An essential ingredient in every one of our products is our profound commitment to human rights and workplace rights. Respecting human rights and protecting workplace rights is fundamental to our culture and imperative for a sustainable business. In our Company and across our system, we are working to make sure all people are treated with dignity and respect.
We consider human and workplace rights—as articulated in the United Nations Universal Declaration of Human Rights and the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work—to be inviolable. We take a proactive approach to respecting these rights in every workplace of The Coca-Cola Company, in our bottling system, in our supply chain and in the communities in which we operate.
The foundation of our approach lies in three key documents: Our Human Rights Statement, our Workplace Rights Policy and our Supplier Guiding Principles. All three are influenced by the United Nations (UN) and International Labour Organization (ILO) declarations. Together, they describe our high standards and expectations, addressing such subjects as child labor, forced labor, freedom of association, discrimination, health and safety, hours of work and the 30 articles contained in the Universal Declaration of Human Rights. Our Human Rights Statement, our Workplace Rights Policy apply to all entities in which The Coca-Cola Company owns a majority interest (unless otherwise agreed). Many of our larger bottling partners have their own human rights policies.
In recent years, we have more clearly defined what we stand for with respect to human and workplace rights. We have also begun the complex work of ensuring that our entire business system and supply chain align with our policies. We expect our Company, our bottling partners and our suppliers to avoid causing, or contributing to, adverse human rights impacts as a result of business actions and to address such impacts when they occur. Furthermore, our Company, bottling partners and suppliers are also responsible for preventing or mitigating adverse human rights impacts directly linked to their operations, products or services by their business relationships.
To meet these expectations, our Company, bottling partners and suppliers are incorporating processes for identifying, preventing and mitigating their impacts on human rights. Additionally, all are required to implement a process for remediation of any adverse human rights impacts they cause or contribute to. Our efforts to promote respect for human rights across the Coca-Cola system and throughout our supply chain are being recognized. In January 2011, Calvert Investments, Inc., announced that we met its “environmental, social and governance criteria as a result of clear progress in labor and human rights.” For more information, read Calvert’s analysis of our progress.
Implementing the United Nations Guiding Principles on Business and Human Rights
Since 2005, we have worked to support the mandate of Professor John Ruggie, the former UN Special Representative for Business and Human Rights, in developing guiding principles for implementing his “Protect, Respect and Remedy” framework for respecting human rights in a business context. In May 2011, we formally endorsed the draft UN Guiding Principles on Business and Human Rights, which the UN Human Rights Council adopted in June 2011 (read the news release)—providing for the first time a global standard for addressing the risk of adverse impacts on human rights linked to business activity. These Guiding Principles are now a key touchstone for our policies and programs related to workplace and human rights.
According to the UN Guiding Principles, implementing respect for human rights in a corporate context has three primary components:
- A policy commitment to meet the responsibility to respect human rights;
- A due diligence process to identify, prevent, mitigate and be accountable for human rights abuses; and
- Processes to enable the remediation of any adverse human rights impacts the Company causes or to which it contributes.
Among the many steps we have taken to implement the UN Guiding Principles is an analysis of potential and actual human rights impacts across our entire value chain, from raw materials to end use. We have identified human rights risks along with policies and actions for mitigating them. In addition, we have developed five human rights–related due diligence checklists for managers across our Company, along with instructions for using them. The easy-to-use, two-page checklists cover such topics as migrant labor, child labor, plant siting and more. They offer clear steps our managers can take immediately to move beyond compliance with our policies to an ongoing respect for human and workplace rights that is inseparable from our daily operations.
Another way we are implementing the UN Guiding Principles is through the 25 “Good Practices” we are encouraging bottlers and suppliers to adopt. These practices enable bottlers and suppliers to move beyond compliance to a sustainable, integrated, systematic respect for human rights and workplace rights.
Our support of the UN Guiding Principles builds on our work as a participant of the UN Global Compact and member of the Global Business Initiative on Human Rights (and its predecessor, the Business Leaders Initiative on Human Rights). Our work in those partnerships continues. In January 2011, we joined 17 companies in launching the Global Compact LEAD program, which challenges Compact members to achieve a blueprint for sustainable corporate responsibility.
More Guidance for Our Managers
In early 2011, we updated our Human Rights Statement and Workplace Rights Policy after reviewing a Danish Institute for Human Rights analysis of gaps in our global policies. We addressed the gaps by updating our online Manager’s Guide on Implementing the Human Rights Statement and Workplace Rights Policy, adding new guidance regarding hate speech, indigenous peoples and other matters. Through online training, we also reinforced the understanding of our human rights policies among leaders across our Company.
In addition, we annually require that all Company managers and employees certify that they have read and understood the Human Rights Statement and Workplace Rights Policy, have acted consistent with those policies and were unaware of any unreported policy violations. Over the course of 2011, approximately 8,600 Company associates participated in 45-minute Human Rights Statement and Workplace Rights Policy training sessions, resulting in more than 6,450 hours of training on these Company policies and procedures.
