Environment

Water Stewardship

In every country in which we operate, particularly in Australia, our biggest market and the world’s driest inhabited continent, we are committed to developing better systems to manage our water resources.

Several years of stringent water saving strategies under CCA’s National Environmental Policy and our Environmental Management Systems, as well as investment of approximately $5.6 million in capital infrastructure, technology and research and development projects have resulted in CCA Australia achieving one of the best ratios in the global Coke System in water efficiency for beverage production, measured as litres of water used to produce one litre of finished beverage (L/FBL). In 2007 this was 1.59 L/ FBL for Australian beverages.

This is a calculation of all water used in beverage manufacture, from the water in the beverages, to the water used in onsite bathrooms, rinsing bottles and washing down trucks.

When it comes to the spring water we use for our bottled water brands, CCA Australia has invested approximately $8 million over the past few years in capital equipment and new technology to ensure the long-term sustainability and quality of our spring water sources (see Water Policy at www.ccamatil.com).

Our leadership in water saving has resulted in awards (see Awards) and commendations from water authorities across Australia – many of which have cited CCA’s local operations as best practice case studies and featured them in their advertising campaigns.

Why are we so focused on saving water? Not only does it reduce costs – purchase, treatment and disposal costs - but it brings huge benefits to our communities, from reducing consumption of a natural resource, reducing demand for energy and chemicals and providing a more sustainable environment.

Saving water in our operations means we also reduce greenhouse gas emissions – by decreasing our energy demands for pumping and treating water and wastewater.

Water use Efficiency

In 2007 CCA beverages in Australia used on average, 1.59 litres of water to make one litre of finished beverage (L/FBL), a slight increase from our 2006 average of 1.55 L/FBL. This is still one of the best water use ratios in our industry worldwide.

The slight increase was due in part to an expanded product portfolio, where beverages like iced teas, sports drinks and juices require more water to maintain a consistently high standard of product quality, and also the fact that CCA’s state operations now make a full range of products, which necessitates more rinsing in between production runs. However the environmental upside of more localised production is that we save on interstate transport costs and associated fuel and carbon emissions.

We have set stringent targets for water savings across the Group for 2008 and remain focused on saving even more water.

CCA has now installed “dry-lube” or waterless lubrication on all 26 Australian production lines, and two in New Zealand, resulting in annual water savings of 95 million litres.

Wastewater Treatment

Our operations are subject to TCCC requirements on wastewater treatment, which states that all wastewater discharged will meet applicable regulatory requirements, maintain an effluent quality that will have no adverse effects on fish or aquatic life in receiving waters and to maintain and operate treatment facilities efficiently. All of CCA’s beverages plants in Australia, Indonesia and New Zealand meet the TCCC requirements, with the exception of Waikerie in South Australia.

CCA has engaged experts to make an assessment of the infrastructure requirements to meet the South Australian Environment Protection Agency (EPA), and TCCC requirements with the aim that Waikerie will be compliant by 2009.

CCA is aiming for all Group operations to be compliant by the end of 2010.

Public Policy and Education

CCA’s focus on water sustainability has seen the establishment of its inaugural National Water Scholarship through the Centre for Groundwater Studies across several leading Australian universities. In 2008 the scholarship was awarded to Jennifer Spencer from the School of Biological, Earth and Environmental Sciences, University of NSW, who will complete her Honours thesis on the interaction between surface and ground waters of the Lawn Hill region in Queensland. This research project will provide more knowledge about recharge and sustainable use of ground water.

CCA became a partner of the Water Stewardship Initiative (www.waterstewardshipconcept.com) the aim of which is to provide a forum and program for responsible water management among large water users.

Bottled Water – the Facts

The bottled water industry has been criticised recently for allegedly contributing to landfill, depletion of water sources and tooth decay.

