Coca-Cola's CSR Initiatives: Economic Impacts & Sustainability

The Coca-Cola Company has launched various projects in different countries to improve education, reduce environmental impact, and promote community development. In the Philippines, the company has built schools and trained teachers to improve primary education for children in isolated areas. In Brazil, Coca-Cola is testing the use of alternative fuels in its delivery fleet. In Australia, the company is introducing new packaging technology that uses recycled materials and reduces waste. These projects demonstrate the company's commitment to corporate social responsibility (CSR) and have both economic benefits and costs. While CSR may seem to conflict with profit maximization, it can actually enhance a company's financial performance by improving its brand reputation and reducing operational costs.

THE COCA-COLA COMPANY PLEDGES TO REPLACE THE WATER IT USES IN ITS BEVERAGES AND THEIR
PRODUCTION
Multi-year Partnership Announced with WWF to Conserve and Protect Freshwater Resources
BEIJING, June 5, 2007 - The Coca-Cola Company (TCCC) today pledged to lead its global beverage
operations, including those of its franchise bottlers, to replace the water it uses in its beverages and
their production. The Company will focus its actions in three core areas: 1) reducing the water used to
produce its beverages, 2) recycling water used for beverage manufacturing processes, and 3)
replenishing water in communities and nature.
The pledge was announced at the annual meeting of WWF in Beijing, where the Company launched a
multi-year partnership with WWF to conserve and protect freshwater resources. This $20 million (US)
commitment from The Coca-Cola Company to WWF will be used to help conserve seven of the world's
most important freshwater river basins, support more efficient water management in its operations and
global supply chain, and reduce the Company's carbon footprint.
"We are focusing on water because this is where The Coca-Cola Company can have a real and positive
impact," said E. Neville Isdell, Chairman and CEO of The Coca-Cola Company. "Our goal is to replace
every drop of water we use in our beverages and their production. For us, that means reducing the
amount of water used to produce our beverages, recycling water used for manufacturing processes so it
can be returned safely to the environment, and replenishing water in communities and nature through
locally relevant projects."
"The Coca-Cola Company is answering the call to help solve the global freshwater crisis through this bold
partnership," said James Leape, Director General of WWF International. "The Company is stepping into a
new and uncharted territory, and we look forward to working together to meet the bold commitments
they have made to water stewardship."
In 2006, The Coca-Cola Company and its franchised bottlers used approximately 290 billion liters of
water for beverage production. Of that amount, approximately 114 billion liters were contained in the
Company's broad portfolio of beverages sold in markets around the world, and another 176 billion liters
were used in beverage manufacturing processes such as rinsing, cleaning, heating and cooling.
The Company's pledge to replace the water it uses has three core components: reduce, recycle and
replenish.
Reduce:
The Coca-Cola Company will set specific water efficiency targets for global operations by
2008 to be the most efficient user of water within peer companies. These targets will build
on improvements already made by The Coca-Cola Company and its bottlers in water-use
efficiency over the past five years, a period where total water use has decreased by 5.6%
while sales volume has increased by 14.6%. In that same period, water efficiency improved
18.6%.
Recycle:
The Company will align its entire global system in returning all water that it uses for
manufacturing processes to the environment at a level that supports aquatic life and
agriculture by the end of 2010. While water is treated currently to comply with local
regulations and standards, the Company has wastewater treatment standards that are more
stringent than applicable standards in many parts of the world. Nearly 85 percent of
Company and independent bottling operations are aligned with the Company's higher
standards, and the Company pledged to align 100% of its entire global system.
Replenish
:
The Company will expand support of healthy watersheds and sustainable communities to
balance the water used in its finished beverages. Engagement will include a wide range of
locally relevant initiatives, such as watershed protection, community water access, rainwater

