Coke, Nike Call Climate Change ‘Commercial Threat’ due to impact on water supply

Coca-Cola and Nike are among the global companies that have acknowledged that climate change is a major threat to commerce, due to its impact of water supplies, and have adapted their business practices as a result.

A New York Times report says that Coca-Cola has always been more focused on its economic bottom line than on global warming, but when the company lost a lucrative operating license in India because of a serious water shortage there in 2004, things began to change.

Today, after a decade of increasing damage to Coke’s balance sheet as global droughts dried up the water needed to produce its soda, the company has embraced the idea of climate change as an economically disruptive force.

“Increased droughts, more unpredictable variability, 100-year floods every two years,” said Jeffrey Seabright, Coke’s vice president for environment and water resources, listing the problems that he said were also disrupting the company’s supply of sugar cane and sugar beets, as well as citrus for its fruit juices. “When we look at our most essential ingredients, we see those events as threats.”

The company is now part of an increasing number of companies that see climate change as a force that contributes to lower gross domestic product, higher food and commodity costs and a problem that can also disrupt supply chains and lead to financial instability.

At the World Economic Forum in Davos, Switzerland, all of Friday was set aside to talk about climate change and its commercial implications.

Nike is speaking at the conference about the threat flooding — a result of climate change — to its operations and supply chain based in low-lying areas. The company last year had to shut four factories in Thailand due to flooding and is growing more concerned about the threat posed to cotton harvests and, as a result, cotton prices, the paper reports.

Both Nike and Coke have policies in place to mitigate the effects on their end product. Coke has implemented water conservation measures and Nike has increased the amount of synthetic materials it uses. The apparel company has also opened a waterless dye factory.

Air France, BMW, Hewlett-Packard and Microsoft are among 79 companies leading in climate change performance, according to an evaluation and benchmarking tool created for CDP supply chain members and suppliers and launched this month.

The Supplier Climate Performance Leadership Index was compiled by environmental consulting and software firm FirstCarbon Solutions on behalf of CDP. The index is based on supply chain program data from 2,868 suppliers that are disclosing climate change data at the request of CDP’s 64 supply chain members.