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04/24/07
Remarks at the U.S. Chamber of Commerce
"New Partnerships, Real Potential: The Coke Side of Progress"
Washington, DC
E. Neville Isdell, Chairman and CEO, The Coca-Cola
Company
As prepared for delivery
Thanks for that introduction, Tom [Donohue], and good afternoon.
It's still exciting for me to be in Washington, DC, and to
see the public buildings and monuments that are such icons of
respect and hope for so much of the world.
My first awareness of this city was not of its buildings and
monuments, but the smiling, confident man named Eisenhower in
the newsreels in the only cinema in Lusaka, the capital city
of what's now known as Zambia.
In those years, I also learned that my parents and teachers
were profoundly grateful for the optimism and confidence that
FDR demonstrated to the world during the war years.
In my teenage years (when we still only had newsreels
in Zambia) the smiling, optimistic images of President John
Kennedy became familiar.
Then in 1963, as a student anti-apartheid activist, I read
with awe about Dr. King's speech at the Lincoln Memorial. In
the fullness of time, the hope and optimism of his dream extended
all the way to South Africa and became an important factor in
ending apartheid.
So even after all these years, a trip to Washington reminds
me of the optimism of Roosevelt, Eisenhower and Kennedy, and
the inspiration of Dr. King.
Optimism and hope have been part of our secret formula
since the first glass of Coca-Cola was poured 121
years ago. They've been at the center of nearly every Coca-Cola
marketing campaign, including "The Coke Side of Life,"
which launched last year.
Marketers will tell you that stubborn optimism is one of what
they call the "core brand attributes" of Coca-Cola.
That attribute is hardly unique to Coke, but I do think it would
be fair to say that we have had some success over the years
inmaking optimism a point of differentiation for Coca-Cola
and The Coca-Cola Company.
From a marketer's perspective, optimism works because it always
seems to be in short supply around the world. It's also the
case that optimism is something like a pre-requisite for any
kind of career in business. You have to believe -- in
economic growth and social progress... in customers and consumers...
in yourself and your company and your colleagues -- if
you're going to succeed. Certainly optimism describes
my own basic orientation.
Business takes a strong dose of realism, too, and my outlook
has also been informed by my personal and career history:
growing up in a divided Northern Ireland, and in a racially
segregated Zambia in southern Africa... attending university
in Cape Town shortly after the Sharpeville Massacre and during
Nelson Mandela's banishment to Robben Island... running the
Johannesburg Coke bottler during the Soweto riots in 1976...
leading The Coca-Cola Company's turnaround in the
Philippines in 1981, when Aquino was shot... our entry into
Russia and Eastern Europe from 1989... and our return to India
in 1993.
To re-state Mark Twain's famous phrase, I've seen a heap of
trouble in my life -- and some of it actually did
come to pass.
Nevertheless -- I am still optimistic. I believe the human condition
will continue to improve. I believe business has an enormous
responsibility (and deserves credit) for taking risks... for
allocating resources efficiently... for creating economic and
social value... and for generally raising the standard of living
around the world.
I believe there's an increasing awareness among my colleagues
in business that our own efforts, while essential, are not sufficient
on their own: If the global economy is going to continue to
grow... if income growth, wealth creation and job-creation are
going to proceed... if, indeed, we're going to make progress
on some of the basic challenges facing mankind... then business
is going to have to work more effectively across the spectrum
of civic institutions.
I believe this view is increasingly shared around the world.
Sustainable communities are the responsibility of everyone,
but there are also enormous benefits in specialization.
I think businesses, governments and some NGOs are realizing
that if we are going to make progress on issues we care about,
we need to work together.
Let me begin with the most basic challenge of all -- global
economic and social development.
The world's population this year is 6.7 billion. That's 700
million more than in 1999. The natural increase (births minus
deaths) in the world's population last year was around 80 million
people, which is nearly the equivalent of adding a country the
size of Germany to the planet. By 2025, the global population
is projected to be 8 billion, and 9.2 billion by 2050. Ninety-nine
percent of the population growth will take place in developing
countries.
The global demographic divide is one of the world's most profound
challenges. On one side of the divide are Europe, Japan and
South Korea: mostly wealthy nations with low birth rates and
aging, declining populations. On the other side are mostly poor
countries with low life expectancies and high birth rates.
It goes without saying that my company and others see opportunities
on both sides of the demographic divide. (Very generally
speaking, there's high profitability on one side and high growth
on the other.) But there's very little point in talking about
opportunities for business if communities don't grow
first.
And sustainable communities are a job for all of us: economic
development and employment opportunities... water and sanitation...
education... health care... and so much more.
A few months ago, the Coca-Cola system opened
its newest production facility, in Kabul, Afghanistan. We entered
Afghanistan -- the first time -- more than 50 years ago, but
the country became one of the few serviced with imported product
after the old plant closed in 1991. The new plant -- a $25 million
bottling facility -- is owned and operated by a Kabul-based
company and will employ around 325 Afghanis. At the dedication
of the plant, President Karzai commented, "This is another
step forward for economic growth, self-sufficiency and better
living standards for Afghanistan."
