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DEAD IN THE WATER Ethical ownership and water management in the Norwegian Government Pension Fund Global 1 Coverphoto: Photography of ‘Thirsty’ poster by Sharad Haksar, Chennai, 2004. Report written and published by FIVAS – The Association of International Water Studies, 2014/2015. With Support from Norad. A special thanks to India Resource Center, http://www.indiaresource.org/, and Amit Srivastava for the help with this report and for longstanding advocacy and activism. Kolstadgata 1, N-0652 Oslo, Norway. [email protected] www.fivas.org 2 3 Content 5 Introduction 6 The global water crisis 8 The Government Pension Fund Global 11 The Fund and responsible water management 13 Water in the Fund’s Ethical guidelines 14 Case studies - Corporate depletion of water resources Coca-Cola in India 16 Mehdiganj, Uttar Pradesh 19 Plachimada, Kerala 22 Kala Dera, Rajasthan 24 Nestlé 25 Discussion – Active and responsible ownership? 29 Leveraging the Ethical guidelines on unsustainable water management 32 Recommendations 33 The Coca-Cola Company, Nestlé 34 References 4 Introduction The world is facing a serious water crisis with However, as far as we can see, there have been few, increasing water scarcity and overuse globally. or none, external and critical analyses of the strategy The demand for water resources is growing rap- on water management and the ethical guidelines in idly mainly due to industrial use1, and beverage relation to the practice of water-intensive companies companies are one of the major industrial con- included in the investment portfolio. The main sumers2. Giant corporations such as Coca-Cola objective of this report is therefore to critically and Nestlé are currently expanding its production investigate and analyse the Fund’s guidelines and and sale of soft drinks and bottled water, especially practises on water management. in the Asian market due to a rapidly growing In order to do so the report will first address middle class3. The commercial over-extraction and explore the global water crisis, before mapping and depletion of local water resources by these out the Fund’s governance structure and strategy companies have led to considerable grievances on responsible investment. This is followed by a and conflicts with affected communities fueled set of case studies representing companies where by the hardship caused by water shortage4. The the Fund holds an ownership interest. These are poor are the first to suffer under water scarcity. A primarily concerned with three different Coca- lack of safe and sufficient water affects both their Cola bottling operations and plants in India and ability to secure a livelihood and their health. This have been selected due to their significant problems raises important questions regarding unethical with commercial over-extraction of water. The cases corporate water management, severe environ- display similar social and environmental problems, mental damage and the human right to water. longstanding unethical practises and unresolved The Norwegian Government Pension Fund social conflicts - across different locations in 1 UNDP 2006, UN Water Global is the largest sovereign wealth fund in the India. In addition, the report will briefly touch 2014 world and has vast sums invested in The Coca- upon Nestlé’s operations in Pakistan, which have Cola Company and Nestlé. The Fund strives encountered similar criticism to that of Coca- 2 Hall & Lobina 2012 to be a responsible investor and regards sound Cola in India. Both Coca-Cola and Nestlé’ are management of water resources as a core priority. part of the group of the so-called “big 10” - the 3 Rosemann 2005, Rodwan Sustainable water management is one of the Fund 10 most powerful food and beverage companies 2011 management’s six strategic focus areas and the in the world, which together have a revenue of Expectation document on water management more than 1.1 billion USD a day. The industry 4 e.g. Hills & Welford sets out their priority to all investee companies. as a whole represents 10 percent of the world’s 2005, Hall & Lobina 2012, The Fund also has ethical guidelines covering economy5. Finally, the last section draws out and Karnani 2012 human rights and serious environmental harm. discusses the main findings from the different case The Fund was an early mover in the field of ethical studies on corporate water management practices 5 Oxfam 2013 investments and has as such been a leading star. against the Fund’s standards on water manage- ment and ethics. 