California is, in its own words, "facing one of the most severe droughts on record" and everyone in the Golden State is being asked to cut their water use. Food and beverage companies are under scrutiny, not least Nestle and its extensive local bottled water operations.
While the food giant is looking to take action, the situation has served to bring a serious issue facing the industry to wider attention – and that may spark more companies into action in an area where environmental advocates say its record is mixed.
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This week, Nestle sought to show the importance it is placing on trying to get its water use in California down with an announcement its milk factory in Modesto would be "transformed" to "zero water".
The site will not use any local freshwater resources for its operations, Nestle said. The project will be completed by the end of next year.
Other moves across Nestle's operations in California are in train, including its under-fire bottled water operations, where it plans to cut 8% of the water they use a year.
"Our water bottling operations in California have come under increased scrutiny in recent weeks, Nestle's head of operations,José Lopez, acknowledged. "Technology we have already deployed successfully elsewhere in the world to help address the challenges of water scarcity will improve our water use efficiency, relieving pressure on California’s water resources."
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By GlobalDataThe criticism of Nestle continues, however. On a US radio station yesterday (14 May), Tim Brown, the head of Nestle's business in North America, said the company would continue to bottle water in California and admitted: "In fact, if I could increase it, I would. "If I stop bottling water tomorrow, people would buy another brand of bottled water. It’s driven by consumer demand, it’s driven by an on-the-go society that needs to hydrate."
It is a sensitive issue for Californians but the situation in the state has underlined to the wider population the impact the food and beverage industry has on the use of water. The risk to Nestle's corporate reputation in California are obvious. And, around the world, there can appear an obvious jar between a corporation's use of water and the lack of available drinking water among some of the world's poorest populations (although businesses would argue – with some merit – that their production of food is helping communities).
However, a recent report from US sustainability thinktank Ceres claims the use of "limited global water resources" are hitting companies' profits – and only some in the industry are acting.
What Ceres calls "water risks" are, it says, disrupting operations, limiting growth and increasing input costs.
"The twin challenges of global water scarcity and pollution are contributing to a water availability emergency that threatens the profitability of food companies and long-term food and water security," said Brooke Barton, senior water programme director at Ceres.
However, she added: "The good news is that more food companies are beginning to respond to these risks, but they must deepen and broaden their efforts, especially in regard to agricultural supply chains."
Unilever and Smithfield Foods and General Mills were among the companies praised for their efforts in areas such as the manufacturing supply chain and support for farmers to grow ingredients more sustainably. Incidentally, Nestle was also recognised for its move to report goals to reduce wastewater discharges and improve water quality beyond compliance requirements.
?"As a global food company, we recognise that conserving water resources is imperative to our business: our consumers, customers, farmers and operations," said Ellen Silva, senior manager of applied sustainability at General Mills. "Water is a complex issue that spans communities, agriculture and industries, so in order to achieve progress, collaboration will be critical. We hope that this report can be a call to action for other companies to assess their water risk as well, and to join in that collaboration."
As in other areas such as sourcing, companies will need to put to one side their day-to-day competitive natures to work together on water.
With the food industry the most water-intensive industry on the planet, this is a huge issue to tackle and one that cannot be approached alone.
However, it is clear water is not just an issue of ethics. It is starting to be a drain on a company's reputation and – what more often focuses the mind quickly – the bottom line.
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