While Coca-Cola is, for now, an exception in Afghanistan,
Afghanistan is not particularly unusual for Coca-Cola.
In 2000, we invested $44 million in two plants in Born Jesus
and Lubango, Angola. Three years ago we opened an $8 million
facility in Mogadishu, Somalia.
The Coca-Cola system operates more than 800 plants,
and we're present in more than 200 countries around the world.
Nearly all of our products are made in the communities where
they're consumed, by local people, using local
resources. In providing millions of little souks and dukas and
sari-sari shops with the opportunity to sell Coca-Cola
products, we create enormous value... and not just economic
value, but social value too.
Social value goes hand-in-hand with economic value, and they
are both indispensable for sustainable communities. In Wealth
of Nations, Adam Smith wrote, "When the greater part
of people are merchants they always bring probity and punctuality
into fashion." As the operator who led Coca-Cola's
entry into Russia in 1991 and our return to India in 1993, I
can tell you that this is absolutely true. In both countries,
as the merchant and entrepreneurial class has exploded, there's
a focus on customer-satisfaction that was simply unimaginable
20 years ago.
"Probity and punctuality," as Smith called them,
have an awful lot to do with competitiveness. They have
to do with keeping commitments... keeping promises... and therefore
with keeping customers. They also have to do with trust.
Trust is required not just to do business... it
also has to result from business.
I want to make two related points here.
First, meeting the challenges of the future will require the
economy to continue to grow. And the only way to ensure
sustained economic growth is through open markets. Adam Smith
understood this, too:
"The pieces of a chess-board have no other principles
of motion besides that which the [invisible] hand impresses
on them," he wrote. "In the great chess-board of human
society, every single piece has a principle of motion of
its own, different from that which the legislature might seem
to impress on it."
Globalization has challenged and continues to challenge businesses
and economies in the US and Europe. Unfortunately, some political
and business leaders have responded to these challenges by seeking
to close their countries to competition -- by attempting to
impress their own principles of motion on the global economy.
It won't work.
The only effective response to globalization -- the
only way to bridge the demographic divide -- is to remove barriers
to trade and investment so that our economies and industries
are free to be as productive and as competitive as they can
be. That's why I think it's so important for the Doha round
of trade talks to be successfully completed. And it's why I'm
grateful to Chancellor Merkel for proposing a partnership to
increase commercial exchanges across the Atlantic by reducing
non-tariff barriers. I urge the forthcoming EU-US Summit to
endorse and incorporate the Merkel Initiative in its communiqué
and subsequent work plan.
Second, like many other business leaders, I am concerned about
the escalating backlash against global trade taking place around
the world. There are many reasons for it, and most of them in
my view are of the confusing-correlation-with-causation variety.
However, one complaint I've heard resonates with me. It's not
that global trade doesn't produce benefits, but rather that
the benefits are not always dispersed broadly enough... that
in some countries, they're skimmed off the top through corruption
and graft. The benefits of globalization need to be more widely
shared in both developing and developed countries.
Now I know it is fashionable to complain about the burden of
America's corporate legal and regulatory requirements -- and
in general I prefer as few as possible. But I have lived and
worked in countries with corruption problems. And I can tell
you that while complying with the Foreign Corrupt Practices
Act, the OECD Anti-Bribery Convention, paying taxes and obeying
local laws and regulations may seem to place Coca-Cola
and other American firms at a competitive disadvantage in the
short-term, over the long term it will help us build equity
in the community as a trustworthy customer, supplier, employer
and neighbor. Even more important, if customers, suppliers,
consumers and employees can benefit from our growth, then countries
with corruption problems can begin to restore their reputations
and attract foreign direct investment again.
So the creation of economic and social value is an essential
condition for sustainable communities, and there is no substitute
for business in this function. But again, it is not sufficient
on its own.
Today, about 1.3 billion people around the world do not have
access to safe drinking water, and around 2.5 billion lack access
to adequate sanitation. By 2025, an estimated two-thirds of
the world's population will face severe and chronic water shortages.
While school attendance has generally increased in the last
decade, only around three-quarters of children ages 10 to 14
in developing countries attend primary school, and the rate
decreases for secondary school attendance. HIV/AIDS is an epidemic
in much of the developing world while access to basic health
care lags considerably.
I want to be clear here. Business exists to make a profit and
to create economic returns for its shareowners. The Coca-Cola
Company is not a social service agency or an NGO. But these
issues have everything to do with sustainable communities, and
therefore with the health of business. The most effective way
to address them is through partnerships.
Partnership is at the heart of our approach to water.
In November 2005, my Company began a series of efforts with
the U.S. Agency for International Development (USAID). The first
group of projects included work in Asia, Africa and Latin America.