harvesting, reforestation and agricultural water use efficiency. Numerous projects are
already underway: the Company has community and watershed programs in 40 countries
focused on education and awareness, productive water use, watershed management and
water supply, sanitation and hygiene; the Company has some 300 rainwater harvesting
structures throughout its global operations; and, last week, in Brazil, The Coca-Cola Company
and FEMSA announced a partnership with SOS Mata Atlantica to reforest over three million
trees on 3,000 hectares of Atlantic rainforest. Unlike carbon, the concept of balancing water
use is not well defined, and WWF, The Coca-Cola Company, and its bottling partners will
work together to measure the impact of these activities on water availability.
In recognition of the impacts on water resources from the "embedded" water in agricultural
commodities and packaging, WWF and TCCC will work together to encourage efficient water use in the
Company's supply chain, beginning with sugar cane. Work with WWF's Better Sugar Initiative has already
demonstrated the Company's commitment to steward its supply chain's use of water. Measurable
targets will be set for improvements of water use, in time, with its agricultural partners.
"Society is just beginning to understand the world's water challenges," continued Isdell, "No single
company or organization has all of the answers or holds ultimate responsibility, but we all can do our
part to conserve and protect water resources. Our Company will need time and cooperation from our
bottlers, our suppliers and our conservation partners to accomplish the goal of replacing the water we
use. We will be open about our progress and engage others to better understand what it takes."
WWF Partnership
TCCC and WWF have been working together for several years on a number of pilot projects to conserve
water, address water efficiency in the Company's operations and protect species. The partners are
expanding their work together to achieve meaningful and large-scale results.
The partnership will focus on measurably conserving seven of the world's most critical freshwater river
basins: China's Yangtze; Southeast Asia's Mekong; the Rio Grande/Rio Bravo of Southwest United States
and Mexico; the rivers and streams of the Southeastern United States; the water basins of the
Mesoamerican Caribbean Reef; the East Africa basin of Lake Malawi; and Europe's Danube River. These
river basins (also know as watersheds) span more than 20 countries in North America, Europe, Africa
and Asia and were chosen because of their biological distinctiveness, an opportunity for meaningful
conservation gains, and potential to advance issues of resource protection.
"The water crisis is as important as climate change," said Carter Roberts, President of WWF-
US. "Thousands of people die each day from polluted water. Freshwater species are more at risk of
extinction. These conditions will only get worse with climate change. The Coca-Cola Company's
commitment to water neutrality is a first. We need more companies to step up and make similar
commitments if we are going to reverse these current trends."
With WWF as a partner, The Coca-Cola Company also will work to further improve upon the efficient use
of water in its manufacturing system's operations. Teams of experts from The Coca-Cola Company and
WWF will collaborate on innovative ways to help Coca-Cola be even more efficient in its use of
water.Also recognizing the impacts of climate change on the water cycle, WWF and TCCC will work
together on climate protection. WWF and TCCC experts have already led a series of energy and climate
protection workshops for many of the Company's bottling partners. Targets will be set for climate-
related emission reductions in the next year.
"Freshwater resources are under growing stress around the world," said Jeff Seabright, Vice President,
Environment and Water Resources, The Coca-Cola Company. "This partnership will leverage the best of
both organizations to make a real and positive impact on one of the greatest sustainability challenges
we face."

