improve water quality in the communities in which it operates. The Company announced that through close collaboration with local and global partners, they have met their goal of replenishing the equivalent amount of water used in their global sales volume back to nature and communities, equating to 191.9 billion liters of water through 248 community water projects in 71 countries.
These efforts in water management were supplemented by efforts to increase energy efficiency in three principal activities of the Coca-Cola business system: manufacturing plants, distribution fleet, and cold drink equipment. In its manufacturing plants, the Company is systematically evaluating the type of energy consumed in its manufacturing processes, and investing in efficient lighting, compressor optimization, heat recovery and renewable energy. While the total amount of energy consumed by manufacturing sites has grown, the Company’s energy efficiency ratio has improved over time.
This improvement resulted in over $600 million cumulative savings in energy costs since 2004. The Company has made similar investments in its fleet composition (shifting to a fleet of hybrid delivery trucks that are significant more energy efficient than traditional trucks) and innovations in refrigeration technology as well .
In September 2016, the Company announced that it has reduced water use by 2.1 billion liters in the past two years and reduced its carbon footprint by 1.07 million metric tons. It simultaneously announced a commitment to using 40% clean energy and recovering for recycling 40% of its packaging introduced to markets by 2020. Other environmental targets include: sourcing 20% of the total plastic PET it uses from recycled or renewable PET, reducing packing by 25% per liter of product produced, and certifying over 95% of its key agricultural ingredients against its Sustainable Agricultural Guiding Principles.
Despite these advancements, much work is left to be done. Coca-Cola remains at risk to the agricultural impact of climate change. While we know that scientists at Coca-Cola are hard at work searching for a substitute for sugar in their concentrate formulas, the Company at this current point in time is far from insulated from agricultural risks. Much is left to be done, but Coca-Cola is well on its way to a more sustainable future.