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Abstract

  1. Top of page
  2. Abstract
  3. Introduction
  4. Corporate Sustainability
  5. Frame of Reference and Method of Enquiry
  6. Findings
  7. Discussion
  8. Conclusions
  9. References
  10. Biographies

The aim of this paper is to provide an exploratory review of the extent to which some of the leading companies in the food and drinks industry are publicly addressing water stewardship as part of their corporate sustainability strategies. The paper begins with an introductory outline of the growing importance of water stewardship and a brief discussion of corporate sustainability. The paper draws its empirical material from the most recent information on water stewardship posted by the leading companies in the food and drinks industry's corporate websites. The findings reveal that the vast majority of the selected companies address a number of elements concerning water stewardship as part of their more general approach to corporate sustainability. However, corporate commitments to water stewardship can be interpreted as being driven as much by business imperatives as by any specific concerns for environmental sustainability or a genuine desire to maintain the viability and integrity of natural ecosystems. More critically, the authors suggest that the selected companies' commitments to water stewardship are framed within existing business models focused on technological improvements in eco-efficiency and continuing economic growth. The paper provides an accessible review of the water stewardship issues being pursued by the leading players in the food and drinks industry, and as such, it will interest academics, students, political commentators and business managers interested in water stewardship and corporate sustainability. Copyright © 2014 John Wiley & Sons, Ltd.


Introduction

  1. Top of page
  2. Abstract
  3. Introduction
  4. Corporate Sustainability
  5. Frame of Reference and Method of Enquiry
  6. Findings
  7. Discussion
  8. Conclusions
  9. References
  10. Biographies

Reputation is a vitally important, yet intangible, asset that provides companies with competitive advantage in the marketplace. De Castro, Lopez and Saez (2006), for example, argue that ‘corporate reputation is the process of the social legitimization of the firm’ and that it can be understood as ‘the collective representation of actions and outcomes of the past and present of the organisation, that describe its capability to obtain valuable outcomes for different stakeholders’. Fombrun and Van Riel (1997) suggest that ‘reputations derive from multiple, but related images of firms among all of a firm's stakeholders, and inform about their overall attractiveness to employees, consumers, investors and local communities’. More recently, while Doorley and Garcia (2011) accept this definition, they suggest that performance, behaviour and communication are all ‘critical components of reputation’. In many ways, reporting on corporate sustainability, which captures all three of these components, is increasingly seen to be crucial in building a company's reputation within the marketplace.

In identifying ‘six growing trends in corporate sustainability’, Ernst & Young and GreenBiz (2012) argue the growing awareness that ‘corporate sustainability and access to natural resources are inextricably linked’. More specifically, in identifying the ‘top sustainable business trends of 2014’, Makower (2014) suggests that ‘companies, communities and countries are coming to recognize that water is increasingly being paired with the words crisis or risk’. In identifying ‘water scarcity’ as one of the ‘10 global sustainability megaforces’ that it ‘believes will impact every business over the next two decades’, KPMG (2012), for example, claims that ‘businesses may well be vulnerable to water shortages, declines in water quality, water price volatility and to reputational challenges’ and that ‘growth could be compromised and conflicts over water supplies may create a security risk to business operations’. More specifically, Lambooy (2011) suggests that ‘water stress is increasingly viewed as a potential constraint on economic growth’ and argues that ‘it can be considered part of CSR to adopt policies on sustainable water use’.

Water is a major element within the food and beverage industry, although there are variations in the way it is used across this sector. It is a primary, and often the major, ingredient for many products, and it is used in cleaning, boiling, cooling, pasteurisation, fermentation, dilution, retrieval, blanching, and brining, to trigger germination and for the conditioning and transport of raw material. At the same time, water quality is a major consideration within the food and beverage industry, and many food and beverage companies also increasingly need to address a wide range of wastewater treatment issues. With this in mind, this paper offers an exploratory review of the extent to which key players in the food and drinks industry are publicly reporting on water stewardship as part of their general commitment to corporate sustainability. The paper provides a brief introduction to corporate sustainability, a description of the framework for the review and the method of enquiry, and an exploration of the various water stewardship issues reported by the world's leading food and drinks companies and offers some wider reflections on water stewardship within the food and beverage industry. The paper is based on secondary source material derived from the corporate websites of the selected food and drinks companies.