Investigating rights-related complaints
We require all associates of
In 2011, we investigated 426 perceived human and workplace rights complaints in our Company, up from 118 in 2010. We attribute this increase to the addition of approximately 65,000 associates through our acquisition of the North American operations of Coca-Cola Enterprises (CCE), as well as an increased awareness of our human and workplace rights policies achieved through communication and education.
The largest number of complaints were related to discrimination (which includes retaliation and harassment) and work hours and wages. We found no issues where freedom of association had been denied. In cases where claims are substantiated, we take corrective action. Depending on the violation, corrective action may take the form of back pay, reassignment of duties and in severe cases, separation from the Company.
A Key Compliance Goal Achieved Early
By 2015, achieve a 98 percent compliance level for Company-owned and -managed facilities with upholding the standards set in our Workplace Rights Policy. Also, achieve 90 percent compliance with our Supplier Guiding Principles among independent franchise bottling partners and suppliers.
As of December 31, 2011:
- 98 percent of our Company-owned and -managed facilities have already achieved compliance
- 68 percent of our bottling partners and 73 percent of our direct suppliers have achieved compliance
To help our Company, our bottling partners and our direct suppliers achieve compliance, third-party auditors trained to our standards conduct regular workplace assessments. We conduct annual assessments of new suppliers and suppliers with a history of noncompliance. For suppliers with a history of compliance, we conduct assessments every three years. Over 12,000 workplace assessments have been completed since 2003.
In 2009, we set a goal of ensuring that 98 percent of our Company-owned and -managed facilities meet our workplace rights standards by 2015. We are pleased to report that we met that goal four years early. In 2011, assessments showed that 98 percent of company-owned and -managed facilities had achieved compliance.
As for our suppliers and bottling partners, we expect them to comply with the higher standards of international norms and applicable laws with respect to workplace and human rights principles. We encourage them to adopt our Human Rights Statement and Workplace Rights Policy or equivalents, to comply with our Supplier Guiding Principles and to uphold the standards we have set for everyone doing business under the Coca-Cola trademark. We convey our expectations and offer compliance assistance through our Supplier Guiding Principles program.
We aim to have 90 percent of our bottling partners and suppliers comply with our Supplier Guiding Principles by 2015. Our advancement in 2011 was slower than we wanted, but we are pleased to report progress nonetheless.
By 2011, we conducted a total of 2,241 audits. By the end of 2011, 68 percent of bottlers and 73 percent of direct suppliers had met the standards of our Supplier Guiding Principles. This represents a 10 percent increase in compliance over 2010 and a 29 percent increase over 2009.
Our progress in achieving supplier compliance in 2011 was slower than expected for several reasons. In some cases, natural disasters or civil unrest forced us to suspend supplier auditing. The March 2011 tsunami in Japan and flooding in Thailand interrupted compliance work in those countries. Similarly, the “Arab Spring” events in some Middle Eastern countries slowed our progress there. We also observed re-offenses among bottlers and suppliers of about 15 percent of previously compliant locations, and we are working to help bring them back into compliance. Our goal is to achieve an 80 percent compliance rate among bottlers and direct suppliers by the end of 2012, putting us well on track to meet our goal of 90 percent by 2015.
Beyond Compliance: Raising the Bar in our Supplier Program
In the fall of 2009, we began building on our Supplier Guiding Principles program by starting a more robust dialogue with bottling partners and suppliers about human rights and other sustainability efforts. Our aim was to move beyond compliance with our policies and work collaboratively with suppliers on a broader joint sustainability agenda.
Continuing this work in 2011, we initiated an update of our Supplier Guiding Principles auditing program, taking into account the UN Guiding Principles on Business and Human Rights, new industry trends and benchmarks, expert guidance and our own experience. The update will improve our program by better aligning it with customer requirements (saving us the significant cost of customer-initiated audits) and leading industry practices. It will encourage our suppliers to move beyond compliance and align to the latest advances in business-related human rights concerns. Updating our auditing program will also lead to more sustainable results by enabling us to help suppliers build capacity for sustainable practices and continuous improvement.
Improvements to our Supplier Guiding Principles programs include:
Stronger requirements. We will now assess suppliers for business integrity, workplace security and work environment. Assessing these aspects of our suppliers’ businesses will align us with the expectations of the UN Guiding Principles.
Inclusion of non-employee workers. We are also creating a consistent approach for ensuring that data about non-employee workers are captured in our assessments. All workers in a facility will now be included in the scope of our assessments, whether they are employee or non-employee workers.
Improved detection of human trafficking. We will also help suppliers build capacity for creating worker grievance systems and protection of migrant workers.
Strategies for capability-building. We created a series of 25 “Good Practices” that take into account respect for human rights to facilitate our ability to sustain and continuously improve supplier performance. These practices are listed on pp. 44-51 of our Workplace Rights Implementation Guide. We are also developing a “human rights metric” that measures against these practices and will add it to our supplier sustainability scorecard. Though the measurement will not be factored into a facility’s audit rating, we expect it to influence supplier and bottler actions to mitigate human rights impacts. We are offering guidance and training to help bottlers and suppliers improve their performance over time.