The Coca-Cola Company's environmental protection efforts - 1) global water stewardship, 2) package
design, recovery and reuse, and 3) energy and climate protection - address the areas that are most
important to its business and are where the Company can make the greatest impact.
About The Coca-Cola Company.The Coca-Cola Company is the world's largest beverage company. Along
with Coca-Cola®, recognized as the world's most valuable brand, the Company markets four of the
world's top five nonalcoholic sparkling beverage brands, including Diet Coke®, Fanta® and Sprite®, and a
wide range of other beverages, including diet and light beverages, waters, juices and juice drinks, teas,
coffees, energy and sports drinks. Through the world's largest beverage distribution system, consumers
in more than 200 countries enjoy the Company's beverages at a rate exceeding 1.4 billion servings each
day. For more information about The Coca-Cola Company, please visit our website at www.thecoca-
colacompany.com.
About WWF.For more than 45 years, WWF has been protecting the future of nature. As a global
conservation organization, WWF is one of the world's largest working in 100 countries. It is supported by
1.2 million members in the United States and close to 5 million around the world. WWF's unique way of
working combines global reach with a foundation in science, involves action at every level from local to
global, and ensures the delivery of innovative solutions that meet the needs of both people and nature.
For more information, visit http://www.worldwildlife.org/.
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Coca-Cola Micro Enterprise Development Program: Creating Opportunities in the
Marketplace
The World Bank estimates that in 2004, Indonesia saw 24 percent of its workforce lose their jobs,
bringing the number of under or unemployed to nearly 43 million people. In the midst of a weak
economy, few new job opportunities and access to only informal sources of capital, many Indonesians
are trying to sustain their families through micro-enterprises but can pay anywhere between 30 and 50
percent interest on informal loans. And while micro-enterprises can help to lift families out of poverty,
few succeed in the long-term.
Coca-Cola Bottling Indonesia has created a sustainable Micro Enterprise Development (MED) Program to
meet the needs of poor families whose existing micro businesses are struggling to grow due to limited
capacity. Piloted in Cikarang Barat, West Java, this program is unique in its partnership and capacity-
building approach. Borrowers, who access loans with monthly service charges of 2.5 percent, are placed
into self-help groups that meet weekly. These meetings are facilitated by local professional business
leaders, who mentor the group and offer practical financial advice and specialist knowledge. The groups
and meetings support entrepreneurs to better manage their businesses and provide vocational training
on topics such as household budgeting, microenterprise management and financial and credit
management.
Each program partner plays an important role:
Akita Bank serves as the financial institution;
Coca-Cola Bottling Indonesia guarantees the loans; a number of its senior executives are active on the
steering committee, advising and overseeing the program; while its employees are involved in
program monitoring;
Yayasan Bina Swadaya, an NGO specializing in community empowerment, is responsible for
implementing the program; and
Indonesia Business Links, a non-for-profit foundation, serves as the independent program evaluator.
With the right loan repayment formula, the Micro Enterprise Development Program has become self-
sufficient in less that one year. A permanent community-driven service center has now been set up to
provide additional support. In less than two years, 95 percent of the participating entrepreneurs have
repaid their loans and are building their business and growing their savings - perhaps for the first time in
their lives.

Following the success of the pilot project, MED Program has now been expanded to Surabaya, East Java.
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Coca-Cola Pushcart Project:Pushing for Progress
Difficult to accurately measure, poverty in Vietnam ranges from under 10 percent in some cities to over
40 percent in some rural areas. To support the Vietnamese government’s poverty alleviation program,
the Coca-Cola Pushcart Project was launched in 2002 in partnership with the Vietnamese Women's
Unions. The goal of the project is to improve the quality of life of disadvantaged Vietnamese women and
combat urban unemployment. Participants are selected by the Women’s Unions from Ho Chi Minh City
and Hanoi and given opportunities to build sustainable livelihoods with custom-built pushcarts selling a
selection of ice-cold Coca-Cola beverages.
The company provides all participants with an initial quantity of
discounted product and introductory sales training to help get their
businesses off the ground. Beverages are delivered regularly by
Manual Distribution Center (MDC) representatives, who cover a small
area enabling a more personal approach to customer service for many
of these first-time small business operators. Exclusive pushcart
promotions also serve to motivate and inspire operators, while the
Women’s Unions provides small start-up capital for participants
requiring it.
Training workshops are periodically organized for pushcart operators. The training is designed to further
equip each vendor with the knowledge and skills necessary to increase their business performance,
thereby strengthening their ability to create and maintain a sustainable income. In September 2003, the
core pushcart program was expanded with the donation of five newly-built houses for disadvantaged
women in the city’s outlying districts. Thirty scholarships were also provided for the children of pushcart
operators.
Empowering disadvantaged women and reducing poverty in Vietnam is a long term commitment. By
doubling the number of pushcarts in the marketplace in 2005 and expanding to other cities and
provinces outside urban centers, Coca-Cola Vietnam and its bottling partners aim to reach substantially
more communities through this on-going initiative.
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Little Red Schoolhouse: The Promise of Basic Education
Childen in rural areas of the Philippines face severe disadvantages because their access to education is
restricted by a shortage of school buildings, trained teachers, books, and equipment. Answering the call
of communities and the government for private sector assistance, Coca-Cola Philippines launched the
Little Red Schoolhouse project in 1997 to improve primary education for children in the country’s
isolated and impoverished areas. To date, the project has worked with 59 rural communities to
construct multi-grade elementary schools outfitted with electricity, running water, furniture and other
essentials.
The project does more than build schools – it also builds the capacity of teachers, parents, and
communities to educate their children. Teachers receive ongoing training on the special skills needed for
multi-grade classroom settings, including the Little Red Read-A-Thon Program conducted in partnership
with Sa Aklat Sisikat (SAS) Foundation. Meanwhile, parent-teacher-community associations (PTCA) are
empowered to maintain the schools through workshops and technical assistance.
The Department of Education has cited the Little Red Schoolhouse project as a model of private sector-
government collaboration as:
Coca-Cola Philippines provides much-needed funding and volunteers to help with construction,
collecting donations and tutoring children;

