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.

Play-Doh Returns

Well, it certainly isn’t the type of manufacturing activity that will ever employ thousands of American factory workers. And yet it is expected to create twenty new jobs for blue collar workers in the United States.

What is this activity? Hasbro, the Rhode Island based toy company, has decided to return Play-Doh production to America. The firm recently announced that it will contract with a foreign owned Massachusetts based facility to fabricate the goopy toy.

That’s not to say that Hasbro is actually shifting any of its existing Play-Doh supply stream away from its overseas vendors. Instead, it plans to utilize its new American made goods to supplement its Chinese and Turkish made inventories.

Should Americans be proud, or be embarrassed, that their nation is now competitively positioned to compete with China and Turkey for Hasbro’s Play-Doh manufacturing business? On the one hand, some may believe that any growth in production work will inevitably boost the national economy.

But on the other hand, others may believe that this business is precisely the type of simple-technology and limited-employee activity that more comfortably fits an emerging economy than an advanced economy. Indeed, at a time when China is striving to shift its economy towards the production of more advanced technological products, the return of Play-Doh to the United States may represent a portent of a backsliding nation.