Corporate Sustainability

  1. Top of page
  2. Abstract
  3. Introduction
  4. Corporate Sustainability
  5. Frame of Reference and Method of Enquiry
  6. Findings
  7. Discussion
  8. Conclusions
  9. References
  10. Biographies

The concept of sustainability can be traced back as far as the 13th century, but in more recent times, it re-appeared in the environmental literature in the 1970s (Kamara, Coff & Wynne, 2006), and since then, it has attracted increasingly widespread attention. Diesendorf (2000) has argued that ‘sustainability’ can be seen as ‘the goal or endpoint of a process called sustainable development’. The most widely used definition of sustainable development is ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs’ (World Commission on Environment and Development, 1987), which Diesendorf (2000) suggests ‘emphasises the long term aspect of the concept of sustainability and introduces the ethical principle of achieving equity between present and future generations’. However, defining this concept is not straightforward, and a number of contrasting and contested meanings can be identified. More specifically, there are sets of definitions that recognise that all human beings live on one planet with finite quantities of natural resources and fragile ecosystems on which all human life ultimately depends.

The term ‘corporate sustainability’ is now in widespread use within the business world. However, Polentz (2011, webpage) claims ‘ask ten different experts to define corporate sustainability you are likely to receive ten different answers’ and suggests that

part of the problem in defining such an amorphous term arises from its continuing evolution along with the ever-increasing entry of new stakeholders, an inconsistent set of state and federal laws and the constant onslaught of newly adopted federal and state laws.

On the one hand, there are definitions that seem to emphasise business continuity more than environmental and social sustainability. Dyllick and Hockerts (2002), for example, define corporate sustainability as

meeting the needs of a firm's direct and indirect shareholders (such as shareholders, employees, clients, pressure groups, communities etc.), without compromising its ability to meet the needs of future stakeholders as well.

Texas Instruments (2014), for example, uses ‘the term sustainability primarily in relation to the operation of our business. We believe responsible, sustainable business can meet current resource needs without compromising the needs of future generations’. More specifically, Texas Instruments (2014) states ‘we work towards sustainability by reducing waste and inefficiency in operations including our manufacturing facilities, office buildings and distribution activities’.

On the other hand, there are definitions that more explicitly embrace environmental and social goals and look to integrate these into a company's mission and core business strategy. Here, corporate sustainability is concerned with

companies contributing effectively to a global partnership for sustainable development. It is about companies delivering wide societal value including support for health and human rights improvements, regional development and fair globalisation and respecting the environment by promoting technologies to reduce the emission of greenhouse gases and by implementing effective environmental risk management (CSR Quest, 2014).

van Marrewijk and Werre (2002) argue that ‘corporate sustainability refers to a company's activities – voluntary by definition – demonstrating the inclusion of social and environmental concerns’, but they suggest that companies develop different levels of corporate sustainability. They further argue that at the ‘holistic’ level, corporate sustainability ‘is fully integrated and embedded in every aspect of the organization’ and its fundamental objective is the ‘survival of life on the planet’ (van Marrewijk & Werre, 2002). More generally, corporate sustainability has been defined as ‘the discipline by which companies align decision-making about the allocation of capital, product development, brand and sourcing with the principles of sustainable development, in a resource-constrained world’ (Global Association of Corporate Sustainability Officers, 2012).

In examining recent trends in corporate sustainability strategy and performance, Ernst & Young and GreenBiz (2012) argued that

over the past 2 decades corporate sustainability efforts have shifted from a risk based compliance focus where rudimentary, voluntary, sometimes haphazard initiatives have evolved into a complex and disciplined business imperative focused on customer and stakeholder requirements.

Many business leaders have been developing sustainability plans and programmes as an integral component of their corporate strategies. A number of factors appear to be important in helping to explain this trend. These include the need to comply with a growing volume of environmental and social legislation and regulation, concerns about the cost and scarcity of natural resources, greater public and shareholder awareness of the importance of socially conscious financial investments, the growing media coverage of the activities of a wide range of anti-corporate pressure groups, and more general changes in social attitudes and values within modern capitalist societies. More specifically, a growing number of companies are looking to publicly emphasise and demonstrate their commitment to sustainability in an attempt to help differentiate themselves from their competitors and to enhance corporate brand reputation. The increasing rational for corporate sustainability is perhaps succinctly made by the United Nations Global Compact (2013) namely ‘in short the case for corporate sustainability has strengthened in response to the deep interdependencies between markets, communities and people in today's globalized world’.

However, it is important to recognise that a number of critics see the growing business interest in sustainability as little more than a thinly veiled and cynical ploy, popularly described as ‘green wash’, designed to attract socially and environmentally conscious consumers while sweeping pressing environmental and social concerns under the carpet. So seen, the moves towards sustainable marketing might be characterised by what Hamilton (2009) describes as ‘shifting consciousness’ towards ‘what is best described as green consumerism’. He sees this as ‘an approach that threatens to entrench the very attitudes and behaviours that are antithetical to sustainability’ and argues that ‘green consumerism has failed to induce significant inroads into the unsustainable nature of consumption and production’. Perhaps more radically, Kahn (2010) argues that ‘green consumerism’ is ‘an opportunity for corporations to turn the very crisis that they generate through their accumulation of capital via the exploitation of nature into myriad streams of emergent profit and investment revenue’.

