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.