Introduction
Coca-Cola proudly serves more than 200 countries and territories from around the world, and Corporate Social Responsibility (CSR) is at the core of their business in each one of them. At Coca-Cola, CSR is part of their commitment to establishing sustainable communities. The company gives back at least 1% of the operating income annually to various programs, initiatives and causes. In 2016 alone, they gave back $106 million, equivalent to 1.2% of their operating income, which was invested in active and healthy living initiatives, water stewardship programs, education, women’s empowerment, humanitarian and disaster relief programs, to name a few.
1.1 "Corporate responsibility is simply a way for companies to take responsibility for the social and environmental impacts of their business operations, ensuring that their company”: (Caramela, 2018)
• Contributes to sustainable development, including health and the welfare of society
• Takes into account the legitimate interests and expectations of stakeholders
• Is in compliance with applicable law and consistent with international norms of behavior, and
• Is integrated throughout the company and practiced in its relationships textbook author (Rensburg, 2016)
As part of a worldwide commitment to give back to the communities in which it operates, Coca-Cola launched its ‘Live Positively’ campaign – a set of initiatives that aim to create positive change in the world through sustainability. Projects within the campaign tackle everything from climate protection and balanced living to education and community. One area of focus, empowering women in developing nations through job and business training falls under the 5 by 20 initiative, a goal of empowering 5 million women entrepreneurs across the company’s global value chain by the year 2020. Beginning in Brazil, India, South Africa and the Philippines, and expanding to China, Mexico, Nigeria, Kenya, Uganda, Haiti and Egypt, Coke plans to reach women worldwide in the coming years.
In Brazil, the initiative took the form of the Coletivo (Portuguese for “collective”) program, which offers two-month courses in business and retail training to young adults, entrepreneurs and artisans, and has grown from five to 136 programs across Brazil. The program features several focus areas, including:
• Retail: which trains young adults ages 15-25 in job skills and retail business basics. To date, 66% of the 25,000 graduates have been women.
• Residential Entrepreneurship: provides female entrepreneurs with business skills to enable them to start small shops in their homes.
• Recycling: supports cooperatives by investing in materials, infrastructure and specific skills which allow cooperatives to increase efficiency and sustainability.
• Arts: provides business and design training to enable artisans to earn greater and more stable incomes from their businesses. Hundreds of local artisans throughout Brazil turn recycled Coca-Cola packages into art, jewelry, handbags and other sellable items. (Elks, 2012)
The concept of ‘Live Positively’, include seven core areas: beverage benefits, active healthy living, the community, energy and climate, sustainable packaging, water stewardship and the workplace. These core areas were set to fulfill goals and improve sustainability practices (Torres, Garcia-French, Hordijk, Nguyen and Olup, 2012). In addition, Coca-Cola has adopted some international CSR guidelines, such as Global Compact, Respect and Remedy Framework, however, these guidelines do not seem to be integrated into the business code of conduct (Torres, Garcia-French, Hordijk, Nguyen and Olup, 2012, p.53). Coca-Cola also publishes a separate annual report devoted to develop Corporate Social Responsibility. These reports are published every two years and verified and assured by a third party.
Furthermore, Coca-Cola established a partnership with the World Wide Fund for Nature (WWF) in 2007. It aims to improve the water usage of Coca-Cola, develop the framework to maintain water sources and help protect the world's seven most important fresh water river basins.
1.2 Most CSR programmes are driven by a number of reasons namely:
Social drivers
Many companies engage in CSR because it is what society expects from them and they comply because they protect their reputation by meeting these expectations. However, Coca-Cola engages in CSR because it is the foundation on which the company is built on. Coca-Cola operates in more than 200 countries. Because of the local nature of the business, they are in a unique position to contribute to the economic vitality of even the most remote communities around the world and they do this by contributing to the economic success of each community by employing local people; paying taxes to governments; paying suppliers for goods, services and capital equipment; and supporting community investment programs. (Staff, 2012)
Coca-Cola had one significant incident which they could be termed as socially irresponsible which is the incident in India. By not taking responsibility for the findings in the beginning, they failed to win the consumers’ trust and ended up looking like the villains who put money before the wellbeing of their consumers. It is however, an incident the company corrected.
Governmental drivers
The marketing and production of beverages must adhere to the United States Food and Drug Administration policies and various local, federal and state agencies’ regulations. The labelling of containers is also regulated by Food and Drug Administration. To enhance its relationship with the government, Coca-Cola as a company makes sure it adheres to government regulations in countries where it operates such as paying taxes and adhering to environmental regulations. (Ragland, 2018)
Facing new regulations that target high-calorie soda drinks, Coca-Cola had to unveil a pair of television ads that acknowledge the calories in its products and encourage consumers to burn them off. The purpose of the ads is to highlight some of the specifics behind the company’s ongoing commitment to deliver more beverage choices, including low- and no-calorie options, and to clearly communicate the calorie content of all its products.
