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The right recipe, but not enough fizz

By Katie Loden (Context) on September 04, 2009 at 11:59am.


Coca-Cola Enterprises (CCE) is the world's largest bottler of Coca-Cola products.  It produces and packages the brands under licence, then sells and distributes them to retail and wholesale customers in North America and parts of Western Europe. It distributed two billion cases of drinks in 2008. The Coca-Cola Company (which owns the brands) owns approximately 35 percent of CCE. CCE is responsible for a wide range of sustainability issues including water use, packaging and distribution impacts.

Content

The fourth Corporate Responsibility and Sustainability (CRS) Report is well thought out, accessible and easy to navigate both as a pdf and in html format.  While the initials appear to be back to front the approach is not. The report is packed with interesting and innovative information. There are five priority issues or ‘CRS strategic focus areas’, some of which are addressed more clearly and explained more convincingly than others:
 · energy conservation/climate change
 · water stewardship
 · sustainable packaging/recycling
 · product portfolio/well-being
 · diversity and inclusive culture. 

The report benefits from some interesting research CCE has done to understand its material impacts. For example, it has calculated the first certified carbon footprint of fizzy drinks.  With the help of the Carbon Trust, CCE assessed Coke in Britain and Dasani water in the United States (see below).  It also completed water-risk surveys for each of the 79 production plants. And it is extending the reach of its efforts by partnering with customers, for example by working with Wal-Mart to reduce the energy consumption of vending machines in employee break rooms.

The company appears to have taken a big step forward in 2008. Chairman and CEO John Brock declares the commitment to CRS ‘has never been stronger’.  Proof lies in the new ‘Commitment 2020’.  The report states “we believe it is now time to set more demanding goals and targets as well as a timeframe in which to achieve them”.  Although the company is clearly attempting to introduce a more aggressive strategy and targets, only the climate change and water goals have become more ambitious.  The others tend to either lack metrics or be little different to previous ones. CRS does appear to be integrated in core business strategy at least as far as mitigating risk is concerned.  Members of the Executive Leadership Team are responsible for the appropriate risk category for their function, which may be why water and energy impacts (the main risk areas) have stronger, measurable commitments.

Climate change is obviously a priority. For the first time CCE has calculated the carbon footprint of its operations in each country where it does business. There is a target to reduce the overall carbon footprint of business operations by 15 percent by 2020, as compared to the 2007 baseline. But there is little context for this, and some other targets. The CEO explains that top leadership, the CRS Board Committee and external sustainability experts came together to establish the Commitments 2020, but does not explain why they came up with the targets.  Nor are we told who these experts are. 

This is disappointing because on other occasions CCE successfully contextualizes its goals.  For example there is a clear description of how it reached the goal to make the average efficiency of 1.3 litres of water going into a product to make one litre of beverage.  Any less and it would reach a water/energy trade off. If it were to continue to reduce the water use ratio towards 1:1 the concentrated wastewater would be reduced but would require more energy to process before release.

Reducing water use is another key issue. Coca Cola Enterprises used a massive 35 billion litres of water in 2008.  But this section leaves us thirsty for more information with its inadequate description of ‘highly detailed assessments of the vulnerability of our water sources’.  It sweepingly concludes: ”based on information available, we believe that our water withdrawal has negligible impact on local water sources”  without an account of the information collected. Results and analysis would help us to trust this judgement. An external viewpoint (from WWF for example who act as observers) would also be another way of adding validity to the statement.

The product assessments surprisingly show that primary packaging (not transport) is responsible for the largest part of the carbon footprint of a Coca-Cola product. The calculations are based on every stage of development including the ingredients used to make products, the manufacturing of packaging, the manufacturing and distribution processes, the cooling of a product within stores, and consumer use and disposal of the packaging. An eye-opening graph shows that diet versions have a much lower footprint and that cans have only around half the impact of bottles.

While CCE is attempting to reduce the impact of packaging it dedicates the majority of reporting to its massive and comprehensive recycling efforts. It divulges that recycling rates average 40% across the markets but asserts it is ‘taking a leadership role to increase recycling’.  Initiatives to educate customers are clearly substantial and one of the 2020 goals is the tough task of recovering the equivalent of 100% of packaging.

Communication

CCE avoids jargon and successfully describes what is a confusing business model for anyone unfamiliar with the company.  The more complex areas such as the manufacturing and distribution process, water recycling and the packaging lifecycle are all accompanied with clear and helpful diagrams.  The overall writing style is appropriate for the reader and avoids waffle or jargon. Visually the design is simple but helps to guide the reader through the report very effectively. 

Features of each section include headline news as well as case studies, and an employee ‘spotlight’ which highlights how employees around the business contribute to CRS efforts.  This works well, breathing life into report.  A comment or quote from the employees themselves would add variety and interest.

Credibility

The tone of the report is credible and comes over as sincere.  CCE is optimistic about its achievements but doesn’t brag. It balances positive stories by acknowledging shortcomings.

Although it follows GRI guidelines, CCE do not yet seek external verification, instead obtaining feedback and guidance ‘through listening sessions and stakeholder engagement’. MBA graduate students at Georgetown University’s McDough School of business in Washington, D.C were invited to review the report.  But the way their reaction is currently presented is lightweight. Publishing specifics about their critique would allow us to make up our own minds about what they really thought.

This problem is repeated throughout the report.  It describes which stakeholder groups the company are engaging with but does not describe what feedback CCE is receiving. The only two stakeholder quotes it includes are both overtly positive and add little value. Stakeholder voices or comments, both positive and negative, providing outside perspectives are helpful in making a report impactful and trustworthy.

Recommendations

· Explain and contextualize targets. Why are they chosen and how does performance compare with others?
· Be brave.  Publish comments from stakeholders and describe how their feedback is being used to take the CRS agenda forward.
·Show how CCE uses its claimed leadership position to influence others.

Katie Loden is a consultant at Context, a corporate sustainability strategy and communications consultancy with offices in London and New York. We are the world’s most experienced provider of advice and writing for corporate sustainability reports.