India: Questions & Answers

How do you balance the local community’s need for water with your business needs for water?

We recognize that water is a critical human and ecological resource under great stress around the world and, as a beverage company that uses water as our most essential ingredient, responsible water management is a priority. Through local and global partnerships, we are learning how to work together to help local communities preserve access to groundwater.

We all share a common need for healthy water systems and, through effective partnerships, have discovered some exciting ways of working together so that the communities where we operate can have access to this infinitely renewable source. Doing so not only benefits the environment, but also makes good business sense.

It is publicly acknowledged that the developing world is under the biggest threat from water scarcity. Is this prompting you to re-think your plant operations in developing areas?

Our global water risk analysis has been able to identify on a very local level the challenges faced in our plants around the world. This global water risk analysis has been able to identify the challenges faced in our plants and has provided us with insight into the complexities of this issue in the communities where we operate. It has also helped enable us to design local solutions, empowering local people and making the best use of local resources.

What are you doing to ensure that The Coca-Cola Company has adequate water supplies to operate?

We have dedicated teams in our plants focusing on water conservation; we are employing new technologies; and we are improving water use and reuse practices in all our manufacturing operations.

We are also collaborating closely with our system partners, suppliers and others to identify and address the water challenges we face, and are reviewing water-related business challenges in more than 1,000 operations across our system.

Beyond that, we are partnering with stakeholders outside our business who share our concern about global water supplies.

How do you respond to allegations that Coke is stealing water from poor communities in India?

We do not agree with those allegations. It simply makes no sense for us to invest in building plants and training workers and then drain the community of the most important resource that we need to produce our products. We share an interest in water stewardship with our consumers, our share owners and the communities where we do business.

In India we're partnering with local governments, NGOs, schools, and communities to establish local rainwater harvesting facilities. We have funded and launched rainwater harvesting projects in eight Indian communities where we operate and more are planned.

Over the last two years, we've installed 300 rainwater harvesting structures spread across 17 states, including locations at schools and farms; the collected water is used for plant functions, as well as for recharging aquifers. We plan to have 50 more rainwater harvesting systems by the end of 2007. Today, a substantial amount of the groundwater we use in our operations is returned to groundwater systems, thereby helping to replenish groundwater resources.

Since these charges first surfaced, what has Coke done to change its practices in India?

We recognize that our path to sustainable environmental and water management in India is just beginning. We must continuously improve our practices, address challenges facing us, and build trust with our partners and other stakeholders. We have made progress and are committed to continuing that work.

Groundwater:
The Coca-Cola Company has continued to reduce our water use ratios in India. Between 1999 and 2005, we reduced our water use ratio by 34 percent. Through rainwater harvesting, we are returning a substantial portion of the water we use to the aquifers.

Biosolids:
Our Environment & Water Resources Department has reinforced standards with our plant managers in India in connection with the generation, composition and management of biosolids. Since 2003 we no longer distribute biosolids to any area farmers for agricultural use. We are also furthering our work with industry associations and the Indian government to encourage the development of additional solid waste disposal sites and the formation of clear government policies regarding disposal.

Pesticides:
It is a well-known fact that pesticides are widely used in agriculture in India, and if misused have the potential to contaminate water sources and agricultural products. However, we constantly monitor our ingredients and products for quality control and continue to strengthen our processes and procedures to ensure that involuntary contamination by pesticide residues is reduced to a level well below the safety limits.

Water used in our products is passed through a multi-barrier water treatment system, which includes an activated granular carbon filtration and purification process designed to ensure every drop is safe for use in our beverages. We test for traces of pesticide residues in water to the level of parts per billion, which is equivalent to one drop in a billion drops. Other ingredients used in our soft drinks are safe and meet applicable regulations.

While we still have much to do to demonstrate our commitment to environmental stewardship in India, our progress has already received recognition. For four consecutive years, Coca-Cola plants in India have won the prestigious Golden Peacock Environmental Management Award for environmental practices from the Institute of Directors, which grants the award in association with the World Environmental Foundation. Coca-Cola India also has received recognition from the Indian Red Cross for its environmental programs. In late 2005, the Confederation of Indian Industries (CII) recognized the Hindustan Coca-Cola Kaladera plant as a “Water Efficient Unit” across industries at the National Awards for Excellence in Water Management. The Kaladera plant also won the “Innovative Project Award” for its contribution towards reduction in specific water consumption.

Why do you put plants in water-stressed areas?

Prior to locating a plant, we conduct an environmental review to ensure adequate water supply and other criteria. Of course, weather patterns can change and an area that previously had sufficient water can face unexpected drought conditions. In Kerala, for example, until 2005, the normal monsoon rains had not fallen in many years. When an area suffers from severe water shortages, we modify our operations accordingly.

What steps have you taken to reduce water usage at your plants?