Near Jakarta, our partnership has improved water supply services,
hygeine, household water disinfection and watershed management
for 25,000 underserved residents. In Mali, 21,000 people received
better access to clean water, improved sanitation and hygiene,
and 1,000 people began to carry out small-scale garden irrigation
to improve nutrition. In Malawi, we worked with USAID to rehabilitate
gravity-fed water systems and build new spring box systems to
improve access of potable water.
In March, USAID and my Company announced a $7 million joint
investment in nine new water initiatives in Africa. The new
projects will be located in Angola, Ethiopia, Kenya, Mozambique,
Nigeria, Tanzania, Uganda and Ghana/Ivory Coast and bring the
partnership's total level of investment from $3 million to $10
million. Along with our implementing partners in 16 countries,
USAID and The Coca-Cola Company are helping more
than 300,000 people who struggle for daily access to safe and
sustainable sources of water.
This month, Coca-Cola India began working with
the United Nations Human Settlements Programme (UN-HABITAT)
on a series of projects to improve access to safe drinking water
and adequate sanitation as part of the UN-HABITAT's Water for
Asian Cities Programme. The partnership's projects in India
will include providing safe drinking water to 150 schools in
West Bengal and construction of rainwater harvesting structures
at 10 schools in Madhya Pradesh. In Nepal, the partnership will
launch a sanitation awareness campaign and provide access to
potable water through World Health Organization-approved household-level
purification methods.
I could go on around the world, but I wanted to mention these
projects because they're in parts of the world where the water
crisis is particularly acute. They also demonstrate the relationship
between clean water and other aspects of sustainable communities:
Better access to clean water means fewer waterborne illnesses,
lower child mortality, and improved maternal health, among many
other things. It also improves the educational prospects for
girls in societies where water is regarded as a woman's responsibility.
It also demonstrates our commitments to these societies.
As useful as these efforts are, we know we need to do more.
All sectors -- including business, government, NGOs and philanthropic
organizations -- need to take coordinated, concerted action
to protect and preserve global water resources.
That's one reason we've helped establish the Global Water Challenge
-- GWC -- which we hope will be a catalyst for an international
movement to meet the urgent need for safe water and sanitation.
GWC is operated by the UN Foundation, and members include Cargill,
Dow, the Wallace Genetic Foundation, Emory University, Millennium
Water Alliance, UNICEF, CARE and several others. I'm convinced
GWC is vital for stimulating the cooperation, long-term investment
and international commitment required to meet the world's future
needs. If your company or institution would like to play a role
in helping provide access to clean water for all people on earth,
I hope you'll consider joining The Global Water Challenge.
To be sure, our partnerships are not limited to water or developing
countries.
- Along with Greenpeace and the United Nations Environment
Programme (UNEP), we co-founded a food and beverage industry
alliance called Refrigerants' Naturally! to promote HFC-free
refrigeration technology to reduce emission of greenhouse
gases.
- We're also supporting a new company called RecycleBank that
is pioneering an innovative incentive-based recycling program.
Philadelphia, Wilmington and other communities that have signed
up with RecycleBank have seen significant increases in recycling
rates thanks to incentives provided by the more than 250 businesses
that support this terrific program.
- And last year a partnership between the American Beverage
Assocation (which includes Coke, Pepsi and Cadbury Schweppes),
the American Heart Association and the William J. Clinton
Foundation led to the voluntary creation and adoption of New
School Beverage Guidelines.
I realize these examples don't exactly add up to a global trend
-- yet. But I wanted to mention them because water and wellness
are so critical to sustainable communities... because the tenor
of our partnerships in these areas has changed dramatically
in recent years... and because we're actually making progress.
A generation ago, issues with the kind of global implications
I've mentioned almost surely would have been left for the government
to address. The partnerships I've discussed today reflect an
important shift in our thinking.
The Coca-Cola Company's legendary chairman, Robert
Woodruff, absolutely wanted to make the world a better place.
His main strategy year after year was to demand high performance
from every employee of the Company... to extend the Company's
reach and to grow volume and earnings.
Today, of course, we still embrace all of those goals. But
Mr. Woodruff's dedication to making the world better through
high performance has some new dynamics in today's global economy
and global village. That legacy also means embracing the work
and the purposes of these new partnerships I have described.
Embracing the work of these partnerships may be a new wrinkle
in the way we work, but I am very confident that in taking this
approach we are doing what we were long ago programmed to do.
In closing -- I want you to know that my understanding and
my education about American politics is still a work in progress.
But I understand that everyone who gets elected and comes to
Washington has to be prepared for the folks back home to ask,
What have you done for me lately?
I also understand that sometimes public officials will turn
the question around... they'll ask, what have you and your company
done for the people -- for my people -- today?
If we can get this partnership concept right, I believe business
can go to its customers... elected officials can go to their
constituents... NGOs can go to their members... and governments
can go their citizens... and we'll be able to say, "We
have taken on the world's most difficult issues together...
because we understand that we are all in this together."
I believe we can get there. I am that much of an optimist.
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