Can We Rely On Coca-Cola’s Water Use Disclosures?

Have you read the recent investigative news story regarding Coca-Cola’s water use? Apparently, the firm has been reporting data in an incomplete (and potentially misleading) manner.

The news story focused on the company’s claim that “For every drop (of water) we use, we give one back.” Why the concern? Because, even though clean water has become a scarce and precious resource around the world, Coca-Cola utilizes massive amounts of the liquid to produce its eponymous product.

The company claims that its water conservation efforts fully replace the volume of liquid that it draws out of the natural environment. But the investigative reporter revealed that the company “… does not count water in its supply chain — including the water-guzzling sugar crop — in its ‘every drop’ math.”

The reporter also noted that a company researcher once revealed that he was pressured to “ … adopt a ‘net green’ accounting method that would have lowered the water footprint of its agricultural supply chain.”

Huh? A “net green” accounting method? Any Certified Public Accountant or Chartered Accountant can confirm that no such method is defined by Generally Accepted Accounting Principles or International Accounting Standards. Coca-Cola concocted it to serve its needs.

Interestingly, the investigative reporter failed to note that Coca-Cola arranges for the Big Four global accounting firm Ernst & Young LLP (EY) to attest to the accuracy of its Water Replenish and Water Use Ratio metrics. The statistic is one of seven sustainability measurements that are assessed by the external accountants.

Sadly, industry critics will likely refer to this situation as an illustration that “corporate sustainability reporting (is) a great waste of time.” But even though it’s possible to regard the Coca-Cola brouhaha as an exemplar of misleading reporting practices, it’s important to keep in mind that — as a result of the company’s disclosures — its water use practices can now be scrutinized by external parties who care deeply about the environment.

Forget Pitching, Hitting, and Fielding! The New York Mets’ Most Glaring Area Of Weakness May Be Statistics

It’s difficult to believe that Major League Baseball’s New York Mets won 11 of their first 12 games this season. Earlier today, the Chicago Cubs completed a four game sweep of the club, continuing a stretch in which the Mets have lost 29 of 45 games.

During this woeful period, fans have witnessed displays of poor pitching, hitting, and fielding skills. And to make matters worse, earlier this week, they witnessed a managerial display of poor statistical skills.

At a critical moment in a game against the Milwaukee Brewers, Mets Manager Mickey Callaway removed an effective pitcher and replaced him with an ineffective one. The change enabled the Brewers to score four runs and convert a two run New York lead into a two run Milwaukee surplus.

So why did Callaway bring in Jerry Blevins to replace Robert Gsellman? Given that Blevins has struggled all season, while Gsellman has delivered periods of clutch pitching? Callaway explained:

The seven times [the Brewers batter] faced Gsellman he got three hits. He’s never gotten a hit (0-for-2 with a walk) off Blevins. The overall numbers suggest Blevins has a much greater chance to get the hitter out and you have to go with those. It is part of managing the game today.

At first glance, it does seem reasonable to bring in a pitcher who has experienced success against a batter. But “0 for 2 with a walk” means that the pitcher had only faced the batter three times in his entire career!

That isn’t even close to a statistically meaningful number of past attempts. Callaway himself acknowledged the “small sample size” that he relied upon to make his decision.

In all fairness, there is no single numerical minimum of observations that must be considered when making a statistically valid decision. The minimum number varies by one’s willingness, in any particular situation, to tolerate risk and uncertainty.

And yet no mathematician would agree that a counter-intuitive baseball decision could be made on the basis of three prior outcomes. Thus, the Mets can now add Statistical Analysis to their List of Necessary Improvements.

Rockaway Beach Provides A Sad Example Of The Integrated Nature Of The Triple Bottom Line

Are you familiar with the Triple Bottom Line? First defined by John Elkington more than two decades ago, it refers to the principle that an organization should measure its social performance and environmental performance, and not solely its financial (or economic) performance. It is occasionally known as the Three P’s of performance, i.e. People, Planet, Profit.

But the principle can also be interpreted in a more complex manner. Each of these three performance factors impacts the others. Thus, the “bottom lines” of these factors should be reported in an integrated manner.

Last week, the City of New York sadly announced a community restriction that illustrates the integrated nature of the Triple Bottom Line. Due to the hurricanes and rising tides of climate change, severe sand erosion on the city’s southeastern peninsula has led to the closing of a prime strip of sandy beach in the Rockaways.

The decision occurred after local tourist businesses opened for the season. Residents, of course, have already begun to protest their government leaders’ decision.

In this situation, an environmental crisis has led to a social and economic catastrophe for a working neighborhood that relies on its primary community resource — i.e. its summer beach — for its survival.

The residents of the Rockaways will gladly attest to the integrative nature of the Triple Bottom Line. Hopefully, the municipal leaders of your own town will learn from the current travails of their New York City colleagues.