CCA, a major producer of bottled water, is committed to ensuring the sustainability of all our water sources. We also accept that as producers of bottled water, we have a responsibility to do our very best to ensure that our packaging is increasingly “lightweighted” and recycled. However, we want to highlight some of the facts on bottled water, which are often overlooked in the debate:

All bottled water in Australia, not just CCA brands, use only 0.01 per cent of the groundwater allocated for use in Australia and New Zealand – mining and agriculture are by far the biggest users
The total amount of water used by Australia’s bottled water industry is 600 megalitres per year – to put this into perspective, the total amount of water used per day in Melbourne is 1200 megalitres
40 per cent of Australian bottled water is sold in 9 or 15 litre containers (like Neverfail Springwater) which are refilled 30-40 times over the life of the bottle, and are fully recyclable
PET bottles (all bottles, including water bottles) contribute a tiny fraction of material going to landfill – just 0.3 per cent
CCA has invested $8 million into infrastructure, expert hydrogeologists and technology to ensure our water sources are sustainably managed
Every potential water source undergoes a stringent hydrogeological assessment process
CCA purchases most of our spring water from farmers and landowners who hold water licences, and who sell it to us on the open market, just as they would sell any other crop
CCA Australia’s water use ratio for bottling water is around 1.3 litres per finished beverage litre (L/FBL), one of the best water efficiency ratios in the world
All CCA’s water brands contain groundwater, none of them contain tapwater
All CCA beverage containers are recyclable – they are not litter, but a resource that can be recycled into a huge range of products, like textiles, carpets and furniture
CCA has been “lightweighting” or using less PET plastic and glass in our bottles for a number of years, saving thousands of tonnes of material
CCA invests in Public Place Recycling stations, so people can recycle their containers when they’re away from home (see Packaging and Recycling)
CCA will consider adding fluoride to some of our bottled water brands, as soon as the Australian Government allows us to
CCA is a member of the National Packaging Covenant and a member of the Australasian Bottled Water Institute.

Packaging and Recycling

Packaging plays a crucial role in ensuring the quality, safety and convenience of all our food and beverage products. We are working hard to make our packaging more sustainable – most of our drink containers are 100 per cent recyclable, and all of our new product packaging must be 100 per cent recyclable.

In August 2008 CCA began training on PIQET (Packaging Impact Quick Evaluation Tool), which calculates the environmental impact of packaging systems through the packaging life-cycle, from extraction of raw materials through to the end of waste management.

The use of PIQET means the business will be able to make better informed decisions about packaging in the New Product Development process.

We are constantly reviewing packaging innovations which could deliver better environmental outcomes and we work with other companies to identify opportunities in this area.

While beverage packaging makes up only 3 per cent of the waste stream in Australia (Packaging Stewardship Forum www.afgc.org.au) we recognise that both sustainable packaging and responsible recycling remains a big challenge.

In 1994 CCA was the first company in the world to package a food-grade product using recycled content in PET and today, on average, we use 15 per cent recycled content in our PET bottles. CCA’s Australian beverage business has committed to increase internal recycling rates by 5 per cent by 2010, from an already high base of 85 per cent waste recycled across all manufacturing facilities. Internal recycling rates improved by 5 per cent from 2006 to 2007.

We see packaging as a valuable resource, not waste or litter. Every PET bottle, for example, is a resource that can be recycled into other goods, like a pair of board shorts, a polar fleece, a carpet or a picnic table. Large home and office containers, like Neverfail Springwater’s bottles are recycled 30-40 times over their life before the plastic is crushed and reused in the automotive industry. Aluminium cans can be recycled many times.

While we accept that as a producer of fast-moving consumer goods we have a responsibility for the containers our beverages come in, we can’t do it alone – everyone has a part to play in recycling.

Less Packaging, More Recycling

CCA’s PET beverage containers have been “lightweighted”, or made using less plastic, saving more than 21,000 tonnes of PET, or 625 million bottles, since 2003. We have also further “lightweighted” our 385 ml glass bottles by 5 grams.

In 2007 we included recycled PET content in hot-fill bottles for the first time, we reduced stretch film usage by 30 per cent at some sites and we reduced width of shrink film by 5 per cent, saving 16 tonnes of shrink film per year.

CCA has consistently improved rates of packaging waste sent to recycling in our manufacturing plants in Australia, New Zealand, Indonesia and Papua New Guinea. New Zealand’s operations have achieved excellent results, in 2007 sending almost 90 per cent of solid waste generated to recycling, avoiding landfill.

