Business Ethics

Coca-Cola on the Yangtze: A Corporate Campaign for Clean Water in China

The Yangtze River -- the longest river in Asia and the lifeblood of millions of Chinese -- was once said to be so clear you could see the bottom. Today, as China's massive economic growth takes its toll on the environment, it is at the top of the list of the 10 most-threatened rivers in the world, according to the World Wildlife Fund (WWF).

To help reverse the tide, the WWF has joined forces with Coca-Cola, which operates 39 bottling plants in China, to improve the water quality of the upper reaches of the Yangtze. One project, for example, has them working with rural farmers to reduce the runoff of animal waste into the river by turning pig waste into biogas, a type of fuel that can be used for cooking and heating. Another involves searching for ways for the multinational to be more efficient in its own use of water.

The non-profit's partnership with Coca-Cola is part of a growing corporate awareness that water is a threatened resource, not just in the Yangtze but throughout the world. Companies that require a lot of water to make their products are beginning to assess the risks that they -- and their customers -- face on the water-supply front and what could be done to mitigate them.  

For continued growth in China, Coca-Cola officials recognize that the company must strengthen what they call "water security." The WWF projects are "not considered philanthropy [or] even CSR [corporate social responsibility]," says Brenda Lee, vice president of Coca-Cola China. "It is part of our business commitment. We can only prosper and thrive in communities that are sustainable."

Coca-Cola is working with WWF to help clean six other rivers on the 10-worst list. The company isn't the only multinational to add an environmental partner to its water-related efforts, which also involve industry groups. Indeed, Coca-Cola's competitor, PepsiCo, has been collaborating for some time now with the China Women's Development Foundation, the architect of the Mother Water Cellars Project, which provides ways for people in the most water-scarce regions of China to have better access to water.

For environmental groups, such alliances add clout to their projects, an important factor in drumming up support and funding from the general public and other corporations. Coca-Cola's rural program "is really making a difference in the Yangtze," notes Chris Williams, director of fresh water conservation at the WWF. "If we could get this kind of involvement from a wider range of private-sector actors in the Yangtze, the results could be considerable."

For companies, such undertakings bolster their image and brand, according to Piet Klop, a senior fellow at the Washington-based think tank World Resources Institute (WRI). "The last thing a branded company would want," he states, "is to end up in a newspaper [report] saying it is operating a bottling plant in an area where households cannot even access clean drinking water."

Coca-Cola is at a particularly sensitive point in China, eager to expand its business into the rapidly growing juice, dairy and ready-to-drink tea market. The company's partnership with the WWF is designed in part to build a relationship of trust, which may help open doors to more consumers in China, according to Eric Orts, Wharton professor of legal studies and business ethics, and director of the Initiative for Global Environmental Leadership. It is a market that is increasingly important to the $31 billion Coca-Cola, whose sales by volume grew 19% last year in China while declining by 1% in North America.

Alliances like that between Coca-Cola and the WWF don't come without challenges. Some environmentalists are critical of non-profits working with companies that are seen as part of the problem. In China, there are special issues, given that the government tends to shun non-profits, while micromanaging projects itself through state-approved non-governmental organizations (NGOs).

Becoming 'Water Neutral'

It's been three years since the WWF and Coca-Cola started working with locals living along the Yangtze. Other multinationals, such as New York-based HSBC bank, have also been involved with conservation and cleanup projects related to the river.

The Yangtze provides China with 35% of its fresh water. Yet nearly half of the country's sewage and industrial waste is discharged into the river as it flows 3,900 miles (6,280 kilometers) from West China to the East China Sea at Shanghai. The river has also been affected by the recent construction of the Three Gorges Dam, the largest electricity-generating plant in the world, which has weakened its ability to flush away pollution.

So-called non-point source pollution, including animal waste and fertilizer runoff, is as big a threat as industrial waste, or even bigger, notes the WWF's Williams. The WWF-Coca-Cola partnership has run pilot projects to produce biogas with farmers living at the upper reaches of the Yangtze in communities along the Minjiang and Jiangling rivers. Coca-Cola has also launched a communication program to educate communities along the river basin about environmental issues. The partnership, meanwhile, liaises with the Chinese government to add their voices to environmental policy-making. "China now has tremendous resources [that the government has] set aside to invest in river basin management and water management," Williams says. "If they put some of those resources into replicating our pilot project, it could have a tremendous impact on the water quality of the river." 

Suzanne Apple, the WWF's vice president and managing director of business and industry, helped set up the partnership with Coca-Cola, which has evolved into a $24 million, seven-year commitment to support fresh water programs globally. Coca-Cola, the world's largest beverage company, uses more than 290 billion liters of water a year. The partnership provides for WWF's help in eventually making all of Coca-Cola's plants worldwide move closer to becoming "water neutral" -- that is, reducing the water the company uses while replenishing the water supplies employed to produce its beverages through recycling and other activities. According to Apple, partnerships like the Coke/WWF relationship are good for business because they help guarantee sustainable supplies of water and other resources.

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