Database development. We are creating an online database to improve reporting and better identify trends, opportunities and challenges. This third-party relational database has replaced a series of homegrown spreadsheets that were increasingly difficult to manage. By digitizing audit entry, we eliminate the time delay and errors of data entry and expect to dramatically increase our analytical capabilities.
We expect these changes to our Supplier Guiding Principles program to be fully in place by the end of 2012.
The challenge of an extended global supply chain
One of our ongoing challenges is ensuring respect for human rights and workplace rights among our second- and third-tier suppliers and beyond. We sometimes have difficulty assessing whether suppliers far “upstream” in our supply chain align with our policies and values. Such suppliers can number in the tens of thousands, and their operations are often not transparent to us.
For example, in 2011, a news story casting light on the substandard living conditions among migrant fruit pickers in Southern Italy’s citrus-growing regions, where we source orange juice for some European products, underscored the challenges we face. We are mapping our orange juice supply chain back to individual farms and are identifying the companies that contract with the pickers who harvest the fruit. Our next step will be to organize field research into the causes and conditions that led to the mistreatment of workers. We will continue to work with our juice processors, their fruit suppliers, pickers, government agencies and others to improve conditions for pickers.
Similarly, we are engaged in efforts to address human rights abuses on sugar farms in the Dominican Republic, where allegations of workplace abuse have been prevalent for many years. Four years ago, our Company funded a third-party study of the Dominican Republic sugar industry, which revealed that, while some progress had been made, human and workplace rights abuses still occurred. (Read the study, along with studies of the sugar industries in Costa Rica, Guatemala, Honduras and Nicaragua.) More recently, Dominican sugar producers participated in a study of labor conditions conducted by the U.S. government and a Dominican nongovernmental organization (NGO). We are awaiting the report from that study. We are also awaiting results of a U.S. Department of Labor investigation into allegations of human rights abuses. Based on the outcome of the report and the investigation, we will work with Dominican sugar producers to bring them into alignment with both the law and our policies. We believe that staying engaged with the industry and applying our influence as a major sugar buyer is the best way for us to effect change. Additionally, as a member of AIM-PROGRESS, we are addressing human rights abuses in the sugar industry and sustainable sourcing generally in collaboration with our peer companies.
Enlisting the aid of suppliers and bottlers
To help extend alignment with our position on human and workplace rights throughout our supply chain, we are working with three of our primary suppliers in piloting a project intended to increase alignment with our policies. We asked suppliers to assess their own suppliers through third-party audits and to demonstrate how they manage their direct suppliers with regard to human and workplace rights. If the pilot project is successful, we may apply similar practices across our supply chain.
Our bottlers play a key role in addressing human rights concerns among local suppliers and farmers. Coca-Cola Europe, as well as bottlers in China, India and the Philippines, have all convened suppliers in recent years to improve the treatment of workers at all levels in the supply chain. These meetings include annual supplier conferences with awards for suppliers who perform well against our Supplier Guiding Principles. Suppliers who have not demonstrated a commitment to meeting our principles are not eligible for awards.
Addressing child labor in sugarcane fields
Our Human Rights Statement, Workplace Rights Policy and Supplier Guiding Principles prohibit the use of child labor. While there is no child labor in our Company-owned operations, we are aware that child labor persists on some of the farms that grow cane for our sugar suppliers, driven by poverty and local social norms. Our Company does not typically purchase ingredients directly from farms, nor are we owners of sugar farms or plantations, but as a major buyer of sugar, we are taking action and using our influence to help end child labor in sugarcane fields.
Our approach is both global and local. At the global level, we set corporate policy, convene experts, and engage with governments, NGOs and other companies. At the same time, we collaborate with suppliers, industry groups and local stakeholders to address the issue with farmers. In recent years, we have joined collaborative efforts in El Salvador that have dramatically reduced child labor in cane fields. We are also taking action in Honduras, Mexico, the Philippines and 16 other countries. In 2011:
As part of our Little Red Schoolhouse project, we continued our work with the ILO-IPEC (International Programme on the Elimination of Child Labour) director for the Philippines, the government of Bukidnon province and the Sugar Industry Foundation, Inc. to eliminate child labor in Bukidnon and enroll child laborers in schools. A grant from
The Coca-Cola Foundationfunded the construction of a high school in Bukidnon, which has the country’s highest incidence of child labor and the highest number of school-aged children not working or attending school. Since 1997, the Little Red Schoolhouse project has built more than 82 buildings benefiting nearly 51,000 public schoolchildren in remote areas of the Philippines.
We helped Honduras’s Sugar Association Board of Directors arrange for all the country’s sugar refineries to commit to addressing child labor. The initial plan calls for evaluation, intervention and education; benchmarking and contracting; as well as enforcement and monitoring activities to be implemented on a long-term basis starting with the 2011-2012 harvest. The first stage was developed by completing an independent assessment of child labor in the country’s sugarcane supply chain, which revealed minimal presence of child labor in the Honduras sugar supply chain.
