Running head: COCA-COLA’S APPROACH TO SUSTAINABILITY MEASUREMENT 1

Coca-Cola’s Approach to Sustainability Measurement

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Coca-Cola’s Approach to Sustainability Measurement

Coca-Cola and the Soft Drink Industry

Coca-Cola is a multinational conglomerate that manufactures, retails, markets, and

advertises non-alcoholic beverages. The organization was established in 1892 after businessman

Asa Griggs Candler bought the innovatory Coca-Cola recipe from chemist John Pemberton. The

company headquartered at Atlanta, Georgia has been producing the brand’s syrup concentrate

since its inception in 1892. The concentrates are sold worldwide through the company’s

franchised distribution network. The Coca-Cola Company owns more than 500 beverage brands

today; however, their flagship product is still the Coca-Cola soft drink. The Coca-Cola brand has

become synonymous with soft drinks because of its global popularity, attractive branding, and

ingenious marketing strategies. In May 2020, it was ranked 96th in Forbes’ list of the world’s

largest public companies with a net profit of $10 billion and assets worth $94 billion (Murphy et

al., 2020). The company dominates the global soft drink industry alongside PepsiCo in terms of

profitability, annual sales revenue, acquired assets, and market value. PepsiCo is Coca-Cola’s

only competitor in the lucrative soft drink industry, outranking the company by securing the 87th

position in the list. Coca-Cola and PepsiCo constantly compete for brand supremacy through

sales revenue, industry practices, and marketing techniques.

Literature Review: The State of Sustainability Measurement in the Soft Drink Industry

Empirical research regarding the identification of the sustainability metrics, indicators,

and the best practices in the soft drink industry is limited. Sustainability measurement is a

relatively novel and uncovered area of study. Thus, as a subset of the research topic, even less

has been studied about the sustainability practices in the global soft drink supply chains (SDSC).
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A study by Pinna et al. categorizes the Key Performance Indicators (KPIs) for SDSCs

into four broad groups. General aspects encompass the industrial safety measures, security, and

client satisfaction (Pinna et al., 2018). Moreover, materials and packaging concern the use of raw

and renewable materials, recycling, and packaging quality that improves the manufacturing and

packaging of soft drinks. The water and energy indicator measures the environmental impacts as

well as calculates the manufacturer’s water and energy efficiency. Emissions indicate the amount

of greenhouse gases, smoke, and solid wastes discharged by the soft drink industries. The

research provides a blueprint for all soft drink companies to measure their sustainability.

However, the scope of this study is small as the KPIs were derived through a case study of two

leading Italian soft drink manufacturers. Furthermore, the research paper also excludes economic

metrics, which is an integral component of the triple bottom line (TBL) framework.

The Sustainability Drinks Index and Trends Report published by Footprint Intelligence

and C&C Group measures the sustainability of the drinks industry on the basis of eight social,

economic, and environmental metrics. The assessment of the eight metrics concluded that the

drink industry performed the worst in implementing social sustainability strategies but made

progress in the packaging and water efficiency department (O’ Neill & Fetzer, 2020). Despite the

comprehensiveness of the study, the report depicts the state of sustainability measurement in the

drinks industry comprising alcoholic and non-alcoholic beverages. Therefore, the study is broad

for the accurate sustainability measurement of the soft drink industry only.

Another study by Demartini et al. (2018) reviews the best and most pragmatic

sustainability practices in the SDSCs through a case study of two soft drink manufacturing

companies. The case study observes the manufacturing process in both the companies, deduces

the best practices, and provides the outcome of the undertaken sustainability measures. The best
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practices involving packaging and water efficiency were emphasized due to their importance in

the process. In packaging, the best practices were found to be weight reduction, using recycled

material, and producing bio-plastic bottles. Moreover, the best practices to improve water

efficiency were concluded to be rainwater recovery, wastewater recycling, and using technology

for cleaning processes.

