Through innovation and collaboration, Coca-Cola has been working to reduce emissions across its manufacturing as well as emissions associated with growing ingredients, producing packaging, and distributing and refrigerating products. Now, as we begin to anticipate the potential impacts that climate change may have on the world, it is equally important for the company to take a close look at what this might mean for its business.
From agricultural ingredients, like citrus and tea, to hyper-local distribution systems, The Coca-Cola Company supply chain is one of the largest and most complex in the world. Coca-Cola products are sold in more than 200 countries and territories, and each of those markets face unique exposure and vulnerability to the impacts of climate change. In 2017, the company partnered with BSR to develop a more holistic picture of its value chain climate risks and identify opportunities to build resilience in its operations, supply chain and communities where it does business.
What is Climate Resilience?
The Oxford English Dictionary defines “resilience” as “the capacity to recover quickly from difficulties; toughness.” In the context of climate change, resilience is the capacity of a system (such as a bottling plant, distribution network or supply chain) or community to rebound following a shock such as a natural disaster. For example, insufficient infrastructure can reduce a community’s capacity to rebound following a disruption like an extreme weather event, as can poverty or gender inequality.
Understanding Climate Resilience at Coca-Cola
The Coca-Cola Company has consistently demonstrated its commitment to sustainability through its goals and programs across a wide range of topics, including women’s empowerment, climate, packaging, human rights, sustainable agriculture and water stewardship. The company set a goal to reduce the carbon footprint of "the drink in your hand” by 25% by 2020 and to return the equivalent amount of water used in finished beverages to communities. In addition to these targets, many of the company’s efforts in these areas are already building community resiliency, such as 5by20TM, an initiative that seeks to economically empower 5 million women across the company’s value chain by 2020.
“With 132 years of history, we have a long track record of building a resilient business. Given our investments to date, understanding climate resilience was a natural next step in our business and sustainability evolution. It also offers significant business benefits. A more resilient Coca-Cola will be better able to anticipate, avoid, accommodate and recover from climate risks,” said Ben Jordan, Senior Director, Environmental Policy at Coca-Cola.
To begin, we identified seven markets—Argentina, Brazil, China, India, Kenya, Mexico and the United States—and two commodities—coffee and tea—to serve as initial proxies for the full Coca-Cola value chain. For each of these markets and commodities, we explored its exposure to major climate hazards in the context of underlying vulnerabilities, such as rapid urbanization, at-risk populations, food and economic insecurity and insufficient infrastructure.
Using this analysis, a benchmark of climate resilience activities in the food and beverage sector, the company’s existing risk mitigation strategy and insights from internal company interviews, we developed a framework for identifying and prioritizing climate-related risks. We then mapped Coca-Cola’s existing programs and initiatives to high-priority risks and outlined an approach for taking this work further across the company’s major business units.
The climate resilience framework aims to integrate resilience into Coca-Cola’s existing strategy, risk management and sustainability systems. The framework is designed to connect and amplify The Coca-Cola Company’s water stewardship, women’s empowerment, climate, community development and business ambitions. It provides consistency while remaining flexible enough to incorporate the unique context of each business unit and geography.
“Over time, we hope to see the framework contribute to creating a more resilient company that is better able to confidently source responsibly cultivated ingredients, withstand or promptly recover from climate-related impacts, identify and reduce climate risks, and—most importantly—contribute to building value chain and community resilience where Coca-Cola is produced and sold,” says Amrah Johnson, Director, Enterprise Risk.
“We are excited that Coca-Cola is seeking to leverage this in their sustainability strategy and efforts moving forward, and we also hope that these efforts will inspire other companies, as well as their partners in the public sector and civil society, to take a more holistic look at climate risk in their value chains and communities and ask where they can contribute to building resilience.”