Frame of Reference and Method of Enquiry

  1. Top of page
  2. Abstract
  3. Introduction
  4. Corporate Sustainability
  5. Frame of Reference and Method of Enquiry
  6. Findings
  7. Discussion
  8. Conclusions
  9. References
  10. Biographies

In an attempt to obtain a preliminary picture of the extent to which food and drinks industry is publicly addressing water stewardship as part of their corporate sustainability reporting, the world's top 10 food and drinks companies, namely Nestle, Unilever, Coca-Cola, PepsiCo, Mendelez International, Danone, Mars, Kellogg's and Associated British Foods and General Mills, as ranked for social responsibility by Oxfam, were selected for study. The companies vary considerable in the nature and diversity of their business operations and in their geographical reach, and many are household names. PepsiCo, for example, is a leading global food and beverage company with headquarters in the USA and operations in over 200 countries, a net revenue of $65bn in 2012 and a product portfolio that includes Pepsi-Cola, Seven Up, Aquafina, Tropicana, Quaker Oats, Doritos and Fritos. Danone is a French-based multinational company. Its mission is to ‘Bring health through food to as many people as possible’, and its product range, which it claims is 100% health driven, spans fresh dairy product, cereals, baby foods, bottled water and medical nutrition products. Its brands include Activia, Actimel, Evian, Volvic, and Cow and Gate. Associated British Foods is a diversified international group whose business is split into five segments, namely agriculture, sugar, ingredients, grocery and retail, and it employs some 113 000 people in 47 counties. General Mills is a US-based company with headquarters in Minneapolis, Minnesota, its brand portfolio includes over 100 leading US brands, and it had global net sales of over $17bn in 2013. Overall, the selected companies, which are top ranked on high social responsibility criteria, might be seen to reflect cutting-edge approaches to water stewardship within the food and beverage industry and to be keen to publicise their water stewardship commitments and achievements to a wide audience. As such, the selected companies provide a simple but suitable framework to explore how large companies are currently addressing water stewardship as part of the corporate sustainability strategies, and they might be expected to reflect cutting-edge thinking and practice across the sector.

During the past two decades, ‘sustainability reporting has evolved from a marginal practice to a mainstream management and communications tool’ (Global Reporting Initiative, 2007). Companies use a wide variety of platforms to communicate and report on environmental commitments and programmes, and the European Commission Directorate-General for Enterprise lists a number of methods that businesses currently utilise including ‘product labels, packaging, press/media relations, newsletters, issue related events, reports, posters, flyers, leaflets, brochures, websites, advertisements, information packs and word-of mouth’ (European Commission Directorate-General for Enterprise, undated). During recent years, ‘the importance of online communications as part of an integrated CSR communications strategy has grown significantly’ (CSR Europe, 2009), and sustainability reporting ‘is now undeniably a mainstream business practice worldwide’ (KPMG, 2013). With this in mind, the authors undertook an Internet search for the most recent material on water stewardship on each of the selected companies' corporate websites (Table 1) in April 2014 using the key words ‘sustainability report’ and Google as the search engine.

Table 1. Food and drinks company corporate websites
  1. Source: Oxfam, 2014.

Nestle http://www.nestle.com/
Unilever http://www.unilever.com/
Coca-Cola http://us.coca-cola.com/home/
PepsiCo http://www.pepsico.com/
Mendelez International http://www.mondelezinternational.com/
Danone http://www.danone.com/en/#
Mars http://www.mars.com/uk/en/
Kellogg's http://www.kelloggs.com/en_US/home.html
Associated British Foods http://www.abf.co.uk/
General Mills http://www.generalmills.com/

The precise patterns of search and subsequent navigation varied from one company to another, but the information revealed by this search procedure provided the empirical material for this paper. The specific examples and selected quotations from the selected corporate websites within this paper are used primarily for illustrative purposes, and there is no attempt to provide a systematic analysis and comparative evaluation of the ways in which the selected companies are addressing water stewardship. Rather, the focus is on conducting an exploratory examination of how water stewardship is currently being addressed, conceptualised, operationalised and packaged for public consumption by the food and drinks industry. That said, the authors recognise that this approach has its limitations in that there are issues in the extent to which a company's public statements realistically, and in detail, reflect strategic corporate thinking on water stewardship and whether or not such pronouncements are little more than thoughtfully constructed public relations exercises. However, given the need to drive forward exploratory research such in this increasingly important area for businesses and to begin to understand the extent to which major companies are addressing water stewardship as part of their sustainability strategies, the authors believe that the Internet-based approach adopted in this paper offers an appropriate and worthwhile entry point for analysis and a readily accessible pool of information to underpin the current study. In discussing the reliability and validity of information obtained from the Internet, Saunders, Lewis and Thornhill (2009) emphasise the importance of the authority and reputation of the source and the citing of a contact individual who can be approached for additional information. In surveying the selected companies, the authors were satisfied that these two conditions were met.

