Coca-Cola Company:  Sustainability and Social Corporate Responsibility

Coca-Cola Company:  Sustainability and Social Corporate Responsibility

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Executive Summary

Despite being used interchangeably, sustainability and corporate social responsibility are distinct terms in the business world. Companies have the legal obligation to perform certain socioeconomic and environmental activities, but in contemporary society, they perform the activities for aspects beyond the stated ones. Coca Cola Company is one of the model multinationals that has succeeded in portraying exemplary sustainability and CSR efforts globally, subsequently achieving significant profit margins in the short term and sustainability in the long run. The company has incorporated a corporate strategy that blends well with its business strategy to ensure accountability, good corporate citizenship, good public reputation, and trust and goodwill among employees and stockholders. Through stakeholder engagement and continuous improvement and evolution, the company will remain a dominant player in the global food and beverage market in the next decade.

Coca-Cola Company:  Sustainability and Social Corporate Responsibility

For most companies with global recognition, treating the environment appropriately in terms of recycling and replenishment is an essential business practice and influences image, and it is mirrored in their Corporate Social Responsibility (CSR) initiatives. Besides, not only is it considered socially responsible practice, it symbolizes good business. As outlined by Rezaee (2019), it is important to balance the short-term goals of high-profit margins for stakeholders with the longer-term sustainability goals of becoming responsible corporate citizens by giving back to the surrounding communities. Akin to other multinational corporations, for success, Coca-Cola adopts business and corporate strategies that encompass all aspects of the organization and community, which will be discussed further in the subsequent sections. However, it is essential to distinguish sustainability from CSR. CSR possesses a fluid definition that varies across diverse corporation programs that benefit communities. According to Długopolska-Mikonowicz, Przytuła, and Stehr (2018), CSR describes any action that a corporation undertakes to benefit the partnership between its business entity and the community, as well as to make a positive contribution within the community through engagement, volunteerism, and financial support. CSR describes a business making efforts to excel in its environs through conducting itself responsibly.

On the other hand, while environmental sustainability usually forms a component of CSR concentrating on ecological concerns and government stipulations, actual CSR is broad. For many multinational corporations (MNCs), treating the surrounding environments appropriately is significant, and the value is typically reflected in their CSR programmers (Ciafone, 2019). More so, CSR assists companies in portraying a particular perspective of their business’ accountability to a broad range of stakeholders aside from the normal investors and shareholders. The principal regions of interest for CSR include safeguarding the welfare of staff, surroundings, culture, and community, at present and in the future. The idea of CSR depends on the notion that corporations cannot operate as isolated economic entities in wholesome communities that are distinct from society. Conventional perspectives of the success, competitiveness, growth, and success of MNCs in a globalized economic space no longer exist.

Literature Review

Background and Overview

As per the literature on CSR, there two distinct definitions: the conventional and contemporary approaches. As outlined by Fordham and Robinson (2018), the traditional approach essentially covered the definitions prior to 1990 when most individuals perceived CSR as a specific duty. In that prior era, for instance, most companies perceived CSR as a component of the law of contract. However, in recent times, CSR has been seen to emphasize context-specific programs that address stakeholders’ expectations and social, environmental, and economic performance (Torkornoo & Dzigbede, 2017). CSR generates opportunities for MNCs to incorporate strategic decisions regarding environmental protection and socio-economic development into their business models to diminish the negative implications of profit-making endeavors within local milieus. Over the past few decades, CSR has elicited both skepticism and support in varying measures among scholars. On one side, supporters of CSR state that it offers a balance between balance and responsibility corrects most social problems associated with business undertakings, elevates the public reputation and image of corporations, and guarantees profits and sustainability in the long run (Torkornoo & Dzigbede, 2017; Długopolska-Mikonowicz, Przytuła, & Stehr, 2018). In the past, the adverse effects of corporate activities on their societies meant businesses were enjoying so much power at the expense of the society’s socioeconomic and environmental detriments.

However, the other side of the divide contends that CSR is a necessary initiative regardless of the prevailing governmental regulations or perceptions by stockholders and other investors (Długopolska-Mikonowicz, Przytuła, & Stehr, 2018). Besides, CSR has been noted as a factor in enhancing long-term profits through promoting social betterment, generating goodwill and trust n society, promoting public image and dignity, and extending beyond the traditional tenets of legal, technical, and economic requirements. Besides, CSR can apply a combination of agency, economic, and institutional variables to achieve long-run profits, thereby satisfying both the socioeconomic needs of the surroundings and the profit intentions of the investors. Therefore, a company that embraces CSR effectively becomes profitable in the short run and sustainable in the future.