Through our comprehensive global water risk assessment, we have been able to identify all the areas of our operations that use water. We continue to work to find efficiencies in all areas.

Water is the main ingredient in our beverages and is also used in production for such purposes as washing and rinsing packaging, cleaning mixing tanks and piping, steam production and cooling. There are also non-manufacturing uses, such as dining and restroom facilities, truck washes and landscape irrigation.

How much water is needed to produce a bottle of your beverage product?

Water efficiency is our first priority and we have been aggressive in working across our bottling system to set water efficiency goals and to make improvements. We've made good progress. In 2004 alone, we worked with our bottlers to improve water use efficiency system-wide by more than 6 percent (as referenced in the 2004 Citizenship Report), which translates to a 2.7 L/L water use ratio.

Is Coca-Cola dumping toxic waste into the environment in India?

No. The Company requires that the generation, composition and management of biosolids (a material composed of both organic and inorganic substances that results from waste water treatment processes) is to be stringently monitored by managers at Coca-Cola bottling plants, and biosolids are to be routinely tested to determine appropriate disposal options and to meet internal and local requirements. Additionally, Company standards require testing of land application areas prior to and after the distribution of biosolids to ensure no adverse impact on the environment. The Coca-Cola Company Environment & Water Resources Department has reinforced these standards with our plant managers in India and around the world.

In addition, we continue to work with our industry associations and the Indian government to encourage the development of additional solid waste disposal sites and the formation of clear government policies regarding disposal.

What is the status of your Kerala plant?

The plant has been closed since March 2004 due to ongoing litigation, and we have no immediate plans to reopen it. However, we have been distributing drinking water to the local community since July 2005.

Are you open to an environmental assessment of your facilities in India?

Yes. The Energy and Resource Institute (TERI), an India-based nonprofit research organization, has begun an assessment of our Company’s current water resources management practices in India. In addition, the evaluation will determine if any pesticides are present in the intake water and review the treatment processes designed to ensure the quality of the water used in the final products. TERI is working with an independent steering committee that is overseeing the study and providing strategic direction to the assessment process.

What is your company’s overall water strategy?

We look at water across the entire value chain – from water use efficiency in operations to watershed protection and community access.

Our strategy starts at home with efficiency in our plants. Ensuring that we are efficient in our use of water is a priority and we have done a lot of work to reduce our water usage ratios over the years. We've made good progress. In 2004 alone, we worked with our bottlers to improve water use efficiency system-wide by more than 6 percent, bringing our water use ratio down to 2.7L/L.

We’re looking at 2006 and beyond, and we’re setting even more aggressive water efficiency goals.

Another aspect of our strategy relates to protecting water sources in areas we operate and ensuring community access to good, clean water. As a system, we have a comprehensive risk assessment initiative in place to identify water challenges at a local level. The results of the assessment are being used to guide our partnerships with local communities as we work to find local solutions to these challenges to benefit both the communities and our business.

A recent report by the Center for Science and Environment reported that there are unsafe levels of pesticides in your products. What is your response to this report?

We have analyzed the water, sweeteners, and other ingredients used to make our products, and also finished products, including Coca-Cola, Thums Up, Sprite, Fanta and Limca, to confirm their safety. We are completely confident in the safety of our soft drinks in India because they are produced to the same level of purity, regarding pesticides, as the EU criteria for bottled water.

In addition, Tests by the Central Science Laboratory (CSL) on soft drinks (finished products) made by The Coca-Cola Company in India detected no residues of the four pesticides allegedly found in the products by the Centre for Science and Environment (CSE). CSL’s tests reported less than 0.1 parts per billion of each of these four pesticides.

Finally, the Ministry of Health in New Delhi conducted tests on soft drinks and found that none exceeded the permissible pesticide limit.

Why are your results different than those in the CSE report?

There are three reasons for differences in testing results:

• Accreditation of the lab -- Although the CSE lab is ISO9000 certified, which means it has quality systems, it doesn’t have an ISO/IEC 17025 accreditation to ensure that it has the capability to consistently generate reproducible results.

• The equipment that is used -- The CSE lab uses equipment that is not capable of separating the necessary compounds and can thus generate difficulties in interpretation of results.

• The testing methodology that is used -- There are issues with the sample preparation and extraction of potential contaminants out of the multi-component matrix of a soft drink. This will be prone to generating false results and incorrect interpretations.

The methods used to test our finished products have been developed by the Company and Central Science Laboratory (CSL), which is an independent laboratory used by the UK government. Although the validation of these methods has not been completed, they represent the state of the art in terms of procedure and technology. CSL runs an international program to test the proficiency of laboratories in analysis, including pesticides.

What percentage of your volume in India is produced by Company-owned bottlers and what percentage is by independent bottlers?

59% of our total sales volume in India is produced by Company-owned bottlers. 32% of sales volume is generated by the independent bottlers there.