Clive Saffery, Swire Beverages China CEO Reflects on The Challenges Ahead

By Clive Saffery 1 November, 2010

China Water Risk talks to Clive Saffrey about Swire’s water philosophy & steps to mitigate water risk in China.

Swire Beverages, a subsidiary of Swire Pacific Ltd., has the right to manufacture, market and distribute the products of The Coca-Cola Co. (TCCC) in Hong Kong and Taiwan, seven provinces in Mainland China, and eleven US states. Swire’s combined franchise territories supply a population of over 420 million consumers. Over two thirds of its beverages are produced in the seven bottling facilities located on Mainland China. In this interview Swire Beveragers China CEO, Clive Saffery, shares with China Water Risk, his insights about China’s water crisis and how the company is learning to insulate itself against water risks.

Boasting impressive water efficiency credentials when it comes to its bottling plants, Swire’s overall water usage ratio (WUR), that is the quantity of water used per litre of beverage produced, dropped by 13% from 2.23 l/l in 2007 to 1.95 l/l in 2008, saving 786 million litres of water and a further 3% to 1.90l/l in 2009.Individual water use ratios ranged from 1.57 to 2.96 l/l with four operation units showing improvements in water efficiency of more than 5%. Its Hangzhou plant in China was classified as one of the best performing plants in the entire Coca-Cola system, with a WUR of 1.57 l/l¹.

CWR: Tell me how Swire’s corporate water philosophy evolved?

Clive: It was the water controversy in India that woke us up to the fact that problems can come at any angle. With the Indian situation, the company went through the right channels and got government permission. The company didn’t know that there were water supply issues. The company took the government’s word that there was water enough for operations and the community. It turns out this wasn’t the case.

We’ve only begun to map water stresses. We understand now that even if you tick all the boxes, you can’t anticipate everything. Even with a risks analysis. Is our risks analysis any good? If you ask me a few years into the future, I will probably say it is not comprehensive enough, as we will have undoubtedly built on it. But for now, it works.

CWR: How does Swire mitigate its exposure to water risks in China?

Clive: We implement The Coca-Cola Company’s Reduce, Recycle and Replenish programme, which is fairly straight-forward. But perhaps more useful to know is that we are undertaking studies to assess the vulnerabilities of the quality and quantity of the water source where our facilities are located. We are working closely with civil society groups and local governments to implement a source water protection plan by 2012.

The water vulnerability studies are also incorporated into the site selection process.  It is common sense to make sure our facilities are not located in areas of extreme water stress.

CWR: What would you say are the main challenges to water management that are unique to China? Experts point to poor enforcement of environmental regulations.

Clive: Yes, poor enforcement of laws is one of the bigger issues (related to water management in China). But while it is critical, I am not as negative about this. I have seen government officials play catch up if they see and understand the incentives for regulation. I see people enthusiastically trying to change things. I also tend to view this phase–where laws are taken as suggestions– as part of a country’s evolution. China is developing and at a very fast pace. It’s natural to see laws contradict each other and even inconsistent execution of laws across China. This will change.

CWR: Are there other more pressing challenges then, in your view?

Clive: There is the problem of infrastructure. The Circular Economy Law stipulates requirements for local authorities to have infrastructure for reuse of treated wastewater.  However, such infrastructure is usually not available thus making reuse impossible. Another pressing challenge, is the governance of the water piece, or rather the lack thereof. In China, there is no clarity regarding who is responsible for what part of the water management. This needs to be addressed.

But more than anything else, it is the wealth gap. Actually behind every issue in China lies the wealth gap. The environment will always come second to the goal of solving China’s income disparity.

CWR: How serious is China’s water crisis?

Clive: I suspect it is a lot bigger than what we are told, than what people perceive it to be. And this is the key point. There is a real need to understand the problem, to grasp its full dimensions. Which means looking at the water issue from a local context, from the watershed level.

Same thing applies to assessing a company’s water use. Here we see a water footprint has its limitations. Will the world care if your total usage is X? A number without local context is meaningless. A cradle to grave approach is more comprehensive and helpful. If you take this approach, you will find the answers to a lot of the critical issues.

CWR: The supply chain has emerged as the elephant in the room when it comes to addressing a company’s water footprint. How is Swire beginning to tackle this giant of an issue?

It’s still very early days. We have just begun working with TCCC, WWF as well as the broader industry on The Better Sugarcane Initiative; a multi-stakeholder collaboration whose mission is to promote improvements in the key environmental and social impacts of sugarcane production and primary processing.

We are also working with TCCC and our agricultural partners, on oranges and corn initially, to establish measurable targets for improving our water use.  These actions will help promote better farming practices amongst producers and encourage procurement strategies that reduce the environmental impacts of our supply chain.

Come back in two year’s time and we will probably have something good to show you.