Also in Honduras, we joined Save the Children in co-sponsoring a major program, including a media campaign and workshops, intended to raise public awareness about the negative consequences of child labor.
We became the first company to participate in an assessment as part of an ILO and International Organization of Employers project to provide companies with guidance on helping to eliminate child labor in their operations and throughout their supply chains.
We collaborated with ILO-IPEC Mexico to design and distribute a training guide discouraging the use of child labor among sugar farmers while encouraging more efficient farming practices and improving the living and working conditions of sugarcane workers. We also facilitated ILO-IPEC’s access to several farms supplying two of our authorized sugar refineries to enable ILO-IPEC programs to conduct appropriate interventions to address child labor in the agriculture sector.
Our audits have detected child labor and generally poor compliance with our Supplier Guiding Principles at sugar mills in India. We worked with our peers in AIM-PROGRESS to hold a forum for more than 50 sugar suppliers in July 2012. The conference delivered a message of zero tolerance for child and forced labor and offered guidance for suppliers who want to bring their businesses into compliance with our standards and earn Bonsucro certification. Recognizing that improving mill conditions means little if farm conditions do not improve, we are also working with Indian sugarcane mills to eradicate child labor in the fields.
We again recognized the ILO’s World Day Against Child Labor, raising awareness Company-wide about our policies and the problem of child labor in the sugar industry.
Beyond the cane fields
We are part of the effort to eradicate child labor in other industries as well. In 2011, we used our Supplier Guiding Principles workplace audits to detect child labor in the direct suppliers of our potential suppliers. We detected child labor in reviews of several suppliers of marketing materials—such as manufacturers of trademarked promotional items and apparel in China—and did not engage those companies as suppliers. We also detected an instance in which a transport supplier to one of our direct suppliers had employed his son, a minor. With our help, the supplier put new practices in place to prevent such an incident from happening again.
For example, as a sponsor of youth soccer programs throughout the world, we purchase and distribute thousands of promotional soccer balls. We continue to require all the soccer balls that we buy to be machine-stitched in facilities with child-labor monitoring and chain-of-custody controls. We have had no reports of child labor in the facilities that produce our balls since adopting these controls.
Eradicating child labor is a complex and often frustratingly slow process, requiring consensus and cooperation among many stakeholders. It is made all the more difficult by persistent poverty and lack of access to education in cane-growing regions. Still, based on our progress and the lessons we have learned to date, we are hopeful about our opportunities to contribute to substantial, lasting change.
Preventing human trafficking
Our Company addresses human trafficking and forced labor through our Human Rights Statement, Workplace Rights Policy and Supplier Guiding Principles. These policies are supported by independent assessments of supplier, bottler and Company-owned facilities and are conducted by third parties to verify compliance with our standards that prohibit trafficking and slavery in supply chains.
In 2009, through our workplace audits in the Persian Gulf area, we discovered that some bottlers were withholding the passports of migrant workers. Based on that experience, we worked with the ILO and its human trafficking experts to develop a guideline that prevents restrictions on freedom of movement among migrant workers. Our Company operations do not hold employee passports. Our stringent guidelines allow bottlers and suppliers to hold employee passports only at the request of the employee.
In 2011, we developed guidelines related to recruitment agencies and fees often associated with human trafficking. The migrant labor due diligence checklist that we provided to our Company managers is a direct result of this work.
In February 2012, we hosted an International Conference on Human Trafficking in Labor Sourcing, which was attended by more than 150 people from more than 45 companies. The conference focused on exploring solutions to eliminate human trafficking in labor sourcing. In addition, we hosted a meeting of the Business Coalition Against Human Trafficking’s founding members, which includes The Coca-Cola Company. The meeting concentrated on the business case for preventing human trafficking, legal considerations, remediation approaches and more.
Collaborating with labor and other stakeholders
We respect the rights of workers in the Coca-Cola system to join unions without the fear of retaliation and engage in collective bargaining without interference or fear of retaliation. More than 30 percent of workers in our system are represented by trade unions. Of those, more than 70 percent are affiliated with the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers' Associations (IUF), one of our business system’s most important stakeholders.
Maintaining a productive relationship with trade unions enables us to collaborate with them on key issues affecting our Company’s success. It also enables us to solve problems constructively and manage risk. If we are unable to address legitimate labor union concerns, renew collective bargaining agreements on satisfactory terms or address workplace inequities in a timely way, our business could suffer through strikes, lawsuits, a global corporate campaign or other labor unrest.
Twice each year, we meet at our Atlanta headquarters with IUF delegates from around the world to discuss labor and workplace issues in our system. These meetings enable us to have frank conversations and address and resolve difficult issues across the table through serious and practical engagement from both sides. We encourage our bottling partners to collaborate with labor organizations as well. In 2011, we enhanced mechanisms for identifying workplace rights problems early. We provided bottling partners with resources and human rights due diligence checklists to address such issues as contract labor, plant siting and human rights in the supply chain.
