Risk and Response -- A Business Perspective on Water Security Greg Koch Managing Director, Global Water Stewardship Office of Sustainability, The Coca-Cola Company

Coca-Cola’s Business Profile

We are the world’s largest beverage company

We refresh consumers with more than 500 brands and 3,300 + beverage products

Globally, we are the No. 1 provider of sparkling beverages, juices and juice drinks and ready-to-drink teas and coffees

Consumers in more than 200 (ALL BUT TWO) countries enjoy our beverages at a rate of over 1.8billion servings a day

2 Business Confidential

3 Classified -- Internal Use

Water is Biggest Part of Our Supply Chain and it is Under Growing Stress

• Physical availability – surface or groundwater – and the sustainability of those sources

• Infrastructure existence, pressure, service area, metering

• Pricing – too cheap or too expensive

• Droughts

• Competing use and increased demand from more people and increased GDP

• Climate change

• Regulatory limits

• Social acceptance

Water Risks in Manufacturing Locations

Water Risks in Agricultural Supply Chain

WATER: THE BIGGEST CHALLENGE TO OUR 21ST CENTURY SUSTAINABLE COMMUNITIES GOAL

Classified - Internal Use Only

TODAY NEARLY 1 BILLION PEOPLE HAVE NO SAFE DRINKING WATER

WOMEN SPEND AN AVERAGE OF 3 HOURS A DAY CARRYING WATER

1 KID DIES OF WATER RELATED DISEASE EVERY 19 SECONDS +

Water Sustainability – The Wider Challenge

Loss of Eco-System Services and Biodiversity

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No Water Supply

No Sanitation

Pollution

Diseases

Poverty

Poor Infrastructure

Water Losses

Wastage

Lack of Finance

Water Stress & Drought

Irrigation Evaporation

Over-Abstraction

Poverty Eradication

Economic Development

Trade

Global Water Stress

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EFFECTS

1. 2/3 of world population in severe water stress

2. 1/3 of world land area in severe water stress

3. Significant water quality degradation

4. Precipitation patterns change: more droughts and floods

5. Significant increase in competition for freshwater

6. More aggressive allocation , increased prices, conflict potential

7. Two billion more urban residents by 2030

8. Variable adaptation by public sector

9. Water infrastructure needs require $1 trillion+ between now and 2025

2020: Water Megatrends and Effects

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MEGATRENDS

POPULATION GROWTH

Expected to increase by 1.5 - 8 billion by 2020

CLIMATE CHANGE

0.8 C temperature increase by 2020

GLOBAL DEVELOPMENT

Dramatic increase in number of developed

economies

2020 Water Stress: Rate of Change

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Understanding Risk and Exposure

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Global Risk Assessment and Analytics

2010 System-wide Water Risk Summary in Manufacturing

Our business can only be as healthy as the local communities where we operate; access to clean water is one of the most important barometers of a community’s health.

Muhtar Kent Chairman & CEO The Coca-Cola Company

“

”

Water is: – The main ingredient in all of

our beverages and essential to our manufacturing processes

– A life-sustaining resource for the communities and ecosystems that make any endeavor possible

– A key component of many of our ingredients, including sugar and juices

– Fundamental to our markets (non-export) 11

Why Are We On This Journey?

Water has Emerged as One of Three Priorities for Sustainability and Coca-Cola

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OUR ASPIRATION Growing our business by making a positive difference in the communities we serve

ME (PEOPLE)

WE (COMMUNITIES)

WORLD (ENVIRONMENT)

WELL-BEING

WOMEN

Community Foundations

Human & Workplace Rights

WATER

Packaging

Carbon

Sourcing

Active Healthy Living

Beverage Benefits

Responsible Marketing

© Copyright 2010 The Coca-Cola Company. Confidential

Global Water Stewardship Strategic Framework Enabling Vision 2020

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GROW PROTECT SUSTAIN

© Copyright 2010 The Coca-Cola Company. Confidential

Global Water Stewardship Strategic Framework Enabling Vision 2020

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Value Chain Water Sustainability

