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HomeExternal EnvironmentCorporate ResponsibilityCorporate citizenship and the community

Corporate citizenship and the community

Corporate citizenship and the community

Today, more than ever, we have come to appreciate and value the relationships that can be forged between individuals, organisations and the wider community. John F. Kennedy, the celebrated American President, set out the nature of what this relationship could be in his inaugural Presidential address when he said:

“Don’t ask what your country can do for you, rather, ask what you can do for your country.”

However, the individual and the organisation are not simply entitled to ‘rights’ – they also have ‘obligations’. This case study focuses on corporate citizenship – i.e. the obligations which organisations have to their communities. Concern for the environment will be considered as an example of corporate citizenship.

An organisation takes on corporate status when it is recognised in law as a body, or entity, in its own right. In the UK, a business takes on corporate status when it becomes a private or public company with shareholders in accordance with the Companies Act. In the same way that we like individual people to be caring citizens, we also want corporations to be responsible, caring and helpful ‘citizens’. Corporate citizenship is particularly important concerning the local, national and global environment.

Coca-Cola and citizenship

For more than a century, The Coca-Cola Company has used its resources to benefit the global community and to demonstrate its leadership to such an extent that the Coca-Cola name has become synonymous with good corporate citizenship. According to a survey carried out by Fortune Magazine, Coca-Cola is the most admired company in the USA.

The Company believes that it is important to give something back to the communities in which it does business. This philosophy, grounded in the Company’s value system, is a key part of the corporate culture. An organisation’s culture is the way in which it does things – its culture defines what Coca-Cola considers to be important and what the Company stands for. The culture will be reflected in everything the organisation does. You should be able to get a feel for the way that Coca-Cola has a strong commitment to the wider community through every aspect of the way the Company operates e.g. the way in which it sponsors sporting activities or its commitment to recycling and minimum use of scarce resources etc. Philanthropy is a central part of the Coca-Cola culture and contributes to one of the Company’s strongest assets – public goodwill.

Philanthropy can be defined as:

“An act or instance of deliberate generosity…a contribution made in a spirit of humanitarianism…goodwill toward one’s fellow citizens especially as expressed through active efforts to promote human welfare…comprehensive benevolence, but often specific in its objectives.”

The Coca-Cola Foundation is the Company’s main philanthropic arm. Its goal is to give something back to the communities in which the Company operates by supporting education and community development activities. The Foundation is nearing completion of a ten year goal of contributing $100 million, during the 1990s, in support of education.

Funding includes support for:

  1. higher education
  2. classroom teaching and learning
  3. global education.

Today, the intelligent organisation recognises that its own future wellbeing is, to a certain extent, dependent on the well-being of the communities within which it operates at a local, national and global level. It is important that investments which take place in the community, in terms of education, the environment, training, art and cultural institutions and many other causes are carefully thought through.

Of course, decisions related to corporate citizenship are rather more difficult than the traditional business decisions which managers are used to making. Clear aims and objectives need to be established which fit well with an organisation’s corporate values and aims. The intelligent organisation today will take these issues seriously and will seek to design careful, flexible, comprehensive strategies to guide their decisions. Organisations such as The Coca-Cola Company, therefore, have established strategies for corporate citizenship.

Coca-Cola’s strategy recognises that the well-being of communities is inextricably linked to the well-being of the business environment. A healthy business climate cannot co-exist for long with an ailing social environment. Strengthening both is therefore a goal of Coca-Cola’s corporate philanthropy.

Translating values into actions (citizenship activities)

Many years ago, Coca-Cola Great Britain decided that, given the very large number of worthy causes seeking annual funding, the Company would channel its support towards a small number of designated charities, principally involved with young people. More recently, this policy has been refined to concentrate not just on young people but, more specifically, on their education and training. Additionally, Coca-Cola sponsors a variety of activities as part of its marketing programme, with an emphasis on sports, music and the environment.

Although these principles tend to result in the support of major national – or international –
charities, Coca-Cola also recognises the need to become involved in the local communities where production plants or offices are situated. For example, Coca-Cola’s offices in Great Britain are situated in Hammersmith, in West London. In this area, Coca-Cola supports the Centre West Training Trust, as well as endeavours to offer modest assistance to schools and training establishments for specific projects.

Since 1985 Coca-Cola has been one of the principal sponsors of Special Olympics UK. This
organisation is based on the premise that individuals with learning difficulties are helped best by reintegrating them into society – and that nothing should prevent them from practising competitive sports. It has grown in strength from year to year. For many years, Coca-Cola has sponsored an annual event to raise funds for both Variety Club – ‘The Greatest Children’s Charity in the World’ – and the Outward Bound Trust, which has encouraged many thousands of people, often the young and underprivileged, to discover themselves and realise their true potential. The Coca-Cola Youth Foundation was established at the end of 1995, with the aim of helping young people to reach their full potential through physical, artistic, cultural or educational pursuits. Those who have benefited to date include The Duke of Edinburgh’s Awards, the National Playing Fields Association, the Juvenile Diabetes Foundation and YouthNet UK.

Employees are encouraged to offer their personal support in the community such as acting on schools’ Governing Boards or on committees of local bodies (e.g. in Hammersmith and Fulham with the Safer Cities Campaign and Groundwork West London).

Coca-Cola is well known for its high-profile sponsorship programme, covering major events such as the Olympic Games, football’s World Cup and, as a partner/supplier with diet Coke, the All-England Championships at Wimbledon. At all events, the Company seeks to enhance the enjoyment of the fans.