In addition, leaders from our Company participated in the annual June International Labour Organization Conference attended by representatives of trade unions from more than 160 countries and by numerous human rights NGOs. Company leaders have served in a variety of leadership positions at the ILO Conference, including employer spokesperson roles on the Committee on Application of Standards through 2011 (the Committee holds countries accountable for workplace human rights violations), and employer spokesperson roles in 2012 to develop an action plan to energize the 1998 Declaration on Fundamental Principles and Rights at Work, which has had a highly successful outcome. We also have ongoing and regular engagement with a wide variety of human rights groups and socially responsible investors.
Ensuring Ethical Engagement of Contract Labor
Like many companies, our Company and bottling partners employ contract and agency labor. We believe there are many legitimate uses of contract labor, and we expect contract workers, through third-party providers, to continue to play an important role in our business. Through enhancements to our Supplier Guiding Principles assessments (please see above), our Company is holding more contract and agency labor suppliers accountable for the ethical treatment of these workers.
Our commitment to human and workplace rights, as well as our commitment to operating a sustainable business, compels us to respect the rights of all workers, including those not directly employed by our Company or bottling partners. What is more, improper treatment of contract laborers would put our business at risk of lawsuits, action by regulatory agencies and damage to our reputation. So, we are working with our business units and our bottling partners to develop a proactive, holistic approach to managing contract labor that protects workers and our Company by addressing critical issues at each phase of a contract worker’s engagement with us—from our initial decision to use contract labor through the end of the relationship with labor suppliers or specific workers. We expect our personnel and our bottling partners to understand the risks associated with contract labor and to carefully manage the labor agencies engaged. We also expect them to provide training, a safe work environment and to avoid using termination practices that circumvent legal obligations.
We take a number of steps to ensure responsible engagement of the contract and agency workers we employ, including:
- Our Human Rights Statement, Workplace Rights Policy and Supplier Guiding Principles outline our commitments and expectations for treatment of all workers. Any allegation of worker abuse—including abuse of contract laborers—is a very serious issue that we fully investigate.
- We conduct continuous assessments of our operations and of key authorized contract labor suppliers to ensure the responsible treatment of contract laborers.
- We engage with key stakeholders to understand their perspective regarding potential abuse of contract workers. The subject of contract and agency labor is a standing agenda item for our semiannual meetings with the IUF. Through these meetings, we have successfully addressed a number of concerns regarding contract workers in India, Pakistan and the Philippines.
- We provide our largest bottling partners with contract labor risk-mitigation checklists and other tools to help them manage contract labor appropriately.
Progress on hours of work
Compliance with local work-hours and overtime laws is a fundamental component of our Workplace Rights Policy and Supplier Guiding Principles. We have provided guidance on this issue to bottlers and suppliers and helped them develop best practices for managing hours of work. Their improvement is reflected in the increasing numbers of Company, system and supplier facilities that have achieved compliance with our Supplier Guiding Principles.
During the second half of 2012, we are working with bottlers and suppliers in South Korea to address extensive noncompliance with our hours-of-work policies. We are developing a unique approach using third-party Operational Excellence resources to better identify and correct the root causes of hours-of-work violations. We hope to apply the tools we develop in this process in managing hours-of-work issues systemwide.
Collaborating to increase sustainable sourcing
We are a leading member of AIM-PROGRESS, a forum of 32 fast-moving consumer goods manufacturers and suppliers working together to promote responsible sourcing practices. Through AIM-PROGRESS’s joint training initiative, the group conducts in-person and virtual supplier training sessions around the world. Trainings cover the four major pillars of responsible sourcing: human rights and labor standards, health and safety, environmental compliance and business integrity. Leaders from participating companies provide perspective on why responsible sourcing is important to customers, stakeholders and sustainable businesses. Over the last two years the sessions have reached approximately 2,000 suppliers and 4,000 people.
Member companies recognize supplier audits completed on behalf of another company through a framework called mutual recognition. Recognizing audits conducted on behalf of another company reduces audit fatigue, reduces time and costs on the part of suppliers and shifts the focus from auditing to performance. Our work with AIM-PROGRESS has advanced our mutual audit recognition to 16 percent of the suppliers we audit.
Beyond Human Rights: Addressing All Aspects of Supplier Sustainability
In every bottle of Coca-Cola you will find not only the work of our associates and bottlers, but also the contributions of our thousands of suppliers worldwide. Our system depends on suppliers for ingredients and packaging, and for other things you may not think of: technology for our production lines, vending equipment, logistics, marketing and much more. We also depend on our suppliers for the innovations and practices that help make us a more sustainable company.
That is why, in addition to our human rights work with suppliers, we are focusing on our supply chain as a crucial element in every one of our systemwide sustainability initiatives. For example, we are active members of Bonsucro, which developed the first metric-based sustainable sugarcane production standard. And we are working closely with suppliers to help us realize our goal of delivering 100 percent of our beverages in PlantBottleTM containers by 2020. In all, we are working to embed our sustainability principles in all of our procurement processes and to extend them as far “upstream” in our supply chain as possible. We are also working closely with suppliers to help them reach beyond compliance with the minimum requirements set out in our Supplier Guiding Principles and instead join us in pursuing a joint sustainability agenda. Some of the ways we are achieving this include:
- Creating playbooks for our commodity procurement groups and scorecards for their suppliers. We are helping our procurement teams understand potential sustainability opportunities for the commodities they buy. We are also providing them with supplier scorecards based on various sustainability criteria so they know which suppliers can best help us meet our sustainability goals.