Agriculture SC Water

Sustainability

Manufacturing Plant

Performance

Customer & Consumer

Engagement

GROW PROTECT SUSTAIN

Global Sustainable

Procurement Leads

Quality, Safety and

Environment Leads

Office of Sustainability

Leads

© Copyright 2010 The Coca-Cola Company. Confidential

Status of Goals GROW PROTECT SUSTAIN

Reduce • The System met our 2012 water efficiency goal of a 20% improvement versus 2004 • We have set and affirmed with the System a 2020 goal of 25% improvement versus 2010 (2020

WUR 1.7) • All Groups and most BUs have yoy WUR goals (working toward 100%) • Water reuse (Rainmaker) are critical Recycle • Goal is always 100% • ~99% of operations are compliant and we are on track for 100% in 2013 • Montreal, Cameroon, Syria, Angola, Yemen Replenish • We are replenishing 35% of production volume towards 100% by 2020 • Groups and BUs have 2020 goals • Latest data is imminent • Policy has been updated to address large volume projects, water quality to quantity and

wastewater reuse off site Risk Management • Nearly 100% of operations have developed source water protection plans with the focus shifting

to plan implementation • Governance will shift to plan effectiveness and updates

Tools and Capacity Building: Water Efficiency

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With WWF, developed interactive, plant-level water efficiency toolkit,

harvesting best practices from throughout our system

-40.00

-30.00

-20.00

-10.00

0.00

10.00

20.00

30.00

40.00

2002 2003 2004 2005 2006 2007 2008 2009 2010

Water usage ratio

Water usage

Sales Volume

Perc

ent C

hang

e Fr

om 2

002

Wastewater treated in accordance with applicable laws and regulations; where municipal or other external treatment facilities do not exist, or do not fully treat wastewater, our manufacturing operations must construct on-site treatment systems

With 99 percent of operations and over 99% of volume aligned with the standard, we are on track to achieve full compliance with our wastewater treatment requirement in 2013.

TCCC will align our entire global system with stringent wastewater treatment standards which require returning all water that is used in our manufacturing processes to the environment at a level that supports aquatic life by the end of 2010

Reporting Progress: Plant Performance Update

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Tools and Capacity Building: Wastewater Management

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Two world-class resources and training as we work toward 100% compliance on wastewater

1. Agricultural land practice changes

2. Storm water management

3. Land use alterations

4. Hydraulic/hydrologic water body alterations

5. Recaptured leakage from water systems

6. Wastewater treatment

7. Biologic management

8. Water reuse

9. Rainwater harvesting and aquifer recharge

Potential Watershed Restoration Activities

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Water Quantity Impact

Water Quality Impact

Water Quality Benefits

Water Quantity Benefits

Source Water Protection Requirement

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Strategic Intent

1. Protect Manufacturing Capacity • Promote and support sustainability of

water supplies • Secure long term access to sufficient

quantities of sustainable water supply

2. Protect Product Quality and Safety • Understand current and emerging risks to

raw water quality • Ensure adequate monitoring and

treatment of raw water

3. Protect/Enhance Reputation and Brands • Avoid being associated with water stress

conditions (social/political) • Be seen as leader, enabling sustainability

of communities through promoting and supporting water resource sustainability where we operate

1 Form Water Resource Management Team

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Complete Source Vulnerability Assessment (SVA)

3

Prepare Source Water Protection Plan (SWPP)

4 Implement action plans

5 Maintain/update SWPP

Key Steps

Working with bottling partners, BUs are executing implementation plans for 100%

of plants by the end of 2012. Technical/environmental and

public/government affairs engagement is critical to the success of this program.

TCCC System Plant: Groundwater Supply SVA Provided Early Identification of Threat to Plant’s Water Supply and Highly Treasured Natural Spring. Plant Actions to Protect Spring Wins Favor with Local Gov’t and Local Activists

SVA Learnings • Nutrient levels in plant water source below

MCL, but rising

Source Water Protection Actions • Engage municipality and community to

protect aquifer and springshed • Municipality using plant’s groundwater

model to support management decisions • Alleviated local social tensions previously

directed toward plant (anti-bottled water), They were previously placing signs in front of plant

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Supply Reliability Decreased water availability

Local Social Adverse social climate

Water Resource Sustainability Water resources under stress

Human Health & Well-Being

Safe Drinking Water

Food Availability

Sanitation Economics

Ecological Health

Aquatic Ecosystems & Species

Terrestrial/Riparian Ecosystems & Species

TCCC Risk

Specific Activities

Watershed Protection

Water Access & Sanitation

Education & Awareness

Water for Productive Use

From Risk Analysis to Action

Locally relevant projects that support communities and nature, from water access to source water protection implementation to rainwater harvesting

“Replenish” is the manifestation of our community and watershed partnership work, with the aim to offset the water we use in finished products.

