Coke vs. Pepsi 2.0: The Taste of Water Footprints, Bluewashing and the Bottom Line

No, the Coke-Pepsi battle is not worn out and now encompasses which company is a better &quo;water steward.&quo;

From the many news streams that flowed out of last month’s World Water Week 2010 (am I a dork because I dig it?), came a story reminiscent of the 1980s: the cola war. Coke and Pepsi – two brands so ubiquitous and ingrained in contemporary life that they hide in plain sight, have embarked on a 21st Century version of the Pepsi Challenge. This time round the battle is over hearts and minds and the perceived use of soda’s most precious ingredient - water.

The challenge: Which company can convince the public that it uses less water through enhanced conservation and efficiency measures?

The companies have carried out this undertaking with vigor. To publicize their sustainable water efforts and programs, the soft drink giants have signed the UN CEO Water Mandate, joined the Water Footprint Network, issued reports (Coke and Pepsi) and launched water stewardship web pages (Coke and Pepsi).

The framework guiding each company’s endeavors is the water footprint, which is the total amount of water that goes into a finished product. In theory, water footprints are straight forward. In practice, finding the water footprint of a product can be difficult because water use measurements have to be determined at each and every step in the supply chain. (Coke’s water footprint assessment report.) For example, think of all the water involved in creating Pepsi brand’s Mountain Dew Code Red™ – from its filtered water base to the water used to grow the corn for its second ingredient, high fructose corn syrup and its third, orange juice, to the water used to create the less-identifiable ingredients, to the water used in the numerous steps in the production and distribution processes – that’s a complex (and likely sizeable) water footprint.

Water neutrality, or “net-zero” water use, is problematic because it is inherently incoherent.  Water neutral – even by its own definition – doesn’t mean that the water footprint is zero, but that it is “reduced as much as possible.”

Although measuring a water footprint isn’t easy, conservation efforts by Coke and Pepsi have multiple real-world implications, not only for those who share in the resources, but for the cola behemoths themselves. Remember, saving water saves energy and doing both keeps more freshwater in the local system for future use, and at the same time, it also saves money. In other words, saving water makes sense from a “bottom line” perspective. Also, the corporations get positive PR from touting their environmental cred. Along with social outreach initiatives, the push for environmental sustainability has helped the cola duo leap up the coveted Corporate Social Responsibility (CSR) rankings, landing Coke in the top 10 and placing Pepsi within spitting distance of its rival.

This seems like a win for Coke and Pepsi, for consumers and for the world’s water, right?

Not so fast. Although I'm a strong supporter of water footprinting, I recognize that the assessment model has a few significant conceptual and operational issues that still need to be resolved.

A prime example is the theory of “water neutrality,” the choice of a new corporate water stewardship generation. Water neutrality, or “net-zero” water use, is problematic because it is inherently incoherent.  Water neutral – even by its own definition – doesn’t mean that the water footprint is zero, but that it is “reduced as much as possible.”

The term neutral is misleading because it cannot be achieved.

Likewise, there’s a functional conceit which maintains that “negative economic, social and environmental externalities of the remaining water footprint are fully compensated.” In other words, high water use in one place can be offset by purchasing water use credits for lower use or water replenishment in another place. Offset credits, while sometimes effective, can prove to be difficult in terms of transparency and accountability, which has led to some failures in the lightly regulated carbon offset industry. The concept of water offsets is even more tenuous, because the physical characteristics of water are closely tied to local climate, hydrogeology and topography, whereas carbon emissions have a global impact because they are released into the atmosphere.

Yet how Coke and Pepsi use water and produce their beverages are more than just theory. In 2006, a study produced by Centre for Science and Environment found that Coke and Pepsi soft drinks contained harmful levels of pesticides, galvanizing a worldwide movement against the companies and culminating in bans  on both companies' products in parts of India. Under pressure from the University of Michigan (which had also banned the company’s products), Coke agreed to and paid for a university-selected institute to conduct an independent review of its Indian operations. The report on pesticides was later found to be inaccurate because prior tests were done on water entering the plant, not on the finished products. But Coke didn’t come out clean in the assessment.

What stuck were suspect groundwater or overuse practices in India, which run counter to the claims of water neutrality, leading critics to call such pronouncements “bluewashing.” One highly publicized incident singled out in the Coke-funded review centered on the bottling plant in the arid, water-poor town of Kaladera, Rajasthan District. The town witnessed the water level of its precious aquifer drop 22 meters after Coke began operating. Coke denied the correlation and blamed the area’s drought for the declining aquifer. The company dismissed recommendations from the review that called for the facility’s closure and announced instead that they are returning more water to the aquifer than they are using.

In a separate case, Coke is facing charges that they are liable for $48 million as recommended by a government committee that purports the company’s bottling plant in Plachimada, Kerala District, caused land and water pollution and lowered aquifer levels. Pepsi’s record on unsustainable groundwater pumping in India is also questionable as indicated by the forced shutdown of a bottling plant in the same thirsty Indian district.

Given such conflicting views, is Big Cola an evil water marauder in search of profit maximization at the expense of local populations, capable of igniting a grassroots opposition movement? Or is it a good corporate citizen that cares about sustainable water use and seeks to make a warm home in the hearts of consumers?

Coke and Pepsi want to use water sustainably because their businesses depend on it. They also depend on a good public image, consumer loyalty and not a little bit of affection. By using resources wisely and promoting a good corporate image, Coke and Pepsi maintain their resource base, cut costs, drive sales through marketing and maintain steady profits. Sometimes the environmental, social and profit motives fit neatly into the triple bottom line.

Of course, the triple bottom line is an effective motivator only to a point. If, for example, the benefits of over-pumping an aquifer while increasing profit margins outweigh the costs of water conservation, the incentive to over-pump is strong. Social norms, regulation and the chance to move up the CSR rankings will often rein in irresponsible corporate behavior, but, as much as we wish it were so, that can’t always be expected.

As citizens and consumers it’s up to us to be aware and to hold corporations and government officials accountable.

So who wins this new Pepsi-Coke challenge? Feel free to cast a vote (for Coke, Pepsi, water, bluewashing, the growing CSR industry, cynicism, you name it) in the comment section.