Commitment to the environment

Coca-Cola aims to help the environment by “always trying to give back more than we take.” The Company’s approach is pro-active and no-nonsense, just as it would approach any other business issue. The challenge is to continually search for new and better ways to improve environmental performance. Its corporate responsibility is to conduct business in a way which protects and preserves the environment.

To this end, Coca-Cola has created a worldwide management system and in order to translate its principles into actions, the company has developed eight policies, each of which is supported by:

  1. strategies which identify how and where resources will be allocated
  2. practices which provide implementation approaches and guidelines
  3. specific standards for measuring performance
  4. programmes specifically targeted to fulfil policy objectives.

Policies – The eight policies are:

  1. To conduct operations in compliance with environmental laws and regulations. Even when regulations do not exist, Coca-Cola operates in an environmentally responsible way.
  2. To minimise the environmental impact of operations, products and packages through research and the application of new technology.
  3. To minimise the discharge of waste materials into the environment by utilising responsible pollution control practices.
  4. To recognise the inter-relationship between energy and the environment and to promote the efficient use of energy throughout the system.
  5. To support efforts to understand and address the problems of solid waste management. Coca-Cola is committed to both reducing and recycling the solid waste generated in its own facilities and to helping communities where the Company operates implement recycling and sound solid waste management systems.
  6. To promote the concept of environmental accountability and to conduct periodic audits of performance and practice. Much of this information is shared with the public.
  7. To encourage and participate in the responsible discussion of environmental concerns. Coca-Cola cooperates with public and governmental organisations in seeking solutions to environmental problems.
  8. To ensure that environmental commitment permeates the organisations and that officers, managers and employees assume responsibility for its daily implementation.

The Coca-Cola Company throughout the world (including Coca-Cola Great Britain) shares the interest of consumers in caring for the environment. Given the range and extent of issues involved, Coca-Cola has concentrated its activities on areas which affect its own industry and which, therefore, the company is able to influence to some extent. In particular, Coca-Cola is involved in promoting collection and recycling systems for packaging and in working towards a litter-free environment.

In a short case study example, it is not possible to examine all the ways in which Coca-Cola is developing its commitment to the environment. Here, therefore, are just a few examples:

  1. Packaging innovation – Packaging is a key point of differentiation and a source of competitive advantage for Coca-Cola. However, it is not simply designed to be distinctive and attractive. Customers and consumers must have confidence in the environmental integrity of the packages offered. In 1991, Coca-Cola pioneered a plastic soft drink container made with recycled content – the first of its kind in the world. Two years later, another breakthrough was achieved with the introduction of a ‘multi-layer’ package which sandwiches recycled material between virgin plastic. This package is now available in a number of markets. Consumers have responded enthusiastically to recycled-content bottles as an affirmation of the recycling actions they take at home. This comes as no surprise – Coca-Cola has used aluminium and steel cans and glass bottles containing recycled content for many years.
  2. Source reduction – Coca-Cola Great Britain has led the soft drinks industry with a source reduction process known as light-weighting. Over time, Coca-Cola has significantly reduced the raw materials needed to produce packaging. In 1993, for example, the company shaved over four millimetres off the necks of aluminium cans, reducing the company’s aluminium usage in the US alone by an estimated 20,000 tons per year! In addition to making lightweight primary packaging, the company also looks for opportunities to reduce the raw materials used to make shipping cases, ingredient bins and other secondary packaging.
  3. Litter prevention – Acting on the conviction that education is the key to changing attitudes and behaviours, Coca-Cola supports dozens of litter prevention organisations around the world, such as the Tidy Britain Group – the Government’s recognised agency for promoting litter abatement – and Coca-Cola Great Britain was proud to receive the Group’s top award in 1992 in recognition of over 20 years of such support.
  4. Education – In conjunction with the overall aim of providing education and training, Coca-Cola has provided a range of materials covering environmental issues, whether independently or with other organisations. These include a comprehensive environmental guide for schools, produced by the RSPB with the Council for Environmental Education; recycling packs, with Waste Watch; and packaging texts through the Industry Council for Packaging and the Environment. In addition, The Coca-Cola Youth Foundation sponsors Eco-Schools, organised in this country by Going for Green.

This case study has examined how The Coca-Cola Company has established strategies and policies for corporate citizenship which stem from the overall corporate strategy of the organisation. It has highlighted the way in which the aims and values have translated into environmental operations and performance. However, it is also extremely important to monitor performance and assess how successful operational activities are in meeting these broad aims and values.

To ensure the ultimate implementation of Company policy, Coca-Cola conducts periodic (every three years) environmental audits of all Company-owned facilities. These audits are augmented by a Corrective Action and Accountability Program which aims to ensure that issues identified through the audits are addressed in a timely, responsible and cost-effective manner.

Corporate citizenship is not about creating an unrelated series of well-meaning measures for supporting communities. Instead, corporate citizenship is concerned with developing a company-wide strategy which creates an integrated series of values, aims, policies and operational activities which are given high priority within an organisation, and are carefully thought through and systematically evaluated.

Of course, all aspects of corporate citizenship need to be continually updated and improved. While Coca-Cola is proud of its accomplishments, the Company recognises that its work is far from complete. In the area of environmental issues, for example, there are opportunities for infinite progress. As today’s high standards become the baseline for tomorrow’s expectations, Coca-Cola will need to elevate its programs and policies even higher. Coca-Cola knows, however, that this provides the opportunity to demonstrate, in very tangible and meaningful ways, that The Coca-Cola Company is different, special and better.