Findings

  1. Top of page
  2. Abstract
  3. Introduction
  4. Corporate Sustainability
  5. Frame of Reference and Method of Enquiry
  6. Findings
  7. Discussion
  8. Conclusions
  9. References
  10. Biographies

The Internet search revealed that all of the selected companies posted sustainability reports that included material on water stewardship on their corporate websites. (These reports are variously titled Sustainability, Corporate Social Responsibility, Corporate Responsibility, Global Responsibility, Citizenship, Global Citizenship reports, but within this paper, they are all referred to as sustainability reports.) Within these, there was considerable variation in both the nature and the volume of the information provided, but a range of water stewardship issues were addressed, albeit to a different extent and under different headings, including water stewardship strategy, water footprinting, efficiency and reduction in water use and water conservation, and recycling; employee engagement; water stress; water resource management; water in the supply chain; and community engagement. Although a minority of companies look to publicly report on a wide range of issues, the majority offer a narrower focus on what they currently perceive to be the major issues.

A number of companies explicitly stress both the strategic importance of water to their business and their corporate commitment to water stewardship. Nestle, for example, claims ‘a long history of leadership on water stewardship because it is critical to the future success of our business and our value chain’. More specifically, the company reports the launch of the ‘Nestle Commitment on Water Stewardship’ in 2013, which embraces five key commitments, namely to ‘work to achieve water efficiency’, ‘advocate for effective water policies and stewardship’, ‘treat the water we discharge effectively’, ‘engage with suppliers especially those in agriculture’ and ‘raise awareness of water access and conservation’. Danone explicitly recognises that ‘water is a precious and sometimes a resource that must be used in harmony with local ecosystems and communities’ and the company reports its commitment to ‘preserving the quality of this indispensable source and to respecting its natural cycles by adopting responsible practices at the local level’. Coca-Cola emphasises its corporate commitment to water stewardship; thus,

Inside every bottle of Coca-Cola is the story of a company that understands the priceless value of water, respects it as the most precious of shared global resources and works vigorously to conserve water worldwide.

Some of the selected companies see water footprinting as an important element in underpinning and informing water stewardship strategy. A company's water footprint is simply defined as the total volume of freshwater used to produce a company's goods and services. Unilever, for example, reports on conducting ‘detailed measurement and analysis of our water footprint to inform our strategy’. This analysis revealed that some of the company's product categories are more water intensive than others and potentially yield the major opportunities, for example, for water reduction. More specifically, in 2012, for example, Unilever calculated the water use used to produce a range of agricultural products and identified tomatoes and sugar as its key crops and a number of specific locations where water reduction programmes could have the greatest impact. Danone also reports on establishing a ‘water footprint methodology’, which looks to take account of water consumption at each stage in the product life cycle and variations in water quality, which in turn helps to identify sensitive zones and methods to reduce environmental impacts.

Programmes and initiatives to reduce the volume of water used and to improve the efficiency of water consumption against set targets are reported by the majority of the selected companies. General Mills, for example, has targeted a 20% reduction in water use between 2006 and 2015 and cites the funding of ‘sustainability projects’ designed to contribute to meeting this target. More specifically, the company reports on projects at its production facilities in Vineland, New Jersey, and Cedar Rapids, Iowa. At the former plant, the company is recycling water to deliver a 14% annual reduction in water use, and at the latter, the installation of a new filtration system has allowed the recirculation and multiple use of water, which has, in turn, seen a 40% reduction in water usage. Associated British Foods claims to be exploring ways to reduce water consumption across its grocery business and to have made ‘some significant progress at a number of sites’ with the accent being on water recirculation, more efficient cleaning practices and rainwater harvesting. Mendelez International reports its target to reduce water usage in its manufacturing plants between 2010 and 2015 and cites examples of successful projects undertaken in Australia, India and Mexico.