The Department of Education’s Bureau of Elementary Education designs and implements the teacher
training modules;
PBSP coordinates schoolhouse construction and PTCA training;
SAS Foundation conducts training for teachers for the implementation of the Little Red Read-A-Thon
Program;
Local governments lend support by improving roads and installing water and electrical connections in
the vicinity; and
Individual communities and the Department of Education assume responsibility for each school,
ensuring local ownership and sustainable operations.
The Little Red Schoolhouse project has increased educational attainment levels for rural children and
revitalized communities. It has improved enrollment in the multi-grade schools by 45 percent to as
much as 200 percent. Four Little Red Schoolhouse teachers have been recognized by the Department of
Education as exemplary among the over 21,000 multi-grade educators nationwide.
Alternative Fuel in Brazil
In 2004, The Coca-Cola Company and our bottling partners launched an innovative project in Brazil to
reduce CO2 emissions from our fleet of delivery vehicles through the use of alternative fuels.
Our bottling partner in São Paolo -- Companhia de Bebidas Ipiranga – is collaborating with São Paulo
University on a "Brazilian Biodiesel Project," in which a fleet of 140 trucks at its São Paulo plant are
running on a fuel that is 5 percent "biodiesel" (made of castor beans and soybeans). The test is being
closely monitored by the government and automobile industry to assess the feasibility of the technology
for future use. Of these 140 trucks, 13 are equipped with emission monitoring devices to measure the
improvements.
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Microflute Packaging Ups Recycled Content in Australia
The Australian environment is set to be the big winner from innovative new packaging technology to be
introduced nationally by Australian bottler, Coca-Cola Amatil (CCA). Beginning in August, multi-can packs
of Coca-Cola®, diet Coke®, Sprite®, and Fanta® will all switch to the new micro-flute outer packaging.
The move will divert up to 5,000 tons a year from landfills.
Microflute outer packaging was developed in Australia by packaging supplier Visy, following 18 months
of cooperative effort with CCA and the successful completion of commercial tests. The new packaging
uses two sheets of lightweight kraft paper and one sheet of 100% recycled paper, instead of the heavier,
non-recycled coated
board currently imported into the country. Microflute provides the same packaging strength, printability
and performance features of conventional materials, but is much easier to break up in the recycling
process. The new micro-flute product also contains 20 percent recycled content in the kraft paper
already produced in
Australia by Visy taking the total recycled content in Microflute to about 45%.
In an added benefit, Microflute will be manufactured locally. Visy Industries CEO Harry Debney said the
technology was great news all round. "It will replace imports and contribute to diverting more waste
from landfills, improve recycling rates, as well as provide a boost to regional Australia through the
construction of our new packaging facility in the Victorian town of Wodonga," he said.
The micro-flute packaging also has cost benefits for CCA, and because it is supplied locally rather than
being imported, it gives CCA more flexibility in its manufacturing processes. "This initiative demonstrates
our ongoing commitment to continually look at ways of reducing and recycling packaging materials,"
said CCA Managing Director --Australia, Andrew Reeves. "It reinforces our view that good environmental
stewardship can also lead to good financial returns."

REQUIREMENTS:
1. What are the key economic concepts that are illustrated in the following projects:(a) water
conservation in China, (b) livelihood projects in Vietnam, (c) assistance to basic education in the
Philippines, (d) use of alternative fuel in Brazil’s fleet delivery, and (e) recycled packaging in
Australia.
2. What are the economic benefits accruing to Coca-Cola for sponsoring the above-mentioned
projects?
3. Is Coca-Cola a profit-maximizing firm?Elaborate on your answer.
4. How can you reconcile the conflicting objectives of corporate social responsibility and profit
maximization (or maximizing shareholder’s value)?
5. What is the economic theory behind corporate social responsibility?