Sustainability and bottled water: can they coexist?

Can a bottled water company go green? SmartPlanet talks recycling, water reduction and pricing with Nestle Waters.

Nestle Waters, the bottled water arm of the global food and beverage giant, has been making strides to make an inherently water- and energy-intensive process -- moving bottles of liquid around the world -- less wasteful.

It's a major undertaking, as the company counts brands Deer Park, Poland Spring, Perrier and San Pellegrino in its North American distribution portfolio.

I spoke with Kevin Mathews, director of health and environmental affairs for North America, and Michael Washburn, director of sustainability for North America, about the company's recent efforts to craft water use ratio targets and develop more comprehensive water "footprinting."

SP: Water reduction efforts for a bottled water company. Isn't it ironic?

KM: We've always had a focus on water reduction, for a number of reasons. It comes down to the bottom line: when you move water, you use energy. We see a direct relationship between reducing water and reducing the bottom line.

In the past 10 years we've seen significant reductions in our factories. We have several initiatives dedicated to reduce water in specific areas. Managers are required to come up with water reduction projects as part of their responsibilities.

It hasn't been easy. Reduction has come in leaps and bounds. Back in 2005, we went to a new brand: Nestle Pure Life. It's a purified water. We can take any municipal water around the United States and essentially clean it up, remove minerals and put a few back in to add a specific taste. Creating purified water requires reverse osmosis, which has a waste factor to it. One hundred gallons of water on the front side leaves 80 [gallons] on the back side, with 20 gallons of waste going down the drain.

We are going to have to look for more energetic ways to reduce water in our operation. The days of getting easy water reductions are over. We're going to have to turn over every stone to get those reductions.

SP: Some have suggested that water is underpriced, given its relative scarcity. Does a cost on water spell trouble for your business?

KM: Our chairman, Peter Brabeck[-Letmathe], is a huge advocate for adequate water pricing to take care of a lot of these problems around the globe. That's something that one company, one country can't do a lot about. Water is shared between countries, and there are difficulties in pricing something that flows over boundaries. As a company, you do what you need to do, focus on operations and sustainability. You have to continue to reduce your usage.

MW: We must remember that water does have a price, and we pay it.

KM: We not only have a retail business but home and office delivery. We have tanker trucks moving 8,000 gallons of water 30 to 40 miles away to our factories. In some cases we have pipelines, in other cases we have large tractor trailers driving that water. We have 125 spring sources around the country, often close to our factory locations.

Our business model is one where we try to go direct to the customer.

SP: Co-location: how important is it to achieving efficiencies in moving around water?

KM: There's no doubt that co-locating is what we absolutely try to do. The least amount of distance we have from point A to B and then to the consumer C is best. That's how you keep pricing down for the consumer.

It's becoming increasingly more difficult to co-locate. It's not easy today to find a high-quality spring. These are very special places. Where they do have the quality and the quantity we're looking for, typically somebody owns it and you've got to negotiate the deal. At the same time, we're looking at logistics -- you could have the best quality spring, but if it's nowhere near where people are located, that's difficult.

But the closer you get to metropolitan areas, the less chance you have of finding a pristine spring.

SP: Your company has done a lot in the areas of recycling and light-weighting bottles.

KM: If you look in the early '90s, the bottled water market was a hodgepodge. You had polycarbonate, glass, PET [Polyethylene terephthalate --Ed.]. Our CEO at the time said we're going to hitch our horses to the PET wagon and to single serve. At the time, the PET bottle was about 21 grams. That's a lot of material. What we became good at very shortly was finding very efficient ways to get into making those bottles. We bought blow molders and began blow-molding them at our factories. We could do it at scale and more efficiently than buying bottles on the open market.

We went from a 21 gram bottle weight to a 17 gram weight. We continued to shave plastic out of the bottle itself. Over the past four years we've been able to take it rom 12 grams down to 9.3. We've been able to save energy in transport on the front side -- blow-molding 98 percent of them from pellets in our factories, instead of [buying bottles from a third-party vendor and] trucking around air.

Any further reduction is going to be extremely difficult from an engineering perspective. It's got to be able to make it through the supply chain.

SP: The beverage industry takes a lot of flack for all the single-serve bottles it sends out into the world. But recycling is important, and getting raw materials back is materials savings for your company. How do you get 'em back?

MW: Across the U.S., about 27 percent of PET bottles are re-captured. That's an important number because we're 30 years into this. There are a few reasons why those rates aren't higher: there are varying degrees of state-level policy, then you've got variation among municipalities and funding. In almost all cases, where it falls down is public space recycling: parks, transit facilities, places where people dispose of single-serve bottles.