Kellogg's reports a range of water saving initiatives including the installation of a reverse osmosis system at its manufacturing plant in Manchester, UK, in 2013, and the replacement of manual washing by an automated washing process at the company's cereal plant at Charmhaven in Australia, which reduced water usage by 90%. By way of a further illustration of its water reduction initiatives, the Kellogg Corporate Social Responsibility Report also included a mini case study of its Georgia factory in Rome, Italy. The company reports that this production facility employs some 50 hoses and nozzles to clean the sticky conveyor belts with high-pressure streams of water, which, when in operation, each uses some 45 l of water per minute. The company reports that it has introduced and installed a new more efficient conveyor belt washing system that has reduced the water used per hose to less than 14 l/min. Overall, Kellogg's reports that the changes outlined earlier along with improvements to heating and sanitation systems within the factory have led to a 69% reduction in water use per ton of food produced during 2012.

Commentaries on reductions in water use are also often linked to wastewater treatment and recycling. Coca-Cola, for example, claims that

in addition to improving our water efficiency, we are also reducing our impact on water systems and contributing to improved water quality by appropriately treating wastewater and returning it to the environment.

Coca-Cola reports that all its company-owned production plants worldwide are compliant with local wastewater treatment legal requirements and standards, although it recognises the challenges involved in attempting to ensure that independent bottling plants in some 200 countries are all similarly compliant. Nestle claims that where possible, it uses municipal wastewater treatment facilities, but reports that where no public treatment facilities are available, it invests in its own treatment plants and returns the treated water to the local water system ‘according to local legislation and internal standards, whichever is the most stringent’.

The role of employee engagement in water stewardship is emphasised by some of the selected companies. Nestle, for example, suggests that

by continuing to engage our people with the national and local water stewardship agenda, they can see the issues first hand and prioritise opportunities for shared value with our suppliers, partners and stakeholders.

Nestle also reports on its investment in its training and education programme for employees, which ‘enables them to make better informed decisions that lead to effective water stewardship’ and which ‘fosters a systematic, employees-involved, continuous improvement culture’. A mini case study of improvements in water efficiency at Nestle's confectionary factory at La Penilla in Spain concludes ‘the project has also improved awareness of water stewardship among our employees, creating positive behavioural change for the long term’.

The issues of physical and regulatory risks and conservation measures designed to mitigate such risks are explicitly addressed by some of the selected companies. Physical risk concerns the availability and quality of water, whereas regulatory risk is bound up with what is often increasing strict government legislation and regulations on water allocation and pricing, wastewater treatment and the issue of operating licences. General Mills, for example, reports conducting a water risk assessment at all its plants designed to help ‘to better understand the health of freshwater resources we depend on for our global plant locations and in our most important growing regions around the world’. More specifically, the company reports on its plant at Irapuato in Mexico where the water risk assessment led to a switch from ‘a point-source water strategy’ (where water is sourced from a specific well head or municipality) to ‘a broader watershed strategy focussed on the entire growing region’. The company plan to replicate this approach across its high-risk watershed areas globally.

Coca-Cola reports requiring each of its 860 bottling plants to conduct local water source vulnerability assessments. The company also reports requiring a water source sustainability assessment as an integral part of its due diligence process when acquiring land for a new facility or purchasing a business with existing manufacturing plants. Such assessments embrace the social, environmental and political risks to the water resources, which will supply both the production facilities and the local communities. These include a description of the water resources available to the plant for both water supply and waste treatment, a review of available water quality, an inventory of the local relevant water resource management agencies and their policy regulation and planning priorities, and an evaluation of how the water use could limit both the availability and quality of water for local communities. These assessments provide the framework for bottling plants to develop and implement action plans for risk mitigation at the watershed level. Many of the selected food and drinks companies report on their regulatory compliance including, for example, action to ensure that extraction licences are in place and that wastewater discharges meet, and, in some cases, exceeds standards set by locally applicable legislation.

Looking beyond their own operations, some of the selected companies address water in the supply chain and the issue of community engagement. Nestle, for example, argues that ‘the greatest challenge to reduce our water consumption lies in addressing the impacts beyond our factories—in our complex supply chains’. The scale of this challenge is enormous not only in that Nestle work directly with some 690 000 farmers but also in that the company's ‘sphere of influence touches millions more through the commodities we purchase’. At the same time, Nestle explicitly recognises that engaging with its diverse and geographically widespread supply chain is critical if the company is to meet its own water security and water stewardship goals. The ‘Sustainable Agriculture Initiative at Nestle’ is a global programme designed to support farmers and to address some of the major challenges in water management and irrigation including farmer and crop resilience to drought and flooding and wastewater and organic waste treatment. Unilever reports on working with tomato growers in California to develop drip irrigation, which has significantly reduced water use and also increased yields.