This regulation had to implemented because the Mayor or New York City barred the sale of sodas bigger than 350ml in many venues such as restaurants, stadiums and movie theaters, with the aim of countering obesity in a city in which 58 percent of residents are obese or overweight, according to the mayor’s statistics. (FRANCE-PRESSE, 2013)
Market drivers
CSR does not only represent costs for companies. It also results in various avantages. Coca-Cola reduces cost through CSR by:
• The company aims to reduce the amount of energy consumed and its carbon footprint. All these are done with the objective of becoming the global leader in climate protection by collaborating with local governments, universities and the community.
• They also aim at developing a sustainable water management model. The aim of the model is to help the company in reducing the amount of water they use during their operations. (Erasmus, 2010)
• Additionally, the company aims to minimize the impact of its packaging on the environment by using recyclable materials and they offer support in communities where they operate by contributing to its welfare.
Cocal-Cola can also increase their revenue through CSR by:
• Beverage consumers are becoming increasingly health conscious and as a result of this soda sales are decresing because consumers are concerned about sugar and obesity. To combat these losses, Coke decided to diversify itself by creating Coke Zero and Coke light. The difference between the two is the taste. Both drinks are sugar free and calorie free. Coke Zero looks and tastes more like the original Coke but has sweetner instead of sugar and Coke light has a different blend of flavours which gives it a lighter taste. They are both calorie and sugar free. So instead of loosing health conscious consumers Coke managed to lure them back to the brand.
• Coke also uses consumer orientated strategies. Through this strategy Coke enhances its visibility in stores and also runs promotions that attract consumers to them. For example, prior to the World Cup that took place in Russia, Coke ran a competition where consumers could stand a chance to win two tickets to watch a game live. All u had to do was purchase a participating product. In this way not only did Coke increase their sales they still gave back to the community, thereby fulfilling their CSR iniatives. (Staff, 2018)
• Coke also wants to help young people gain the skills they need for the workplace. Through their education centers and partnerships (including Passport to Employment in France, The Real Business Challenge in Great Britain and JINC in the Netherlands) they plan to support the skills development and learning needs of 250,000 young people each year by 2020.
• They are also part of the RE100 initiative and have committed to source 100% of their electricity from renewable sources by 2020. This will help them reduce the carbon footprint of their products by a third by 2020. (Bawden, 2017)
Ethical drivers
• Ethics is the difference between right and wrong. The ethical responsibility of a business does not only aaply to external damages but also applies to responsible business dealings and conduct in the workplace.
• Coke felt ethically responsible for the damages that occurred in India where they were accused of causing water shortages. They then created a foundation called ‘Ananda’ which works with local communities and NGOs to address the water problems. The issues in India definitely presented as a learning curve for the company and they have clearly proven that they learnt from it. (Cristina A. Cedillo Torres, 2012)
• Now whenever the company encounters a crisis, they ensure that there is a clear channel of communication between management and the consumers.
• By not taking responsibility for the pesticide issues because the company tried to maintain its integrity, resulted in them looking like money is more important then their consumers and was ultimately an ethically wrong decision to make.
1.3 Corporate governance can be defined as the system that manages and controls companies. Is also refers to the relationship between those who govern and those that are governed. (Rensburg, 2016) The Coca-Cola Company is committed to good corporate governance, which promotes the long-term interests of shareowners, strengthens Board and management accountability and helps build public trust in the Company.
The Board of Directors of The Coca-Cola Company has adopted the following guidelines to enhance its corporate governance.
1. Board Mission and Director Responsibilities.
The Board is elected by the shareowners to oversee their interest in the long-term health and the overall success of the business and its financial strength. The Board serves as the ultimate decision-making body of the Company, except for those matters reserved to or shared with the shareowners. The Board selects and oversees the members of senior management, who are charged by the Board with conducting the business of the Company.
The core responsibility of the Directors is to exercise their business judgment to act in what they reasonably believe to be in the best interests of the Company and its shareowners. Directors must fulfill their responsibilities consistent with their fiduciary duties to the shareowners, in compliance with all applicable laws and regulations. Directors will also take into consideration the interests of other stakeholders, including employees and the members of communities in which the Company operates.
2. Board Leadership
The Coca-Cola Board believes that there should be two individuals occupying the offices of Chairman of the Board and Chief Executive Officer. This simply ensures that there is a equal balance of power and authority.
The Board of Directors annually elects one of its members to serve as Chairman of the Board. The Chairman of the Board shall preside at all meetings of the Board and the shareowners, and shall perform such other duties, and exercise such powers, as prescribed in the By-Laws or by the Board from time to time.