- Engaging supplier-by-supplier. For some years, through our Supplier Relationship Management Program, we have collaborated with suppliers on meeting our mutual goals. We are building on those relationships so we can better integrate sustainability into our joint long-term business planning. In 2011, we established
The Coca-Cola CompanySupplier Sustainability Council, a group of 34 suppliers who are leaders in sustainability in their respective industries. We see this group as both a means of aligning our sustainability practices with our supply chain and as a birthplace for ideas that will shape our sustainability journey.
- Engaging our system. Our bottlers worldwide are crucial to any vision we have toward sustainability. We are helping them to ingrain sustainability into their own local procurement processes, and in many areas—Europe, China and India among them—their proactive procurement practices are instructing ours at the Company level.
- Major initiatives. With programs like PlantBottle packaging, Bonsucro-certified sugar and our eKOfreshment program for making our vending and cooling equipment more climate-friendly and energy efficient, we are advancing sustainability across our global system in increments measured in billions of product units.
- Third-party engagement. We cannot achieve supplier sustainability alone. So we partner with the experts: World Wildlife Fund (WWF), Carbon Disclosure Project and many others.
Encouraging transparency among our suppliers
As a member of the Carbon Disclosure Project, we can invite our suppliers to disclose their carbon emissions through the program as well. In 2011, we asked the 34 members of our Supplier Sustainability Council to report their emissions, and 28 took us up on our offer—including eight who had not previously reported. In 2012, we will invite 89 suppliers to disclose through the project. Such joint disclosure gives us a clearer picture of our global carbon footprint while strengthening our connections with the suppliers who are taking our sustainability journey with us.
Regional engagement for greater impact
While our supplier engagement has begun at the Company level with a group of large, mostly global suppliers, many of our system’s regional procurement entities have launched their own specific programs on supplier sustainability as well, localizing sustainability and extending it farther up the supply chain. In 2011, Coca-Cola Enterprises, Inc. (CCE) held its second annual Supplier Sustainability Summit and Awards Ceremony. Attended by representatives of more than 50 of CCE’s key suppliers, the summit provided a forum for sharing best practices on carbon reduction and challenged suppliers to measure, reduce and report their emissions. CCE also presented awards to the three suppliers who most contributed to the Company’s business in 2010. Our operations in China, India and the Philippines have held similar meetings over the last several years.
Sustainability across every facet of our supply chain
The work we have done to date is really just the beginning of a comprehensive effort to integrate sustainability objectives into our procurement practices and every one of our partner relationships. In the next 12 to 24 months, we expect to have even more to report, including the outcomes—such as money and resources saved—of our supplier initiatives. Here are just some of the advancements we made in 2011:
We continued working with equipment vendors like Krones, Sidel, KHS and Tetra Pak to make sure new production lines in our manufacturing facilities are more energy- and water-efficient.
Our Cross-Enterprise Procurement Group, the global procurement entity funded by our Company and bottlers, collaborated with Ardagh Group to explore ways to increase levels of recycled glass used in our glass bottles with CCE, our largest bottler in Europe.
We engaged with carbon dioxide (CO2) suppliers, The Linde Group and Air Liquide, to identify alternatives for the gas we use in our sparkling beverages and to look at how we can expand the use of gases, like hydrogen, for fuel.
With Cargill, Incorporated, and WWF, we are working to improve agricultural sustainability in the corn-growing regions of northern China. Read more about our work to promote sustainable agriculture.
As the world’s largest buyer of closures, we have collaborated with suppliers to reduce the weight of our closures by 10 percent over the last three years. We are looking at how we can use one-piece closures made from a single material to help simplify recycling streams around the world.
Managing the Costs of Sustainability
Often, sustainability comes at a price. Innovations or sustainable practices may be more labor- or capital-intensive for our suppliers, and they sometimes pass those costs on to us. We are working on a supplier-by-supplier basis to negotiate costs and manage their effect on our business. In cases where there are substantial up-front costs for meeting our sustainability goals, we take a long-term view and aim to arrive at cost neutrality over time. But we do not yet have all the solutions to this piece of the sustainability puzzle, and we will be working closely with suppliers to manage costs and mitigate negative impacts on our business as we continue to become a more sustainable enterprise.