On a much wider scale, Coca-Cola reports on its support for the United Nations Development Programme and more specifically on the ‘Every Drop Matters’ programme, which has undertaken up to 100 projects embracing watershed restoration, sustainable agriculture initiatives and capacity building among government water managers in over 20 countries mainly in the former Soviet Union. More generally, Coca-Cola also reports on its initiatives in addressing the ‘water–energy–food nexus’ and in working towards the ambitious and challenging task of seeking to ‘ensure water, energy and food security for everyone’. Here, some projects are increasing the ability of watersheds to absorb some of the threats associated with increasingly severe weather events, whereas others are attempting to build resilience in response to ever-increasing demands for water, energy and food. More generally, Nestle reports on its approach to ‘public policy engagement’. Although the company believes that ‘governments must take the lead to establish water policies that give people universal access to clean and safe water, within which Nestle and other water users can operate’, it asserts it willingness to ‘assist in this process, by advocating for effective water policies and water stewardship’.

Discussion

  1. Top of page
  2. Abstract
  3. Introduction
  4. Corporate Sustainability
  5. Frame of Reference and Method of Enquiry
  6. Findings
  7. Discussion
  8. Conclusions
  9. References
  10. Biographies

The findings indicate that the majority of the selected food and drinks companies address water stewardship as part of their more general approach to corporate sustainability. Many of them also report on future plans to further improve water efficiency and to develop and/or enhance some of their existing initiatives on water stewardship. As such, the findings would seem to support Makower's (2014) position that concerns about water are becoming an increasingly important element in corporate strategy. At the same time, the findings reveal considerable variations in the information that the selected food and beverage companies publicly provide on their approach to water stewardship. In part, this would seem to reflect a number of factors, including the importance that the selected companies attach to water stewardship, their strategic corporate commitment to water stewardship, the resources they are prepared to commit to corporate sustainability reporting and the extent to which they want or feel it necessary to commit to the public disclosure of their water stewardship strategies, targets and achievements. More generally, a number of issues merit discussion and reflection.

Firstly, there is a set of issues concerning the ways in which the selected food and beverage companies report on their approach to water stewardship. Generally, the accent on providing a simple narrative of their water stewardship initiatives and programmes sometimes illustrated with basic descriptive statistics and mini case studies with pictures and simple diagrams being widely used to illustrate broad themes. Currently, there are no clear, agreed or definitive international standards for water stewardship disclosure, although some of the selected food and beverage companies do utilise water-specific voluntary reporting frameworks including the CDP (formerly the Carbon Disclosure Project) Water Disclosure key indicators and the United Nation's CEO Water Mandate reporting template. More generally, some of the selected companies, including Danone, PepsiCo and Nestle, claim that their corporate sustainability reports reflect and/or comply with the Global Reporting Initiative guidelines, but others provide information on water stewardship in their own idiosyncratic house style. Overall, the lack of common and agreed frameworks and standards and the use of simple case studies make it difficult not only to make any meaningful comparison between one company and another but also to assess the contribution that these companies are making towards the water stewardship at regional, national and international levels.

At the same time, there is little extensive evidence of independent external assurance of the information on water stewardship posted on their corporate websites by the leading food and beverage companies. Both Associated British Foods and Unilever, for example, employed PricewaterhouseCoopers to undertake limited assurance of a number of the performance measures included in their sustainability report, but water stewardship was not explicitly covered in either of these assurance exercises. A statement from Forum for the Future, an independent non-profit organisation that looks to work with businesses and government to address sustainability challenges, is also included in Associated British Food's sustainability report. Although this statement suggests that ‘water scarcity’ is one of the ‘key issues’ on which ‘we feel Associated British Foods can make the most difference’, this statement concludes that ‘the company will need to have a more active and transparent role in shaping the debate and progress on key issues which are material to the business’. The widespread lack of independent external assurance can be seen to undermine the transparency, reliability and integrity of the sustainability information posted by the selected companies. That said, it is important to remember that many of these companies are large, complex and dynamic organisations. Capturing and storing comprehensive information and data across a diverse range of business activities throughout the supply chain in a variety of geographical locations and then providing access to allow external assurance are a challenging and a potentially costly venture and one that many of the selected currently choose not to publicly pursue.

Secondly, although there are variations in the ways in which the leading food and beverage companies have implicitly defined water stewardship, collectively, their approach can be interpreted as being built around business efficiency and business continuity. The dominant concern, for example, is to reduce the volume and to improve the efficiency of water consumption, which helps not only to safeguard current and future operations but also to reduce costs. As such, the water stewardship initiatives and programmes within the selected companies' sustainability reports can be seen to be driven as much by business imperatives as by commitments to environmental sustainability. A number of Coca-Cola's reported watershed projects in Illinois developed in partnership with the US Department of Agriculture, for example, supply water to the company's plants as well as to other local users.