For example, the issues that Coca-Cola had in India impacted the company in a negative way. Firstly, high levels of pesticide were found in the drinks and then the company was accused of causing water shortages in Kerala and other areas. Coke experienced other CSR related issues but none of them resulted in a loss of trust in the company and its products by consumers. The problem here lied in the response by the Chief excutive officer. By denying the claims that beverages did indeed have high levels of pesticide as well as taking responsibility for over-exploiting and polluting water resources, they chose to deny all allegations and failed to show concern to the situation, thereby failing to regain consumers trust. The company did however learn from their mistakes and rectified them later on. (Anon., 2017)
Coca cola’s primary objective is to deliver to their shareholders, superior investment via a continuous increase in profits generated from its sales and long-term operating cash flows. For this reason, the company has committed itself to superior and innovative marketplace excecutions. The strategy has helped the company in capitalizing successfully on opportunities in emerging markets and distribution channels. The company on a routinely basis reports its performance and activities through conference calls and news releases. Equally the information about the company’s financial reports, presentattions and events, financial highlights, stock information, investor services and shareowner information are accescible on the company’s website. (Morchedi, 2014)
1.4 stakeholders can be defined as a group of people who are potentially affected by the company’s business activity.
There are two kinds of stakeholders: Primary and Secondary.
Primary stakeholders are stakeholders whose ongoing support for the company is vital for its survival. For example, Coke will not survive without consumers that buy their product.
Seconadary stakeholders are stakeholders who have a less direct impact on the company, however a seconadary stakeholder can become a primary stakeholder if the situation changes.
Coke is committed to ongoing stakeholder engagement as a core component of their business and sustainability strategies, their annual reporting process, and activities around the world. They engage with their many stakeholder groups in a variety of formal and informal settings across the entire Coca-Cola system. The engagements range from meetings with local, regional and national groups to ongoing dialogues with bottlers, suppliers and consumers. At an international level, they are actively involved in multi-stakeholder initiatives, such as the United Nations Global Compact and the World Economic Forum, so that they can address pressing global challenges. By proactively working together with external stakeholder partners, they are able to identify and address issues by bringing together the expertise, knowledge and passion of many organizations and individuals. This approach helps them achieve far greater positive impact on environmental, social and other issues.
How they engage with stakeholders
The variety of stakeholders and the breadth of their reach means they engage in different ways. Below are examples of key stakeholders and the ways in which they engage with them.
• Bottling partners: day-to-day interaction as business partners, joint projects, joint business planning, functional groups on strategic issues.
• Consumers: hotlines, local websites, plant tours, research, surveys, social channels, focus groups;
• Customers: regular visits, dedicated account teams, joint business planning, joint value creation initiatives, customer care centers, social media engagement, surveys;
• Communities: community meetings, plant visits, partnerships on common issues, sponsorships, lectures at universities;
• Employees: engagement surveys, senior executive business updates, town hall meetings, employee communications, individual development plans, health and safety communications programs, community and employee well-being projects, ethics hotline;
• Governments and regulatory authorities: foreign investment advisory councils, recycling and recovery initiatives, chambers of commerce;
• Non-governmental organizations (NGOs): ongoing dialogue, partnerships on common issues, memberships of business and industry associations;
• Shareowners and analysts: annual meeting of shareowners, quarterly earnings reports and webcasts, investor presentations and webcasts, quarterly shareowner newsletter, and ongoing dialogue with investors and analysts;
• Suppliers: joint value creation initiatives, annual supplier conference, Supplier Guiding Principles, packaging associations;
• Trade groups and industry and policy organizations: industry collaborations, joint value creation initiatives, ongoing dialogue, policy engagement activities.
Coke applies their Golden Triangle partnership approach to stakeholder engagement, spanning the public, private and civil society sectors. They recognize and embrace the idea that the collaborative power of partnerships can achieve much greater collective impact than would be possible by any one organization or sector working in isolation. The Golden Triangle partnership approach is a core part of their business strategy, and can foster sustainable business growth, environmental stewardship and social progress.
The efforts to protect local water sources can be successful only if they involve collaboration with local stakeholders, including governments, community members, water agencies, NGOs and others. As our bottling partners implement their source water protection plans (SWPPs), they engage local stakeholders and collaborate on solutions that serve local communities and ecosystems as well as our business.
The development of goals and strategies will continue to benefit from collaborative conversations with stakeholders. Additionally, once reports are published, they listen carefully to stakeholders’ feedback about where more clarification and explanation are desired within their disclosure topics.
Dialogue with a wide range of external stakeholders is critical to respecting human and workplace rights within their system. Continuous dialogue enables them to identify and address potential issues proactively and collaboratively.
Recent Stakeholder Convenings
Recently Coke held four stakeholder engagement sessions in Mexico and the United States between September and October 2016 continuing ongoing conversations with a group of diverse stakeholders. The primary objective of the coordinated international stakeholder engagement sessions, some of which included bottling partners, was to ensure that their sustainability strategy remains responsive, relevant and on-track. The focus was on the 2020 Sustainability Commitments, including strengthening disclosure, tracking progress and identifying areas for improvement.
1.5 The Brundtland Report defined Sustainable Development as “The development that meets the needs of the present without compromising the ability of future generations to meet their own needs."
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