Choosing Engagement as a Way to Effect Change
A question we always face as we build sustainability into our supply chain is whether it is best for us to remain engaged with a supplier when we learn that the practices of a particular business or industry are contrary to our own policies. Sometimes we can do more to improve the situation by maintaining our connection with a supplier. In the Dominican Republic, for example, we have chosen to remain engaged with sugar producers despite years of documented human rights abuses in that industry because we care passionately about respecting human rights and believe we can have far more influence as a customer collaborating with producers than as just another critic on the sidelines. But in other instances, our only choice may be to end our relationship with a supplier. The right choice may not always be clear, and we evaluate each situation individually. This is a challenging aspect of building supply chain sustainability and one we are still learning about.
Making Our System a Great Place to Work
Inside every bottle of Coca-Cola is the passion, hard work and ingenuity of some 700,000 people around the world and across our system—the people who make, market and deliver our products.
One of our 2020 Vision goals is to be a great place to work. And we believe that work should be a place of exploration, creativity and professional growth—a place where people are inspired and motivated to achieve extraordinary results. We want our people to take pride in their work as they refresh the world, inspire moments of optimism and happiness, create value and make a difference.
How do we achieve our vision? By listening to our employees and acting on what they tell us.
Turning employee insights into action
We have conducted regular global employee engagement surveys since 2004. In 2010, our employee engagement score reached 84 percent—aligning for the first time with Towers Watson’s High Performing Companies’ Norm Index.1 We also found that compared to the previous survey, more associates said they are proud to be part of
To improve operating effectiveness, we integrated Operational Excellence—our program for increasing productivity and eliminating waste—with our annual performance plans. We also offer Operational Excellence training to help associates learn how to integrate solid operational techniques into their day-to-day work.
To improve people leadership and development, we implemented a manager excellence program for new managers to ensure they understand key people processes and build skills in team development. We also began offering career workshops to teach employees and managers how to use the career planning and development tools we make available to them. And we launched the “Coca-Cola Way of Leading Teams” program to build skills that help team leaders better develop and engage team members.
A globally recognized “Best Place to Work”
In October 2011,
Global hiring and turnover rates
Cultivating the future of our Company
Developing our managers’ leadership potential helps keep them engaged and challenged. It also helps ensure strong, expert leadership for our Company well into the future. Our Leading Positively framework includes programs that build skills and provide peer-networking opportunities for managers throughout our Company. One example is our "Coca-Cola Way of Leading Teams." All first-level through mid-level managers worldwide will participate in the program within the next three years. For the past five years, we have also offered Catalyst, an accelerated leadership program that combines experiential learning, in-market project work and instructor-led training and coaching to develop our next generation of senior leaders.
In addition, 100 percent of our Company associates have the right to receive regular performance and career development reviews. In 2010, we estimate that 97 percent of our associates completed self-assessments in their performance plans, and approximately 60 percent also completed career and development plans.
Creating a more inclusive workplace
We are a multinational business whose brands and operations are deeply interwoven with a multicultural world. Having a workforce as diverse as the people we serve is crucial for our future growth. Moreover, providing equal opportunity is one of our most closely held values. Among our achievements in increasing diversity in 2011:
- As part of the integration of Coca-Cola Refreshments USA, Inc. (CCR) with our Company in the United States, we established eight new Diversity and Inclusion Councils, which provide strategy reviews, employee advocacy and develop recommendations for senior management.
- The Coca-Cola system’s U.S.-based spend with diverse businesses was $766 million in 2011, an 18 percent increase over our 2010 diverse business spend.
- 5,500 of our associates in the United States self-identified as having served in the military.
- We were named in Black Enterprise magazine’s list of 40 Best Companies for Diversity for the eighth consecutive year.
- We scored 100 percent in the Human Rights Campaign’s Corporate Equality Index, maintaining our perfect score for the sixth consecutive year.
- We were named to DiversityInc’s Top 50 Companies for Diversity list for the 10th consecutive year.
- We achieved the second-highest score among Fortune 100 companies on the 2011 Hispanic Association on Corporate Responsibility (HACR) Corporate Inclusion Index.
- Asian Enterprise magazine named us as one of its Ten Best Companies for Asian Americans and Pacific Islanders.
Slowly but surely, more women in our global ranks
In 2011, we continued to make progress in recruiting and advancing women across our system. Global representation of women in our senior leadership roles increased to 28.2 percent, up 1.2 points from 2010. External hiring of women at senior leadership levels globally has risen from 13 percent in 2007 to 41 percent in 2011. Female representation in our key assessment and development programs has risen from 21 percent in 2007 to 49 percent in 2011. More than 33 percent of the talent in our immediate pipeline is female. While we are encouraged by this progress, our efforts to significantly increase the number of women in leadership positions across our global operations still face challenges. Our pool of qualified women in some parts of the world has historically been very low. We are aggressively striving to increase the number of women in our talent pool through recruitment and internal development strategies.
Diversity and CCR
In 2010, The Coca-Cola Company acquired CCE’s former North American business (which is now known as Coca-Cola Refreshments USA, Inc. (CCR)) as a wholly owned subsidiary. CCR employs about 65,000 associates in North America. This expansion has presented both opportunities and challenges in regard to our efforts to build a more diverse Company.