Importance of Sustainability and Corporate Social Responsibility

The significance of sustainability and CSR for corporations around the globe cannot be understated. Despite the legal requirements for CSR being minimal, MNCs perceive it as a good practice because it takes into account pertinent issues of socioeconomic and environmental nature that make them more appealing (Tunaiji, 2019). Today, most consumers expect corporations to behave in a certain manner that aligns with the communities’ ideals. In other words, the consumers, who are among the main stakeholders, desire to be associated with companies that are seen to be conscious of the communities’ challenges. Besides, most companies report CSR activities in their annual Sustainability Reports with the objective of reassuring all stakeholders that they are accountable for their actions. As Shankar et al. (2018) write, CSR forges corporate reputation for MNCs because it emerges as an attempt to account for business transgressions while simultaneously building relationships with the society and achieving set business objectives. Similarly, Shankar et al. (2018) established that CSR activities assist a company in fostering trust among staff. Corporations that maximize CSR initiatives make the employees aware of them. Further, organizational managers ought to adopt such initiatives that possess high salience among potential or current employees to ensure their benefits are positively influencing the employees, stakeholders, and the business. The investors gain from the high profitability and the high brand reputation cultivated using CSR.

Consequently, such CSR activities include training where the workforce undergoes a series of coordinated learning forums and social welfare activities in surrounding regions. Corporations that manage to balance business objectives and corporate citizenship tend to be more sustainable in the long run (Shankar et al., 2018). From investors’ perspectives, a sustainable company is worth investing in more.  

Coca-Cola Sustainability and Corporate Social Responsibility

Coca-Cola has effectively undertaken all the variables of CSR, which is evident from its statement of undertaking business sustainably “to make a difference in people’s lives, communities and our planet by doing business the right way” (Tunaiji, 2019). The company has a strong presence globally and serves a diversified assortment of brands in the canned and bottled soft drinks category, purified water, and carbonated water within the foods and beverages industry. Serving in more than 200 countries worldwide, CSR remains an essential aspect in each of the corporation’s business spokes. The corporation accounts for roughly 3.3 percent of the industry share, followed closely by PepsiCo’s 2.6 percent share (Torkornoo & Dzigbede, 2017). Whereas Coca Cola is intent on maximizing returns for its stockholders, its practices demonstrate that it is also convinced about maintaining a robust CSR program, which it reports annually through its Sustainability Reports. The reports typically describe an overview of the current CSR and sustainability endeavors, usually provided in metrics and graphic forms, and mapping of projected plans for the future. For example, the 2018 Coca Cola Sustainability Report demonstrates to stakeholders its current sustainability activities, its immediate successes, and failures, as well as projections for the future.

Sustainability presents an essential component of the global operations of the corporation. As outlined, its annual sustainability reports portray its strong efforts within local community development, human development, and environmental protection, particularly in the developing economies (The Coca Cola Company, 2018). However, as Torkornoo and Dzigbede (2017) write, it is important to note that sustainability reports for companies might differ because of the divergence in sustainability themes. Using a text-based analysis approach for studying corporate sustainability reports, it is evident that Coca Cola’s sustainability is based on the key phrases of human development, health and safety, community welfare, job creation, education, and biodiversity (Coca Cola Enterprises, 2016; The Coca Cola Company, 2018; Hamilton, 2015). As per a study by Torkornoo and Dzigbede (2017), it emerged that Coca Cola emphasizes major on sustainability, with the core themes being the development and engagement of the local community. The findings indicated that its main rival, PepsiCo, is also concerned about identical themes, but the frequency differs. The frequency of a distinct theme contained in a corporation’s annual sustainability report is analyzed based on its text outputs, which subsequently mirrors the company’s core themes.

Consequently, Coca Cola’s annual sustainability reports demonstrate its contributions towards emergent community needs in development and community engagement. Its Golden Triangle Initiative represents the overall program that depends on partnerships between civil society, business, and government, encompassing multiple projects and programs in local communities where it operates across the globe (Torkornoo & Dzigbede, 2017). In its 2018 annual sustainability report, the company explicitly mentioned local community support, growth opportunities, watershed protection, recycling, education, access to clean water and sanitation, and arts and culture as a core part of its CSR (The Coca Cola Company, 2018). Besides, the corporation listed economic impacts of its CSR activities within the local communities as growth opportunities, value and revenue for clients, community investment, women empowerment, and creation of employment opportunities. The entities are recorded in a chart the company calls the “shared opportunity system diagram” (The Coca Cola Company, 2018).

Figure 1: Coca Cola’s shared opportunity system diagram Adapted from The Coca Cola Company (2018)

                   In addition, Coca Cola has clearly laid out a sustainable approach that tells stakeholders what the company aims to accomplish, including the operational and sustainability objectives, through a concerted effort. The company continuously sets ambitious goals because of the increasingly competitive beverage industry, stakeholder expectations, and the determination to remain dominant (Hamilton, 2015). Essentially, the company has an Enterprise Risk Management team that identifies issues affecting the local communities through data collection to enable evidence-based solutions for business and community problems. Beyond the team, there is a Stakeholder Engagement function tasked with collaborating with bottling partners, business divisions, local communities, and non-governmental organizations across all locations of operation (The Coca Cola Company, 2018). Besides, on analyzing Coca Cola’s priority issues matrix, it emerges that governance, social, and environmental issues are most important (see figure 2 below). The matrix assists the managers in developing corporate and business strategies that, in turn, guide its growth, evolution, and reporting about its sustainability and business undertakings.