Our New Zealand team has also developed an event recycling bin (www.moxie.co.nz) and guidelines for event managers on minimum waste generation (www.packaging.org.nz).

CCA Australia is a leading member of the Packaging Stewardship Forum (PSF), best known for its iconic “Do The Right Thing” campaign. In 2007 the PSF funded an innovative trial to recycle glass bottles from pubs and clubs using the Bottle Cycler, a small, on-premise glass crushing machine which reduces large, bulky volumes of glass bottles into crushed glass, or “cullet” which can be recycled. In the first 12 months of the trial in Melbourne, more than 250,000 kg of glass was diverted from landfill.

Public Place Recycling

Australians are good recyclers – 90 per cent of households have access to kerbside recycling and we recycle around 70 per cent of the beverage containers we use at home. (Source: Packaging Stewardship Forum)

The challenge for recycling comes when people are out and about. Since 2004 CCA has been running the “Refresh Recycle Renew” campaign and has invested significantly in public education and Public Place Recycling.

In 2007 in partnership with Australia Zoo on Queensland’s Sunshine Coast, CCA launched a Public Place Recycling program featuring the zoo’s animated tiger, Khan, which aims to recover up to 400,000 PET bottles every year.

On the Gold Coast, CCA partnered with Warner Village Theme Parks and Polar Bears International to launch a recycling fund-raising initiative at Sea World. CCA donated 5c for every PET bottle placed in the recycling bins (to the value of $10,000) which will go to Polar Bears International.

Over the 2006-2007 summer holidays, CCA launched a “Refuel Recycle Renew” competition which encouraged people to place their beverage containers into recycling bins in service stations along the Hume Highway between Sydney and Melbourne, and in 2007, CCA, in partnership with Jones Lang LaSalle launched Public Place Recycling stations in Australia Square and the MLC Centre in Sydney’s CBD.

Public Policy

CCA is a founding member of Australia’s National Packaging Covenant (NPC), a joint initiative established in 1999 between government and industry to manage the environmental impacts of consumer packaging, as well as highlighting the importance of packaging minimisation through the supply chain. The NPC has provided more than $21 million in funding since 1999 to increase packaging recycling. The NPC and the responsibilities arising from its reporting requirements have fostered an important change within CCA’s corporate culture over the past 24 months. New processes have been established and followed, with environmental impacts of new products now considered under NPC guidelines, in the early stages of the decision process.

Under the NPC, national recovery rates for waste have increased from 41 per cent to 56 per cent over the last 4 years. The focus of the NPC’s next stage (Covenant #2) is on ‘away from home’ recovery and the national target for 2010 is to achieve a 65 per cent recycling rate.

Collectively the 54 projects that have been funded through Covenant #2 are projected to divert more than 500,000 tonnes of packaging materials for recycling by the end of 2009. Total investment in these projects is $47 million and industry has contributed more than $4.9 million in funding (matched by state jurisdictions).

A further $4.5 million of industry funds is available in 2008.

Energy & Climate

CCA has been voluntarily reporting carbon emissions and identifying opportunities to reduce them since 1999 under the Australian Government’s Greenhouse Challenge. CCA also participates in the global Carbon Disclosure Project, and in 2007 was included in the Australia/New Zealand Goldman Sachs JBWere Climate Leaders Index, which recognises demonstrated leadership in disclosure to the investment community, across a range of investment relevant climate change issues. This put CCA in the Top 25 of 141 ASX100 and New ZealandX50 participating companies.

However, 2007 was the watershed year for global action on climate change. Businesses in Australia prepared themselves for operating in a carbon- constrained economy, as both major parties went to a Federal election with policies for a national emissions trading scheme, and new legislation mandated major companies to publicly report their energy use and carbon emissions. Australia’s new Labor Government announced a “cap and trade” emissions trading scheme, or Carbon Pollution Reduction Scheme, to start in late 2010.

While CCA’s manufacturing operations are not high carbon emitters and energy costs presently represent just 3 per cent of our operating costs, our manufacturing business triggers the threshold under the National Greenhouse and Energy Reporting Act 2007 and we are required by law to report our energy use and GHG emissions to the Federal Government.