Coca-Cola’s Approach to Sustainability Measurement

Coca-Cola ranks high in the list of the world’s biggest producer of plastic waste. A 2019

audit led by Break Free from Plastic concluded that Coca-Cola was the top polluter with 11,732

plastic bottles collected across 4 continents and 37 countries (Nace, 2019). Thus, the company is

constantly pressurized by environmental activists to adhere to sustainable practices. On the other

hand, Coca-Cola measures its socio-economic and environmental impacts through an annually

published sustainability report. The report uses United Nation’s Sustainable Development Goals

(SDGs) Index that focuses on the three components of the TBL framework: environmental,

society, and economy.

What is Coca-Cola measuring? What types of indicators are used?

Environmental Impacts: Coca-Cola uses KPIs such as climate change, carbon footprint,

materials, and water efficiency to measure its environmental impacts. In the 2018 sustainability

report, data collected by the company through its activities in Japan indicated that it had reduced

the crude oil consumption to 15, 365 KL in 2017, returned 241% of the water used in production

to nature, and recycled 99.1% of the waste generated during the production processes (Coca-

Cola, 2018). The performance indicators are measured annually to track the company’s changes

and progresses. For instance, the water replenished rate measured through the company’s water

stewardship program rose from 241% in 2017 to 273.7% in 2019 (Coca-Cola, 2019). In the same
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way, Coca-Cola annually tracks its carbon footprint, recycling percentage, and emissions to

statistically measure its impact on the environment. The programs also meet SDGs 13, 14 and 15

which are climate action, life below water, and life on land respectively.

Socio-economic Impacts: Coca-Cola strives to increase its socio-economic impact of

development on the society through its tailor-made programs that aim to empower people, foster

economic growth in developing countries, and create opportunities for people in need. The most

notable social initiative launched by Coca-Cola is the 5by20 program. The program seeks to

empower women entrepreneurs in developing countries through the provision of small business

development grants (Torkornoo & Dzigbede, 2017). According to the company’s 2019

sustainability report, Coca-Cola empowered 4.6 million women worldwide, a significant rise

from 1,357 participants in 2017 (Coca-Cola, 2019). This entails that the organization uses

indicators such as training, female labor source rate, and poverty in developing countries to

measures it socio-economic impacts. The indicators cover training programs initiated by the

company to empower and educate people, action taken to improve female participation in the

workforce, and charitable contributions to improve the economic conditions of people living in

developing countries respectively.

What are the organization’s boundaries?

The assessment and analysis of the organization’s boundaries is difficult yet pivotal for

measuring the sustainability metrics. Defining the boundaries of indicators and reports to assess

the corporate contribution to sustainability is uncertain (Antonini & Larrinaga, 2017). The data

and indicators that measure Coca-Cola’s recycling rate transcend national boundaries such as

plastic wastes in oceans. Moreover, the company is affected by planetary boundaries such as
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climate change and ozone layer depletion during the measurement of environmental impacts.

Socio-economic efforts may be limited by political affairs, conflicts, and war.

Are stakeholders identified?

Coca-Cola’s stakeholders comprising consumers, bottling partners, governing bodies,

NGOs, and suppliers are properly identified in Coca-Cola’s approach to sustainability

measurement. The company has partnered with international organizations such as UNESDA

and UN Global compact in its approach to measure the environmental impacts. Coca-Cola’s

EKOCENTER program was launched in Africa in partnership with different public and private

organizations. Furthermore, the socio-economic efforts in developing countries involve the

participation, empowerment, and identification of potential consumers. The company constantly

engages all types of stakeholders involved in its sustainability measurement activities.

Strengths and Limitations of the Approach

The strengths of the approach are as follows:

1. The sustainability reporting approach effectively examines the company’s areas of

sustainability development and highlights which section requires improvement. It enhances

the organization’s understanding and performance of sustainability. Sustainability reports aid

in understanding the company’s sustainability issues, benchmarking, learning how the

company performs, establishing the company’s accountability, and gathering market

information (Searcy & Buslovich, 2014).