Figure 2: Coca Cola’s priority issue matrix Adapted from The Coca Cola Company (2018)

In addition, Coca Cola remains one of the most notable MNCs in sustainability because of its successful use of communication. Besides its press releases and annual reports, Coca Cola ensures consistency of information through its local hubs for regular, meaningful communication (The Coca Cola Company, 2018). The company has committed itself to respect divergent values and views, use open disclosure and communication, accept inclusivity, and promote accountability and transparency. Using these outlined techniques, it is able to reach all stakeholders and inform them of pertinent business and corporate strategies, programs, and initiatives, as well as gather information for strategic planning.

Overview of Coca Cola’s Sustainability and CSR in Five Years

Based on the text-based analysis of the recent sustainability report by the company and the commitment communicated through the pronunciations of James Quincey, Chief Executive Officer and Chairman, it is indicative that the company will enhance its efforts in promoting sustainability through CSR activities. Specifically, in 2020, the CEO stated that “We are pleased with our progress against some of our goals while recognizing that more needs to be done in other areas. We will continue to take action and grow our business the right way—not the easy way” (The Coca Cola Company, 2020). The company has acknowledged that the planet is significant, which means that it intends its efforts to conserve it by creating a better and more shared future. Additionally, the corporation intends to make a difference in the lives of humans and the communities through improving business practice. With the increasingly competitive market and growth of awareness regarding good corporate citizenship, its benefits for different stakeholders including the company, stakeholders, governments, local communities, and the environment, and the pursuit for long term profits and good public reputation, it is inevitable that the company will intensify its sustainability efforts even as it expands its global coverage.

Additionally, Coca Cola has been known to gather data from the local communities, civil stakeholders, and government agencies to evolve its products. As per a report by CSR Europe, (2018), the company intends to reshape its packaging approach to collect and recycle 100 percent of its packaging material by 2030. Essentially, the implication is that the company will have at least met some significant proportion of the target in the next five years. The company has pledged to invest in the planet, which means reducing garbage and investing more in the conservancy. Coca Cola will cut its water usage significantly by replenishing used water, which will benefit the ecology. In 2015, the company surpassed its objective of replenishing water supply by five years, which is an indicator of its commitment to achieving even greater exploits (CSR Europe, 2018). Similarly, the company will improve its women empowerment initiatives through increased funding and more opportunities at the local levels.  

Conclusion

Coca Cola Company is dominant in terms of growth and market share in the foods and beverage industry because of its progressive corporate social responsibility approach. The company has been consistent in formulating its business and corporate strategies, which align with the needs of the local communities such as education, jobs, women empowerment, arts and culture, conservation, and socioeconomic development. It has solid frameworks for collecting and processing data to achieve sustainability outcomes, which are reported in its annual sustainability reports. In the next five years, it is rational to make the assumption that the company will continue to make milestones in sustainability and CSR activities, which is based on a text-based analysis of its most recent reports.

References

Ciafone, A. (2019). Counter-Cola: A multinational history of the global corporation. Berkeley, CA: University of California Press.

Coca Cola Enterprises. (2016). Corporate responsibility & sustainability report 2015/2016. Coca-Cola Enterprises, Inc.

CSR Europe. (2018, January 30). The Coca-Cola Company announces new global vision to help create a world without waste. Retrieved from CSR Europe: https://www.csreurope.org/coca-cola-company-announces-new-global-vision-help-create-world-without-waste#.XkyNM2gzazd

Długopolska-Mikonowicz, A., Przytuła, S., & Stehr, C. (2018). Corporate social responsibility in Poland: strategies, opportunities and challenges. New York, NY: Springer.

Fordham, A. E., & Robinson, G. M. (2018). Mapping meanings of corporate social responsibility – an Australian case study. International Journal of Corporate Social Responsibility 3(14), https://doi.org/10.1186/s40991-018-0036-1.

Hamilton, J. M. (2015). The EKOCENTER: A case study in Coca-Cola, corporate social responsibility, and blue washing. Minneapolis, MN: University of Minnesota.

Shankar et al. (2018). Perceived CSR and Corporate Reputation: The Mediating Role of Employee Trust. Vikalpa: The Journal for Decision Makers 43 (3), 139-51. https://doi.org/10.1177/0256090918794823.

The Coca Cola Company. (2018). 2018 Coca Cola sustainability report. The Coca Cola Company.

The Coca Cola Company. (2020, February 19). Sustainable business. Retrieved from The Coca Cola Company – sustainable business: https://www.coca-colacompany.com/sustainable-business

Torkornoo, H. K., & Dzigbede, K. D. (2017). Sustainability practices of multinational enterprises in developing countries: A comparative analysis of Coca-Cola and PepsiCo. Journal of Global Initiatives: Policy, Pedagogy, Perspective 11(2), 20-30.

Tunaiji, N. A. (2019, Feb. 18). Sustainable business. Retrieved from Coca Cola: https://www.coca-colacompany.com/sustainable-business