More generally, such an approach would seem to be consistent with the claim by Deloitte (2012a) that companies develop sustainability issues ‘based upon what matters most to the business’, and this would, in turn, seem to privilege commercial imperative in the construction and development of sustainability agendas. More critically, Banerjee (2008) has argued that ‘despite their emancipatory rhetoric, discourses of corporate citizenship, social responsibility and sustainability are defined by narrow business interests and serve to curtail the interests of external stakeholders’. This, in turn, echoes Hobson's (2006) argument that rich and powerful groups will construct sustainability agendas that do not threaten consumption, per se, but seek to link them ‘to forms of knowledge – science, technology and efficiency – that embody the locus of power’ already held by large business corporations.

Thirdly, in their pursuit of efficiencies in water stewardship, a number of the selected companies have looked to harness technological innovation and to promote the diffusion of seemingly environmentally friendly technologies. PepsiCo, for example, reports on innovative solutions to conserving water at its food facility in Funza in Columbia. Here, the company installed a high-efficiency water reclamation system that uses a specialised membrane bioreactor that enables the reuse of 75% of the water entering the plant. This membrane bioreactor technology, combined with low-pressure reverse osmosis, produces recycled water that meets the US Environment Protection Agency standards. More generally, Nestle argues that its approach to sustainability involves, inter alia, ‘large investments in technology with lower environmental impact’. However, Huesemann (2002) suggests a number of reasons ‘why technological improvements in eco-efficiency alone will be insufficient to bring about a transition to sustainability’, and potentially more divisively, Vorosmarty et al. (2010) argue that ‘massive investment in water technology enables rich nations to offset high stressor levels without remedying their underlying causes, whereas less wealthy nations remain vulnerable’. In extending this political argument, Schor (2005) has suggested not only that do ‘advocates of technological solutions argue that more intelligent design and technological innovation can dramatically reduce, or even stop the depletion of ecological resources’ but also that ‘the popularity of technological solutions is also attributable to the fact that they are apolitical, and do not challenge macrostructures of production and consumption’.

Fourthly, there are tensions between commitments to water stewardship as part of corporate sustainability programmes and the pursuit of continuing growth. Coca-Cola, for example, stresses that the company is ‘firmly committed to advancing our growth trajectory’, whereas Associated British Foods reports positively that its strategic approach ‘has delivered revenue growth of over 20% in the last three years’. Nestle claims to be committed to ‘sustainable growth’ without explicitly defining the term. Corporate commitments to continuing growth are certainly consistent with the argument by Reisch, Spash and Bietz (2008); that is, although moving towards sustainability is a major policy agenda, ‘growth of income and material throughput by means of industrialisation and mass consumerism remains the basic aim of western democracy’. There are also arguments that economic growth, dependent on the continuing depletion of the earth's finite natural resources, is incompatible with sustainability and that harnessing technology will not offer a long-term solution. Huesemann (2002), for example, claimed that business leaders have promoted the concept of eco-efficiency in order ‘to ensure that continued economic growth and environmental protection can go hand in hand’ but argued that ‘improvements in eco-efficiency alone will not guarantee a reduction in the total environmental impact if economic growth is allowed to continue’. Looking to the future, Huesemann (2002) further argued that unless growth in consumption is restrained, ‘technological improvements only delay the onset of negative consequences that as a result, will have increased in severity, thereby reducing our freedom to choose satisfying solutions’.

Finally, the issue of water stewardship, and more particularly, of water risk, is intimately bound up with reputation. Although a number of the selected companies address physical and regulatory risks as part of their approach to water stewardship, reputational risk receives little explicit attention within corporate sustainability reports. That said, reputational risk is a major issue within the food and beverage industry. In the past, for example, some of North America's leading food and beverage companies have been involved in litigation about water pollution incidents, and they have incurred large fines for violations of federal clean water legislation. Reductions in the availability and quality of water, particularly in areas experiencing increasing water stress, can increase competition for clean water between food and beverage manufacturing plants and local communities and generate tensions, adverse publicity and civil protests. At the same time, in a briefing on water stewardship for corporate Chief Financial Officers, Deloitte (2012b) argued that

even the perception of extracting water to the detriment of other stakeholders is a problem in a world where almost anyone leveraging social media can impact your social licence to operate.

A range of potential reputational damages can be identified including decreased brand value and consumer loyalty, reduced investor confidence, adverse regulatory responses and loss of social licence to operate.

As public interest in the more sustainable use of natural resources, and more specifically, in water stress, water shortages and the more sustainable use of water grows, so major companies' approach to water stewardship seems certain to attract ever greater political, public and media scrutiny. Although the leading food and beverage companies' public responses to both physical and regulatory risks can be measured and documented relatively easily in corporate sustainability reports, in some ways, the issue of reputation, though all pervasive, is less tangible, and it will provide a continuing and potentially increasingly difficult challenge for these companies. That said, in reporting on ‘seeking the social license for water use’, Coca-Cola, for example, explicitly recognises that

in some parts of the world where water is acutely stressed, we have encountered opposition to our operations because of perceptions that we are using more than our fair share of water and depleting water resources to the detriment of local farmers and residents.