2. The TBL provides the company the framework to balance its environmental, societal, and

economical sustainability efforts. The indicators in the study conducted by Pinna et al. do not

incorporate economic sustainability. The TBL framework covers the three fundamental

aspects of sustainable development.

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3. Coca-Cola’s approach encompasses the best practices in packaging and water efficiency as

determined by Demartini et al. The company effectively recycles the solid and water waste

used during production and tracks the progress in its annual sustainability report.

The limitations of the approach are as follows:

1. The TBL framework is a comprehensive method of sustainability measurement. However, it

is not the most effective and complete way of measuring sustainability. Vanclay (2004) states

that the Social Impact Assessment (SIA) framework is a more preferable approach than TBL

while assessing an organization’s social impacts because it is more established, broad, and

professional.

2. The TBL framework is also not a suitable approach to measure the sustainability of urban

water services. Hence, a more advanced approach is required to measure water sustainability.

Marques et al. (2015) proposes a multi-criteria decision analysis system that quantifies the

sustainability level of urban water services, therefore, filling the gap left by the TBL

framework.
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References

Antonini, C., & Larrinaga, C. (2017). Planetary boundaries and sustainability indicators. A

survey of corporate reporting boundaries. Sustainable Development, 25(2), 123-137.

doi:10.1002/sd.1667

Coca-Cola. (2018). Coca-Cola sustainability report 2018. Retrieved from

www.cocacola.co.jp/content/dam/journey/jp/ja/private/2018/pdf/coca-cola-sustainability-

report-2018en.pdf

Coca-Cola (2019). Coca-Cola business and sustainability report 2019. Retrieved from

www.coca-colacompany.com/content/dam/journey/us/en/reports/coca-cola-business-and-

sustainability-report-2019.pdf

Demartini, M., Pinna, C., Aliakbarian, B., Tonelli, F., & Terzi, S. (2018). Soft drink supply chain

sustainability: A case based approach to identify and explain best practices and key

performance indicators. Sustainability, 10(10), 1-24. doi: 10.3390/su10103540

Marques, R. C., Cruz, N. F., & Pires, J. (2015). Measuring the sustainability of urban water

services [Abstract]. Environmental Science & Policy, 54, 142-151.

doi:10.1016/j.envsci.2015.07.003

Murphy, A., Tucker, H., Coyne, M., & Touryalai, H. (2020). Global 2000 - The world's largest

public companies 2020. Forbes. Retrieved from www.forbes.com/global2000/

Nace, T. (2019). Coca-Cola named the world's most polluting brand in plastic waste audit.

Forbes. Retrieved from www.forbes.com/sites/trevornace/2019/10/29/coca-cola-named-

the-worlds-most-polluting-brand-in-plastic-waste-audit/
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O'Neill, S., & Fetzer, A. (2020). Drinks Industry Sustainability Index - Trends Report 2020

[PDF]. Footprint Intelligence. Retrieved from www.candcgroupplc.com/wp-

content/uploads/2020/02/CC.FootprintDrinksReport.2020.pdf

Pinna, C., Demartini, M., Tonelli, F., & Terzi, S. (2018). How soft drink supply chains drive

sustainability: Key Performance Indicators (KPIs) identification. Procedia CIRP, 72,

862-867. doi:10.1016/j.procir.2018.04.008

Searcy, C., & Buslovich, R. (2013). Corporate perspectives on the development and use of

sustainability reports. Journal of Business Ethics, 121(2), 149-169. doi:10.1007/s10551-

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Torkornoo, H., & Dzigbede, K. (2017). Sustainability practices of multinational enterprises in

developing countries: A comparative analysis of Coca-Cola and PepsiCo. Full Issue,

11(2), 19-30. Retrieved from www.digitalcommons.kennesaw.edu/cgi/viewcontent.cgi?

article=1236&context=jgi#page=27

Vanclay, F. (2004). Impact assessment and the triple bottom line: competing pathways to

sustainability. Sustainability and Social Science Round Table Proceedings, 2003, 27-39.

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sustainability.pdf