Coca-Cola sells more cans of soft drinks than any other company in the world. Yet it has committed itself to becoming “water neutral” in a sustainable world and is highly conscious of the need to reduce poverty and encourage education.
Muhtar Kent, president and chief operating officer of The Coca-Cola Company, explains how one of the most commercial companies in the world came to this socially worthy conclusion, in an interview with Weekend Review.
“At Coca-Cola we subscribe to the view that climate change is serious. We are committed to ensuring that we play a leading role in [ensuring] the sustainability of the world,” Kent said.
The company sells soft drinks in more than 200 markets around the world, making it one of the most international of all consumer companies. Its business model involves a global centre working with local companies in each territory that bottle, package and distribute the soft drinks, which gives the company a tremendous range of local entrepreneurs as business partners who are deeply embedded in their local societies.
Through this network, Coca-Cola is actively involved in business partnerships into which it can feed its social plans. It also works with many public sector organisations, and this helps build the company’s agenda to develop a strong civil society in different parts of the world, while never losing sight of its business goals.
“We believe that unless we take the lead in helping create sustainable communities, we will not have a sustainable business,” Kent said. “We have been around for 121 years and want to be around for another 120. The best way to achieve this is by business, government and civil society working hand-in-hand.”
Coca-Cola defines three types of partnerships to advance its social targets:
1. Economic partnerships: There are hundreds of business partnerships that Coca-Cola is involved in, as most of its business is conducted through local bottlers and distributors. The company works to improve the standards and skills of these smaller companies, feeding new skills into the local economies while also supporting its own network.
“We want to improve their businesses and their operating standards,” Kent said. “We have many micro-enterprise projects and all of them are in our core area of business. Most retailers we serve are small entrepreneurs, and we want them to grow bigger and better.”
Coca-Cola runs over 100 micro-enterprise projects around the world as part of this activity. “For example, we put money into these small businesses, and work hand-in-hand with the governments and civil societies in many parts of Africa to promote entrepreneurialism,” Kent said.
Having seen a global need for more training in entrepreneurial attitude and skills, Coca-Cola has developed a support plan to develop this knowledge, and runs this programme within its own network of business partners in several counties, including South Africa, Kenya and India.
2. Societal partnerships: Coca-Cola completely agrees with the United Nation’s Millennium Development Goals, or MDGs, and is committed to supporting the eight universal principles it lays down in the areas of poverty, education, gender equality, fighting disease, environmental sustainability and developing a global partnership for development.
The MDGs were announced in 2000 with great fanfare, but failure to follow through on the former UN Secretary-General Kofi Annan’s initiative has meant that the Millennium Goals have lost their momentum.
The ambitious goals laid down in 2000 are now impossible to meet. Nevertheless, there is a renewed effort to put them back on track and re-commit to new and more achievable dates to achieve the same ambitious targets.
In several discussions at the World Economic Forum in Davos in January, there was a broad agreement that the Millennium Goals were too important to be dropped and that they must be rescued.
Kent agreed that the MDGs had lost their way and welcomed the renewed focus on the goals sought by British Prime Minister Gordon Brown and others. Kent welcomed the drive to make specific UN bodies take responsibility for pursuing separate MDGs, calling backsliders to account.
“We need a more business-minded approach to a very complicated problem, and opportunity,” Kent said. “I agree with Gordon Brown who wants to focus and bring this programme back into control, to narrow the corridor and create more attention on the focus.”
Coca-Cola is still very committed to implementing the MDGs. “We remain very close to the UN — either its various agencies, such as the UNDP, or the whole body,” Kent said.
Coca-Cola has several education programmes running with UNDP support as part of its MDG work.
It includes a retailing university recently established in India in partnership with the government and NGOs.
3. Environmental focus on water: The third track of activity is Coca-Cola’s environmental programmes that work on aspects of sustainability. This work covers a wide range of activities but the most important ones have to do with improved use and conservation of water.
Coca-Cola has more than 120 water replenishment programmes in 50 countries where the company is trying to help with rainwater-harvesting projects.
It also has a partnership with the Worldwide Fund for Nature (WWF) to which it has committed $20 million for water replenishment in river basins around the world, including the Yangtze, Mekong and the Danube basins, “all of which is part of a large company-wide focus on water issues”.
“One of the goals we have set for ourselves is to return to the environment all the water we take out of it, where it is good enough for the habitat to [survive], by 2010,” Kent said. Coca-Cola is trying to become “water neutral” by helping its bottlers waste less and by protecting water supplies, as well as by using better technologies and working practices.
“We are doing this through our water programmes, which apply to the total system, which is us and all our bottlers,” Kent said.
By using better manufacturing technology, Coca-Cola reduced theirwater needs by 20 per cent each year from 2003 to 2007, and their business has grown substantially. We recycle and reuse the water, and replenish water resources (See graph), he added.