While water savings remains our priority (see Water Stewardship) CCA is working hard to understand and measure the climate impacts of our business and our value chain across the Group. Our business strategy is to continue to accelerate the implementation of energy saving projects within our operations, reduce our direct carbon impacts and increase our focus on co-operative activities with our customers.

With carbon, we already measure our Scope 1 and 2 emissions, which are the direct emissions from our manufacturing operations and owned fleet plus indirect emissions from purchased electricity.

The next step will be to measure our overall carbon footprint, which includes Scope 3 emissions. CCA in Australia and New Zealand has commenced scoping Scope 3 emissions from cold drink equipment, packaging and third party owned distribution fleet. We aim to publish our progress in our next Sustainability@CCA Report and use it to identify future emissions reductions.

Emissions

CCA Australia has committed to reducing carbon emissions in our manufacturing plants (measured by grams of CO₂ per finished beverage litre of product, or gCO₂-e/FBL).

In 2007 CCA generated an estimated total of 267,617 metric tonnes of CO₂-e across Scopes 1 and 2 across the Group.

In 2007 the Australian beverage business (which generates approximately 70 per cent of CCA’s earnings) had a carbon emissions ratio of 60.43g CO₂-e/FBL – a reduction from the 2006 ratio of 61.51g CO₂-e/FBL (this figure also includes emissions from CCA owned sales fleet).

In New Zealand, the ratio for the beverage business was 14.39g CO₂-e/FBL, a much lower figure than Australia’s because the bulk of New Zealand’s power is derived from hydro-electricity and wind, which is much less carbon-intensive than energy derived from coal-fired power stations.

The 2007 Group ratio (including SPC Ardmona, which is more energy-intensive because of the fruit cooking or “retorting” process) was 93g CO₂-e/FBL.

Energy Saving Projects

CCA is undertaking various energy abatement initiatives at its Australian and New Zealand operations, including:

Installation of a new pasteuriser for Keri Juice in Auckland which is saving 50 tonnes of CO₂-e per year
Filling optimisation project at Richlands, Queensland saving 807 tonnes of CO₂-e per year
New air compressors in the Northmead and Smithfield plants, NSW, saving a total of 588 tonnes of CO₂-e per year
Power correction at Thebarton, SA, saving 333 tonnes of CO₂-e per year.

Renewable Energy

CCA has installed solar hot water at the Northmead distribution centre (DC) and the new DC at Eastern Creek.

CCA purchases 2.5 per cent Greenpower at the Richlands operations in Queensland, which offsets emissions by 411 tonnes of CO₂-e per annum.

Cold Drink Equipment

The cold drink equipment - the coolers, vending machines and fountain equipment that CCA places at customer premises - are critical to our business strategy. They do, however, represent a significant source of indirect (Scope 3) emissions. We are working on a number of projects seeking to improve the energy- efficiency of our cold drink equipment.

The Coca-Cola System’s “eKOfreshment” program has ensured:

All new equipment now contains HFC (hydrofluorocarbon)-free insulation, which avoids three-quarters of the direct GHG emissions compared to our old equipment
Development and implementation of a proprietary Energy Management System (EMS) which delivers energy savings of up to 35 per cent.

CCA was the first bottler in the global Coke System to implement both these new technologies.

The final step was to develop equipment that utilises a natural refrigerant, CO₂, to cool the product. Ironically, while CO₂ is the main culprit in global warming, when used in cooling systems it is 1,300 times less potent a GHG than the main refrigerant currently in use – HFC-134a*

CCA has committed to purchasing 1000 new CO₂ coolers in 2008, with follow-up commitments for 4000 units in 2009-10.

*(It is important to note that the refrigerants in all our coolers are present in “closed loop systems” which means that only a very small percentage is ever actually released into the environment.)

Possible Impact of an Emissions Trading Scheme or Carbon Pollution Reduction Scheme

This table, as reported in the Carbon Disclosure Project 2007 – Australia and New Zealand, confirms CCA’s analysis that we are a relatively low energy user in our manufacturing operations and as such, immediate direct impacts of an ETS are unlikely to be material.

Cost of emissions at $10 per tonne
as a percentage of company EBITDA