In 2011, The Coca-Cola Company ranked No. 12 on DiversityInc’s Top 50 Companies for Diversity list and had been in the top 20 on that list for eight consecutive years. In early 2012, we were ranked 46th on the list because of the dilution of our diversity data that occurred when we counted tens of thousands of CCR employees for the first time. Viewed separately from the CCR data, our “legacy” diversity data from The Coca-Cola Company—including the representation of women in the organization, the number of people of color in management and senior management, spending on women- and minority-owned suppliers, and membership in our employee affinity groups—actually increased in 2011.
We are working with our new colleagues at CCR to accelerate their implementation of programs for ensuring the same kind of leadership in diversity, inclusion and fairness that has characterized The Coca-Cola Company for more than a decade. CCR established eight new Diversity and Inclusion Councils, which help drive diversity policy and are sponsored by CCR CEO and President Steve Cahillane. CCR also continued the process of embedding diversity and inclusion into its various human resources processes, including talent acquisition, talent management and employee communications. In 2011, CCR also developed its first diversity and inclusion metrics.
The Coca-Cola Company has conducted comprehensive analytical fairness studies in regard to compensation, selection, performance management and decisions regarding restructuring on an ongoing basis since 2001. In 2011, the Company began implementing many of those same workplace monitoring programs for CCR associates, including fairness studies on performance management, annual incentive awards and the granting of stock options and performance share units
Managing Workplace Safety
Every worker has a fundamental right to a safe, healthy workplace. Our Workplace Rights Policy demands we take responsibility for maintaining a productive workplace by working to minimize the risk of accidents, injury and exposure to health risks for all of our associates and contractors.
In 2011, The Coca-Cola Company continued to focus on safety improvement. As part of an internal reorganization, we expanded our occupational health and safety team, adding resources with the intention of accelerating our occupational health and safety program.
Our Safety Record in 2011
The following table shows our Company’s lost-time incident rate and lost days for 2011 and the previous five years:
In 2011, our lost-time incident rate decreased to 3.33 from 4.06 in 2010. We attribute the decline to an ongoing increase in focus on safety across our business units. We are also integrating safety education and training in Operational Excellence, our program for increasing productivity and eliminating waste.
We regret to report the deaths of three Company associates and 12 contractors in 2011. Nine of the deaths were due to traffic-related incidents. One employee was shot during a suspected robbery attempt while in the field. Three contractors suffered fatal injuries while loading or unloading vehicles. Two others died from falls.
We recognize the unacceptable number of deaths in our system in 2011, and the high proportion of contractor fatalities. In response, we are evaluating ways to better implement our safety requirements for contractors, which are among the most stringent in the industry. This is particularly important in countries such as India and the Philippines, where distribution and route sales have historically been handled by contractors.
A tool kit for increasing fleet safety
Any time we experience a significant safety and health incident, especially if one of our associates or contractors dies in the course of duty, we review our practices and take steps where necessary to mitigate risks of similar tragedies in the future. In 2011, to improve the safety of our fleet drivers, we launched a comprehensive online fleet safety tool kit for our system. The kit, which can be customized to fit specific needs from bottler to bottler, includes more than 60 proven tools, such as driver training materials, sample safety policies, vehicle maintenance checklists and more. The kit also encourages sharing of best practices among fleet managers across our system. Our fleet safety tool kit is based in part on successful measures implemented by one of our Mexican bottlers, which reduced accidents-per-million kilometers by 60 percent and cut insurance costs by 20 percent between 2009 and 2011.
Similarly, we have also introduced a tool kit providing fall prevention and fall protection solutions for the loading and unloading of vehicles. Reducing falls was identified as a priority based on our injury and audit data.
Recognition for Safety Practices in Iberia and New Zealand
In 2011, two of our bottlers were recognized for their advancements in workplace safety. New Zealand bottler Coca-Cola Amatil NZ was recognized by the Business Leaders’ Health & Safety Forum after implementing a “zero harm” program and dramatically reducing lost-time incidents and claim costs between 2009 and 2011. And Coca-Cola Iberia was presented with an award by Asepeyo, a health and safety consultant, and the Work Department of the regional government of Madrid for its recent reduction in lost-time incidents.
Looking Ahead: A Strategy to Increase Safety Systemwide
While we took some important steps toward improving safety in our Company and system in 2011, on the whole we consider our safety results, from the fatalities we suffered to our lost-time incident rate, to be unacceptable. We are working to substantially improve our safety performance. In 2011, we launched our Global Safety Network, convening safety leaders from our Company and our bottlers to develop strategies for safety improvement.
1 The Towers Watson’s High Performing Companies’ Norm Index is composed of 25 organizations, representing more than 300,000 employee views from companies across a range of industries worldwide. These companies maintain return on invested capital or net profit margin that is above relevant industry averages and high survey scores on associate engagement and other key cultural factors over a three-year period.
2The award was presented by the Great Place to Work Institute as part of its inaugural World’s Best Multinational Workplaces list. To qualify for the list, companies must appear on at least five national Great Place to Work lists, have at least 5,000 employees worldwide and have at least 40 percent of their global workforce working outside of the company’s home country.