“Water is [the company’s] top priority this year. There is no question that there are areas very stressed for water around the world. We are seeing trends where basins are getting lower and the underground reservoirs of water are being challenged, in places such as China, around Beijing, and many parts of India.
“The second issue on water — [and] there is evidence to suggest that — is that due to climate change, the intensity of rain has increased. Quantity is one thing, but intensity is something else altogether. When it rains with more intensity for short periods, the wastage is significantly increased and capturing [water] becomes a much more difficult task.
“Another area in which we need to increase awareness is in seeking a paradigm shift that could happen around water by developing commercially viable technology for desalination. We have more water in the world than we know what to do with, but it is salt water,” Kent said, referring to sea water.
Ninety-seven per cent of the world’s water is salty and two per cent is frozen in the polar ice caps. Only one per cent is fresh water available for drinking.
“Very little money has been spent [on studying] the desalination option. I recently saw some statistics [showing] that 200 times more money has been spent on research and development on wind turbines and wind technology than on desalination.
“The Arabian Gulf relies on desalination but it is a very expensive technology which relies on access to cheap gas, which will run out. Therefore, new technology has to be developed to make it less expensive,” Kent said.
Focus on core business
Kent made it clear that Coca-Cola was not investing in research into desalination: it was leaving the work to those companies whose core business it was.
“Just as we do not invest directly in packaging, industries that have the know-how to do those things should do them,” he said. “We focus on selling Coca-Cola and other non-alcoholic beverages efficiently and in the most productive way around the world. But we certainly influence people to invest in looking for better ways to do packaging and in all our ancillary [requirements].
Similarly, we will not invest in desalination technology but will certainly be involved in persuading people that more needs to be done in this area.”
Use distribution network
Coca-Cola has one of the largest distribution networks for liquids in the world and it needs clean water to be able to manufacture and deliver its products to its customers. Therefore, it is often involved in activities that are outside the assumed business of mixing and distributing soft drinks.
“In many parts of the world, we have facilitated villages and towns to have access to clean water,” Kent said. “We have to have access to clean water [for our business], and, therefore, towns can have the same access as we do.”
In addition, Coca-Cola can deploy its skills for the general good when required. “For example, when an earthquake hit Pakistan two years ago, we mobilised our system to supply water to millions of people who could not get it any other way,” Kent said.
End poverty
Coca-Cola has taken on board the primary importance of eliminating poverty as an essential first step to living in a more stable and prosperous world. “Only when you remove poverty can you worry about inequality. You have got to grow first,” he said.
Kent referred to many “great examples of this in the world: the first great example of this was Singapore and then we had Ireland, Eastern Europe, and now [we have] India, China and Brazil.”
“There are three billion people living under the poverty line in the world,” Kent said. “We are coming to another important crossroads. Many things are converging at the same time. Poverty in the world cannot be eradicated by governments working alone.
"Every time we have seen government try to do this, they have failed. They fail to empower the people and take themselves out of poverty,” Kent said, adding, “Coca-Cola is certain that this world target has to be met by a combination of government and private sector support.”
The answer lies in cooperation between businesses, civil societies, and governments, all three of which, Kent said, have to work hand in hand to bring the world out of poverty. He listed the following steps as essential to eliminate poverty:
1. Break barriers to trade and capital flow.
2. Drive entrepreneurial spirit and empower people to get out of poverty.
3. Stimulate small businesses.
4. Invest in education seriously.
“When these four things come together, we have seen time and again that countries succeed in getting large chunks of the populations above the poverty line,” he said.
Creating 1 million jobs
Coca-Cola is conscious of the power it has to develop economies and to create jobs, especially in the developing markets.
Kent estimates that about 700 million people will rise to the middle class before 2015, which means more wealth and spreading prosperity. “This 700 million is twice the population of the USA. And all of them will be in the emerging markets such as China, India, Ukraine and Vietnam,” he said.
“The whole Coca-Cola system has created about one million jobs around the world. We are a system that manufactures locally and about 80 to 90 per cent by value of what we do is produced locally.
In addition, there is a very strong multiplier: For every job we create as a system, there are another ten created in the wider economy.
“For example, we opened a business 15 or 20 years ago in Kazakhstan. First the bottling plant goes up. And with that factory comes another investment by a can manufacturer, which might employ another 500 to 1,000 people. Then comes the creation of kiosks to sell Coca-Cola around the country, which employs many more. Then comes advertising.
We might say to an agency: ‘We want you to go to Kazakhstan because we need your services there’. So, the agency opens up and creates jobs. Then a truck manufacturer opens up service systems, and then, maybe, a cooler manufacture opens up.
I have just been to China at the opening of a European cooler factory in China because we had asked them to build [there] as we were putting coolers in all stores,” Kent explained.
