Speeches

"From Availability to Sustainability:
 Keeping the World's Most Recognized Brand
 Relevant in the 21st Century"

"We must all wake up to the fact that the health of business is absolutely inseparable from the health of the planet and all who share it."
- Neville Isdell

INTRODUCTION OF NEVILLE ISDELL BY PROFESSOR COLIN MAYER, DEAN OF THE SAÏD BUSINESS SCHOOL

COLIN MAYER: Good evening. It's a pleasure to have Neville Isdell with us today. As you'll be aware, he serves as chairman of the Board and CEO of The Coca-Cola Company. Neville was born in Northern Ireland, raised in Africa, attended the University of Cape Town and he earned his degree in Social Work and practiced this for some time before joining the local Coca-Cola Bottler in Zambia in 1966.

For the next 35 years, he worked for the Company, introducing products into Eastern Europe, the former Soviet Republic and overseeing mergers and activities on several different continents.

He notionally retired in 2001 but not for very long. At the request of the Board, he came back in June 2004 to serve as chairman and CEO. And since returning, he has focused on restructuring the company, building sustainable growth and helping the company not only to achieve profitability but also to sustain a lot of the community work that Coca-Cola is now famous for around the world.

And indeed, under his leadership, the Company has launched numerous projects and partnerships -- with Greenpeace on climate friendly cooling systems, with the World Wildlife Fund on several critical watershed projects around the world and in partnerships with the U.S. Agency for International Development to make clean water more accessible to people in Africa.

So it's a very significant and important set of projects that he's initiated in the company. The company has also signed the UN Global Compact and the UN CEO Water Mandate. It's making some very significant commitments around the world to grow the Company's business without growing its carbon footprint, to recycle or reuse 100 percent of the plastic bottles in the U.S. market, and to try and achieve the goal of every drop of water used in Coca-Cola's production around the world being replaced.

So throughout his career, Neville has seen the marketplace develop in numerous respects, and he's made a great and very lasting contribution to the development of the company in terms of it's underlying philosophy as well its success in a commercial sense.

This evening, he is going to talk about this and the impact that the company is having going forward. So we will very much look forward to what you have to say about these topics. Before we do that, we're just going to have a short video clip to act as a background to his presentation. So perhaps we can turn to that now.

[VIDEO: A video is shown of a Coca-Cola public service announcement about HIV/AIDS. In the video, a young boy places a message inside a Coca-Cola bottle and calls out for others in a variety of locations. In the final scene, his calls are answered by Nelson Mandela, who greets the boy and says, "I got your message." The video concludes with a note that every day 6,500 people die of HIV/AIDS on the continent of Africa.]

REMARKS BY MR. ISDELL

Good evening, ladies and gentlemen and Dean, thank you very much for that introduction. You can see I have a fairly dramatic introduction myself in terms of that film. That was really how I wanted to begin today because when Nelson Mandela says, "I got your message," he's actually talking about a continent's cry -- a continent that I lived on more than any other continent in my life -- for help in combating HIV/AIDS.

But that cry is one of many. The world is also sending us a message about climate change, about human rights, about shrinking biodiversity and water as well as the lives still of over a billion people at risk.

And are we really listening? Or more importantly, if we are, will we act on what we hear?

In my view, how we answer is a measure of our response to the demands, which are unlike any that business has faced before -- and that is to transform how we do business from availability to sustainability.

At stake really, are the strength of our markets around the world, the judgments of investors but also of our consumers in what is an age of expectation.

Oxford's Saïd School of Business
And I can't think of a more appropriate forum to make this speech than right here. Because you are a school with a deep commitment to social entrepreneurship, which means that your view of the purpose of business puts profit in a wider context. Also, you're a school with a great deal of global diversity. I believe 41 nations represented, which means that the context that you have embraces the world -- the world you live in, the world I live in.

Now, I'm going to enjoy the Q&A because I want to hear what you have to say, and you can actually broaden it beyond the scope of this speech as well.

The Nelson Mandela Lecture Theatre
But in saying it's in an honor to be here today, I want to emphasize, it's an honor because that man over there, [points to a bronze bust on the stage] . . . Nelson Mandela, is one of my heroes. His picture happens to be the only personal photo on my office wall.

[A photo is shown of Neville Isdell, years earlier, standing with Nelson Mandela on a stage at an awards ceremony. Both men are laughing.]

I just want to remind you, the one with hair is me, okay? [laughter]

But if you were to ask me who is the most impressive human being you ever met, it is this man. Because if you think of what he went through -- and I was a student demonstrating against Apartheid at the University of Cape Town when he was interned at Robben Island. If you think of what he went through and if you think of the amazing sense of forgiveness that he showed when he came out of jail, you get some of the measure of the man.

[In this photo]  I was presenting him the Fulbright Prize for International Understanding at the State Department in Washington. We were in the Green Room beforehand, you know, warming up and talking. I told him a story about an award I'd given to the former World Heavyweight Champion, Max Schmeling, on his 80th birthday. It was a very heavy, cast award -- as was this award here. I was then in my mid-forties. I'd given it to 80-year old Max Schmeling who put it in one hand and lifted it up like this. . . Great embarrassment for a 45-year old.

Mandela was a boxer, by the way, but I said to him, "Don't you try because this is really heavy and I will just lift it, you know, slightly and give it to you."

Well, he went on stage. We did this piece here, and I haven't got the photograph of that on show but he actually took the award and he lifted it up in two hands. And as he was getting the standing ovation, he turns to me and he says, in his slow way, "Not quite Max Schmeling . . . but not bad for Nelson Mandela." [laughter]

I tell you that story because it is about people like Mandela that difference is made.