Total amount of water used in

Manufacturing

Treated wastewater

Product Volume and amount to

replenish

Replenish: Communities and Watersheds

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To Date, We Have 386 Community Water Programs in 94 Countries Replenishing 35% of Product Volume

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Access to water and sanitation

Education and awareness

Water for productive use

Watershed protection

Includes Support For:

Collaboration is Key to the Success of Our Community Water Programs

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Our partners include:

Business Confidential

• Community Water Sustainability Initiative implemented in partnership between TCCC and UNDP

• Established in 2006, 5 yrs, total $5M, East Europe & CIS

• Expanded in 2011, $2M p.a., Entire Eurasia

• Components to contribute to the achievement of Millennium Development Goals (# 7)

- Improve access to safe drinking water and sanitation

- Improve water governance

- Raise awareness among communities

- Adaptation to climate change

Water and Development Alliance

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Launch November 2005

Investment $30.6 million (Coca-Cola and USAID funds)

Geography Africa, Asia, Middle East and Central and Latin America

Project Types •WASH •Productive Use of Water •Watershed Protection

• TCCC recognized with USAID’s 2007 “Alliance of the Year” Award and 2011 “10th Anniversary Private-Sector Development Partner” Award

• Over 520,000 expected to benefit from improved access to water through 33 projects in 23 countries

• Groundbreaking public-private partnership in the development sector

WADA Project Snapshot: Malawi

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Country: Malawi

Project Name: Community Watershed Support Project

Funding: • $600,000 TCCAF • $600,000 USAID • $196,680 Total LandCare and Coca-Cola

bottler

Project Duration: July 2010 – July 2013

Impact: 100,000 people across 20,000 households

Activities Summary:

WADA is working with Total LandCare Malawi to provide 100,000 people access to safe water and 20,000 access to improved sanitation. Through this partnership, WADA will reach 400 villages and improve watershed management practices through capacity building for water user associations, tree planting, household behavior change and training for more efficient agricultural water use.

Business Confidential

Announced • March 2009 (First RAIN funds deployed April 2010)

Investment • $30 MM • Matched at least 1:1

Primary Objectives

• At least 2 million people with sustainable water access

• Water projects in every African country

Project Types

• Water, Sanitation & Hygiene • Productive Use of Water • Watershed Protection

The Replenish Africa Initiative (RAIN)

• LEADING WATER STEWARDSHIP PROGRAM THAT TRANSFORMS COMMUNITIES • The flagship program of The Coca-Cola Africa Foundation • On track to reach at least 2 million people with safe water by 2015 • Exceeding co-finance target of 1:1 • Establishing partnerships with best-in-class stakeholders

RAIN Project Snapshot: RAIN Water for Schools

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Country: South Africa

Project Name: RAIN Water for Schools

Funding: • $2,125,000 Coca-Cola System • $2,000,000 South African Department of

Basic Education • $200,000 H20 for Life

Project Duration: October 2009 – October 2012

Impact: 60,000 Students

Activities Summary:

RAIN is providing WASH interventions in 100 South African schools in partnership with the South Africa Department of Basic Education (DBE). RAIN Is also developing a customized O&M plan as part of DBE’s overall sustainability strategy while building capacity for provincial education departments and school governing bodies.

Business Confidential

Water Policy Engagement

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Critical to SWPP Execution • Water policy issues are at the heart of many challenges

identified in SVAs • The System must build capacity and engage/advocate • We issued a Policy Engagement guidance document as well as

a Stakeholder Engagement guide

Best addressed through Collective Action • Work with industry groups, suppliers, customers, other industry • We have supported the Water Resources Group since 2008;

housed in the IFC/World Bank Group • Country-level analyses, multi-stakeholder convening, and policy

transformation approach • Active with BUs in:

• Mexico • Jordan • China • Mongolia • South Africa • India • Peru, Tanzania and Bangladesh are likely next candidates