My family is religious about it, but for a lot of others, people don't see the value in that material. It's important for us to get them back, for two reasons: one, it doesn't do our business good reputationally, for people to think that we make these bottles to waste; second, there's value in that material -- we've paid for it once, and to throw it away is absolutely unacceptable. PET, if processed correctly, can be recycled back into high-quality food-grade PET. We'd like to see across the country the kind of recycling infrastructure that increases those rates to 60 percent by 2018.

SP: Do you get in there and build the infrastructure if municipalities don't have the business case?

MW: When a municipality has a solid waste system, they have to bear the cost of moving it around and disposing of it. Landfill covers are a very expensive process. There is a local benefit to diverting materials from landfills. When we throw that bottle away, we're throwing away that value, we're costing communities, and we're costing the jobs to convert it back. All of that plus the environment.

Secondly, some states have bottle deposits, like New York. It's great for the consumer if they bring the bottle back -- if not, it's great for the state treasury. Given the budget situation, the dollars that have been left behind to redeem accounts have been claimed by governments to pay for non-recycling needs. Deposits are good -- you get sometimes 80 percent reduction. But the finances are a little dark.

The industry pact is an interesting way to think about extended producer responsibility. Sometimes it's called "product stewardship" or "sustainable packaging." It's a process in which the costs of the packaging are internalized in the product and made transparent to the consumer: you buy a pack, and see an eco-fee on your receipt. A penny a bottle, perhaps. Produce baskets. Egg cartons. It ends up being a lot of money. What government can do is regulate the use of those dollars to only be made available to enhance state recycling projects, not going into state budgets but into a trust fund managed by a non-profit.

It's difficult to develop a recycling system that just develops PET bottles. It's aluminum, glass, plastics -- it's holistic. We feel like it's where the world is going. You see the beginning of it, primarily around hazardous materials -- batteries, paints.

Long-term in this country, it would collect more material, it would be self-funding, and create enough material flow -- revenue -- to stimulate domestic investment in recycling.

SP: And the hurdles in doing so?

MW: Bottle bills have been a success, but what they don't understand is the dynamic where that could be inhibiting broader recoiling programs. So public awareness of the complexity of how these systems work.

Another challenges are prices that have been kept artificially low: glass consumers already sort their clean glass, versus what they would pay at a modern sorting facility.

SP: How do these efforts fit into your own corporate responsibility initiatives?

KM: One is water, two is sustainability, three is community. It's been with us since the beginning. When we're talking about a corporate citizenship summary and report, that's less about showing something externally than it is create a living roadmap for us, refocusing us and keeping our eyes on the ball.

Anything that you do has to enable you to continue growing the business. You wouldn't want to do something environmentally that chips away at your ability to lead. If we went to 100 percent green power tomorrow, that wouldn't be a good business decision for us. But moving in that direction is as our abilities allow us to. Some companies are probably a lot more profitable and can put solar arrays on every building they have.

Every business has got to look at it from the perspective of what makes sense for the business and industry and what core competencies are. We've put a lot of stock into lifecycle analysis for where we do our investments. What gives us the biggest return from a lifecycle perspective across the value chain? It's been lightweighting. The more we can reduce the material for our product, the less everything we have to deal with. Ultimately, it's better for the consumer.

SP: If lightweighting bottles has given you the biggest return, now what?

KM: You look at the old adage: reduce, reuse, recycle. We can't reduce so much anymore, but we're looking at the multi-serve bottles, too. Then reuse -- if we can get a few trips out of a bottle, great. That's why we have home and office delivery. The third is recycle, and that's where we're hitching our horses to today. You can reduce your carbon footprint 25 percent just by recycling a bottle.

Now it's changing behavior -- recycling is good and good for the environment.

SP: Sustainability makes sense for corporations. How do you make sense for consumers? I'm picturing the Keep America Beautiful "Crying Indian" ad from the 1970s.

KM: That ad really struck a note and recycling rates shot up. It was probably one of the most effective ones ever made. Is this something where you get large companies banding together to put their heads together and figure this out? That's what we're trying to do. We do believe it will take something big.

They did a study in Cleveland where they made curbside recycling available and still only got 50 percent. Why? Instead of taking a blue box, then had a bin. The recycling rate doubled, simply because they had a bigger container. Once it reaches its maximum, they start throwing it in the trash. Where do I get another blue box? They get angry. Do I get charged? In some communities, you have to pay a subscription for it.

It's going to Washington and meeting with legislators and educating them that you really have to go beyond throwing a tax on a bottle to get them to recycle it. Because everything is getting recycled. When you put a tax on that, you're putting a premium on that bottle and lowering everything the value of everything else in that blue box. The recycling guy gets a cut when he comes down the street, but if you're pulling out the highest value product, he's losing revenues. Operators are telling cities that they're going out of business because they don't get the value of materials in the recycling stream anymore.

It's our product, so we've got to take direct involvement in it.

This post was originally published on Smartplanet.com