More positively, Coca-Cola reports

we have worked hard to provide data that show that we use water responsibly and to make the case that it would be contrary to our own business interests to damage water sources and harm residents.

However, although the leading food and drinks companies report on a range of water stewardship themes in their corporate sustainability reports, not all of these necessarily provide appropriate vehicles for widespread public communication. The concept of the water footprint, for example, can be valuable in raising public awareness, but it is probably too complex to be employed as an effective public relations tool.

A number of the leading food and drinks companies believe that effective and continuing stakeholder engagement will be vitally important in complementing and enhancing water stewardship commitments and achievements documented in corporate sustainability reports. Coca-Cola, for example, recognises ‘the value of maintaining an active dialogue with a diverse group of global partners, including employees, consumers, customers, distributors, shareowners, investors, nongovernmental organisations and non-profit partners’. More specifically, the company seeks feedback from its stakeholders on its water stewardship programmes on a continuous basis and reports on how it has addressed a range of stakeholder feedback. In the event, however, in addressing stakeholder concerns, for example, about providing ‘more details on water efforts with suppliers’ and to ‘discuss challenges in meeting goals’, Coca-Cola's response was simply to refer stakeholders to the company's current corporate sustainability report. Looking to the future, the leading food and drinks companies would be well advised to provide more comprehensive commentaries on water stewardship and on their work to minimise reputation risks within their corporate sustainability reports, but they will also look to deploy a range of communication channels and particularly social media effectively and imaginatively to guard and enhance reputation.

Conclusions

  1. Top of page
  2. Abstract
  3. Introduction
  4. Corporate Sustainability
  5. Frame of Reference and Method of Enquiry
  6. Findings
  7. Discussion
  8. Conclusions
  9. References
  10. Biographies

The findings of this exploratory study suggest that all the selected food and drinks companies are addressing various elements of water stewardship as part of their broader commitment to corporate sustainability. Several of them also report future plans to fund programmes for further water efficiency and to develop and/or enhance some of the existing initiatives on water stewardship. These findings would certainly seem to suggest that concerns about water are becoming an increasingly important element in corporate strategy and in managing corporate reputation. However, many of the reported water stewardship achievements and commitments can also can be interpreted as part of a wider search for operational efficiencies and cost reductions, which are driven as much by business imperatives as by any genuine commitment to the sustainability of natural ecosystems and resources. More critically, the authors suggest that the selected companies' commitments to water stewardship are couched within existing business models that focused on technological improvements in eco-efficiency and continuing economic growth.

There is only limited evidence of any independent external assurance of the corporate sustainability reports and information that the leading food and beverage companies provided on their water stewardship achievements, and this, in turn, undermines the integrity and reliability of these reported achievements. Looking to the future in the short to medium term, the leading players in the food and drinks industry may be well advised to provide more comprehensive and verifiable commentaries on their water stewardship achievements within their corporate sustainability reports as part of their approach to reputation management. At the same time, they will continue to look to deploy a range of communications channels, and particularly social media, effectively and imaginatively to guard and enhance reputation. In the longer term and in the wake of potentially dramatic and unpredictable climate changes, such business models may be inherently unsustainable, and while that poses major business continuity risks for the food and drinks industry, such risks may in turn be dwarfed by greater and more daunting challenges facing humanity.

References

  1. Top of page
  2. Abstract
  3. Introduction
  4. Corporate Sustainability
  5. Frame of Reference and Method of Enquiry
  6. Findings
  7. Discussion
  8. Conclusions
  9. References
  10. Biographies

Biographies

  1. Top of page
  2. Abstract
  3. Introduction
  4. Corporate Sustainability
  5. Frame of Reference and Method of Enquiry
  6. Findings
  7. Discussion
  8. Conclusions
  9. References
  10. Biographies
  • Peter Jones is a Professor in the Business School at the University of Gloucestershire, having previously served as the Head of the Department of Retailing and Marketing at the Manchester Metropolitan University and Dean of the Plymouth Business School. His research interests are in sustainability and retail marketing.

  • David Hillier is a Professor in the Centre for Police Sciences at the University of South Wales, having previously served as Head of Geography at the then University of Glamorgan. His research interests are in crime and the design of the urban environment and in sustainable development.

  • Daphne Comfort is a Research Administrator in the Business School at the University of Gloucestershire, and her research interests are in corporate social responsibility and woodland management.