5 6 WHO 2014 7 Barlow 2013 7A: Barlow 2013, pp 21-22 8 UNDP 2006 9 Gleick 1996 10 UNDP 2006, p 13 The global water crisis 11 Hall & Lobina 2012 12 Lambooy 2011, Norge The World Health Organisation estimated in 2014 ately much of their total disposable household Bank 2009 that 784 million people do not have access to safe income on water. Because water is a basic need drinking water and that nearly half of them live and impossible to go without, paying for water 13 FAO 2014 in Sub-Saharan Africa6. On a positive note, 1.3 may go at the expense of other needs and leave billion people have gained access to improved little money for other important necessities such 14 Karnani 2012 drinking water since 1990. Nevertheless, these as food, health services, medicines, etc. In the figures are widely disputed due to the way “access” Human Development Report 2006 UNDP states 15 Upadhyaya 2013 to drinking water is defined and measured. It that “Clean water and sanitation are among the neglects important factors such as affordability most powerful drivers for human development. and the quality of water, which often results in They extend opportunity, enhance dignity and insufficient access to water for poor people. One help create a virtuous cycle of improving health important measure employed is the number of and rising wealth.”10 pipes installed in a country. However, as Barlow The largest corporate water users are beverage points out: “Just because there is a pipe does and food companies, such as Coca-Cola, Nestle, not mean clean water is coming out of it, and if PepsiCo, Unilever and beer companies. Especially there is, it may be far from where people actually the production of soft drinks and beer require a live. Further, if tariffs on the water are too high lot of water.11 The fast-expanding consumption of, and cannot be paid, new pipes are immaterial”7. and market for, bottled water also contribute to Thus, the water source should be located within the increased extraction of water in several places7. a convenient distance from the household – in The overuse of water for commercial production extent no more than 1 kilometre. The amount of water received, regardless of the ability to pay, The fast-expanding consumption of, and is also crucial. The minimum amount of water required to meet basic human needs is contested. market for, bottled water also contribute The United Nations’ Deveopment Programme, UNDP, consider 20 liters per person the amount to the increased extraction of water in necessary to meet basic needs8. While 20 litres may be the minimum for decent living it is several places. The overuse of water for widely stated that higher volumes are required for daily household needs, Peter Gleick presented commercial production of beverages has a convincing argument for 50 litres as a more appropriate volume to be able to have enough lead to insufficient access drinking water for survival, water for sanitation services, human hygiene and household needs9. of beverages has lead to insufficient access to Access to water is unequal within different water for poor people, women, lower castes and regions and countries. Those without sufficient certain ethnical groups in different rural areas in access to water are normally poor and often live India and Pakistan, an issue we will return to in in rural areas. Progress and improvement towards the cases. This is because the local communities greater access is mainly benefitting wealth- are left with little access as large volumes of water ier people and leads to increased inequalities6. are appropriated, sold and allocated to wealthier Moreover, women and girls often spend several people through the production of beverages. hours a day fetching water. Hence the girls miss Less than 1 % of the world’s water is accessible the chance to go to school. 3.6 million people die freshwater12, and the groundwater supplies are every year from water-related diseases and 1.5 decreasing. 20 % of the aquifers are over- exploited millions of these are children7. These diseases kill and some are in critical conditions. The grow- more people worldwide than all wars and con- ing demand for water globally will reinforce flicts in the world. Many also suffer from chronic the current pressure on limited natural water diarrhoea. Poor people often use disproportion- resources and ecosystems (See textbox and map). 6 The biggest challenges will be in countries In Asia, industrial water use is predicted to experiencing rapid economic growth, as this increase by 65 % between 2000 and 2030. The case normally requires increased water use. In total, studies in this report are mainly from India. Here 40 % of the global population is estimated to 53 % of the population, approximately 660 million live in areas with severe water stress in 2050. The people, live in water scarce areas14. The availability main reason for increased water use is the growing of freshwater resources is rapidly declining mainly demand of industry and manufacturing which due to population growth and the changing life- is set to become the largest user of water, while style associated with improved material standard agriculture will have to feed and create livelihoods of living for some groups15. In India, farmers use for 2.7 billion more people (UNDP 2006, UN as much as 80 % of the water resources.

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