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Case Study

 

Success with Sustainability at The Coca-Cola Company

insiderPROFILES

April 1, 2010

Even with its substantial environmental footprint, The Coca-Cola Company is leading the charge around creating more sustainable business processes. What lessons can the rest of us glean from this experience? Jeff Seabright, Coca-Cola’s VP of Environment and Water Resources, answers this question with seven pieces of advice.
 

The Coca-Cola Company is most widely known across the globe for its beverages, with Coca-Cola being the flagship brand. With its roughly 300 bottling partners running some 900 manufacturing plants, the Coca-Cola system has operations in more than 200 countries. These operations consume roughly 300 billion liters of water and require massive amounts of sugar, citrus, and coffee. Add in packaging (bottles, cans, and cardboard), and the environmental footprint is significant. But so are the company’s sustainability activities.

Over the past six years, under the leadership of Jeff Seabright, Vice President for Environment and Water Resources, the Coca-Cola system has achieved significant sustainability milestones for carbon emissions, refrigeration and energy efficiency, sustainable packaging, and water use.

Moreover, it has successfully made these sustainability initiatives value drivers for its business:

  • Programs for water stewardship both in plants and in the communities in which bottlers operate have reduced water consumption and, hence, production costs. These programs also serve to minimize any risk of business disruption due to water-related issues.
  • Using less packaging material and less energy for manufacturing has reduced the cost of goods sold, which in turn enhances the profitability of the business.
  • There is incontrovertible evidence that engaging consumers around sustainable propositions enhances revenue. Special promotions with Wal-Mart on Earth Day last year, for example, were accompanied by a big spike in sales. Plans for new eco-friendly bottles are expected to enhance the customer appeal of the company’s brands.  

Looking ahead, The Coca-Cola Company will expand its work beyond driving environmental stewardship in its bottling plants to focus on engaging more robustly with suppliers as well.

The Coca-Cola Company’s Top 7 Lessons Learned

The Coca-Cola Company is clearly leading the charge around creating more sustainable business processes. So the obvious question now is: What lessons can the rest of us draw from this experience? insiderPROFILES asked Seabright this very question. Here are the seven pieces of advice he offered:

Coke machine

1. Sustainability starts at the top.

I am lucky to work at a company where the senior management really understands this, and it makes a huge difference. It’s also part of the history of The Coca-Cola Company and the connection our business has in communities around the world. If you listen to Muhtar Kent, our CEO, talk about sustainability, he clearly sees himself as the chief sustainability officer. He’s not there just to engage with environmental do-gooders, but also to get it right for the business. The ultimate responsibility for the reputation of the company and the integrity of our brands rests on his desk, and so does sustainability. This is a tremendous asset.

2. Embedding sustainability into your business strategy requires targets and quantifiable metrics.

Measuring and monitoring your environmental performance is an area of growing importance. Software and environmental accounting tools, like those offered by SAP, allow you to intelligently understand and react to interrelationships among different variables. For example, we might see an energy consumption pattern emerging in one plant that’s different from others. With the right data, we can correlate this to water-use efficiency. Once you spot a pattern, you can be proactive rather than lagging, which in turn creates efficiencies that lower your costs.

If you want to drive sustainability as a real business imperative, then you must treat it as such. You need targets and quantifiable metrics. For example, we want to improve our water efficiency 20% by 2012. None of our goals would be achievable or actionable if they didn’t have metrics standing behind them.

3. Connect with employees.

For a company to be successful, its employees need to feel good, motivated, and excited about coming to work every day. You see this happen around sustainability agendas. I get comments in the cafeteria, people coming up saying, “I work in the finance department, and I’m so excited about what we’re doing. I feel proud to be part of it.” That kind of reaction from people reinforces everyone’s commitment to the workplace. So, get the word out. We’ve actually developed an internal language for sustainability at The Coca-Cola Company called Live Positively, which embodies the values that we aspire to deliver on every day as a business. 

4. Meet in the middle.

I mentioned that sustainability starts at the top. But you can’t succeed with a sustainability agenda and make it a value driver for your business with only a top-down approach. It also requires a bottom-up commitment from employees. You need the understanding of your senior management, but they need to feel confident that employees have their hands around the business at the plant level and the operating unit level. If the people at the plant level, who have 1,000 tasks they need to complete every day, don’t get a signal that sustainability is valued up the management chain, they will gravitate to what’s important to their management. A meeting in the middle of senior management and employees is how you get successful engagement around sustainability.

5. Engage your suppliers.

We had a terrific supplier sustainability summit in Atlanta this past September with the leadership of our top 30 suppliers. The group included agricultural, packaging, and refrigeration equipment companies. We asked them to work together with us to innovate sustainability solutions and create value for our customers. We’ve received hundreds of ideas from our suppliers on how we can work more closely to drive a shared sustainability agenda. The results will have a marked impact on our environmental footprint and our bottom line. We reached back into our supply chain for inspiration and innovation as opposed to contracting it out to a consulting firm.

6. Gain a mastery of both the technical and the political facets of sustainability.

To gain the trust of all stakeholders, you need a mastery of two things. One is technical and the other is political — or on the policy side of sustainability. A lot of this work is technical. In my case, I need to be able to talk about biological oxygen demand for treated wastewater effluent parameters and to engage in the blocking and tackling of environmental sustainability and workplace safety issues. 

At the same time, you’ve got people at the highest levels — from the secretary-general of the United Nations to the president of the United States to the Pope — talking about sustainability. It’s in the news every day. It’s very political, and it can be polarizing in some places. The policy engagement — understanding how all this fits together — is critical, especially as sustainability becomes a more integrated aspect of the workplace.

If you’re purely technical, you’re probably not going to seize all the opportunities. If you’re purely policy-oriented, you probably won’t get as much traction as you need to. Every organization has its own center of gravity culturally, and it’s important to understand what that is. The Coca-Cola Company is clearly built on brands, and so marketing, reputation, and public affairs are very important to us. Each company has a different set of priorities. So master the technical and political issues that enable you to play to the center of gravity of your business.

7. Understand that corporate environmental action has evolved.

Sustainability is no longer a compliance or public relations issue. It is not sufficient to provide grants to environmental projects and mention sustainability in an environmental report. Sustainability needs to be fully embedded in the business and treated as a truly integrated element of business strategy, P&Ls, brand stewardship, and the people side of the business.

All departments need to be involved: legal, PR, research and development, manufacturing, logistics, finance, marketing, sales, and even HR. Go to an MBA recruiting tour these days, and you quickly find that you need a way to explain why coming to work at your company offers an opportunity, not just for a rewarding career financially, but also to do some meaningful work as part of an organization that’s making a positive difference in the world.

Sustainability is not a compliance or check-the-box issue. It’s about understanding the challenges and opportunities that will shape the business landscape for all of us going forward — and the winners will be those companies that understand and navigate that landscape well, integrate it into their business, and stay the course.

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