I told you before that I was involved in that tremendous political debate of the sixties when I was at university in Cape Town. So to be here, in the Nelson Mandela Lecture Theatre -- where he has stood -- is a great honor for me today.

And yes, my journey did begin in Northern Ireland but really, the real influence was when I was 10 years old, going up through Africa and seeing the Africa of 1954 unfold.

I was fortunate to have socially involved parents who educated me in terms of the equality of all human beings. I think that is part of what makes me really believe that the transformation for business has to be from availability to sustainability.

I majored in sociology. I was a qualified social worker, and you could imagine what it was like when you go back to your old professor and you say that you've actually gone to work for Coca-Cola instead of being a social worker. And I said to the professor at the time, I said, "Prof Batson, I actually believe that I can benefit the lives of more people by what I'm going to be able to do in business than I'm going to be able to do narrowly as a social worker."

And I believe, as I look in that mirror, that I have at least met that particular hurdle that I put in front of me.

We all, no matter what path we follow, have the ability to make a difference, a difference as business leaders. But I believe that today, business leaders have an obligation to face the challenges of our planet and of the communities that we serve.

Moving Business from Availability to Sustainability
So, what is this availability to sustainability?

Availability really means what we used to do in the last century -- using markets and people and resources for maximum benefit. Staying, obviously, within the law, staying within our own moral values, rewarding our shareholders. In a way, the Milton Friedman definition of business was their sole purpose of business being to make a profit.

Sustainability is not that Friedman model. It's infinitely more complex and obviously more important. It means creating enduring brands and consistent performance by ensuring the sustainability of the communities and the market that we serve is intact, ensuring that the health of the communities that we serve is intact so that they, too, can support our business.

It means achieving your growth and your success without limiting the opportunity of others to achieve theirs. Some might call that enlightened self-interest. It's not. It's actually quite literally, self-interest.

Sustainable business builds sustainable communities and that demands a whole new kind of responsibility. It's no longer enough to just say the right things. We have to do the right things. And we need to do many things that businesses have not done before. I call it the Triangle of Sustainability. Very simply put -- wake up, step up and measure up.

Obviously we have all -- maybe not all, but most of us I'm sure -- have woken up to the reality of a planet in trouble. But there's an awful lot of parsing the terminology and arguing the decimal points and maybe not enough focus on the solutions. The planet requires it, but I also believe that our stakeholders require it.

Growing Investment Interest in Sustainability
And you see it in the investment community now, at large. Investment houses have now formed teams to figure out the connections between company performance and social and environmental issues, and I believe this is just the beginning. There is a company called Innovest, which has added up 120 factors, like energy use, commitment to health and safety, to the usual financial metrics, to rank 2,200 listed companies globally. Out of that comes the Global 100. And interestingly, you're either in the Global 100 or you're out of the Global 100. There's no 1, 2, 3, 4, 5, 6, 7, 8, 9, 10. It's the top 100 out of 2,200 and that is their list of the world's most sustainable companies, and I've very proud that The Coca-Cola Company is on that list.

And of course, there are other emerging ones as well. The Dow Jones Sustainability Index being one of them, which tracks sustainability metrics. And more and more savvy investors are going to reward those companies that look after the broader interests of society and the broader interests of the planet.

Growing Consumer Interest in Sustainability
And our consumers are watching as well, just as are our employees. Public opinion consultants Global Scan surveyed 25,000 citizens across 23 countries. It's one of the biggest surveys of its kind, and you wouldn't be surprised to know that 90 percent said they wanted business to focus more than just on profits. Sixty percent said that they form their own opinion of a company by what it did in the area of social responsibility.

Now, with the rapid-fire synapses of the Internet, it's increasingly likely that feelings about a company jump absolutely, directly and quickly, and the decisions of its brands go around the world. That can be bad, and it can be good, and we've suffered from that when it's been misinformation as well. And it's especially important if you're a company like the Coca-Cola Company, when the name on the building is also the name of the brand, the name on the bottle, the name on the can. I'm pleased to see someone drinking one up there. Thank you very much. [laughter]

Changes at The Coca-Cola Company
But we have to measure up in how we organize and how we chart progress against those commitments. And when I came back [to Coca-Cola in 2004], this wasn't at the heart of the business. In fact, it was part of the depth of some of the problems that we had. Because I came back to lead a company which was in a downward drift. I wouldn't say "spiral," but a downward drift in terms of basically every metric of our performance, not just the stock price. But also -- just as importantly -- in the sense of who we were.

We asked our people what they thought about the company, and it wasn't actually pretty. They felt the social contract that we had, had been broken with them, that the psychological contract, in fact, had been broken. And we had metrics to show it. So what we did is asked the top 150 managers from around the company, around the world, to validate that. Then we said to them -- because your people know your business better than anyone else, we said, "Okay, it's our company. What are we going to do to change it, to turn it around?"

And out of that came what we call the Manifesto for Growth, which I'm happy to say, has driven a turnaround in our results and also in the metrics I talked about and the engagement scores of our people and obviously also in the external environment's view of us.

It is not that we have reached our destination. We are now on the road to where we need to go and even though, last night, our stock closed at a six-year high, that's not the measure.

The measure is how we develop as society develops as a global corporation.

The Five P's
I'm not going to go through the specifics but Manifesto is a 10-year plan. It focuses on five key areas.

• PEOPLE, obviously number one and most important;
• PROFIT because without profit, we're not going to be able to do any of the other things that we need;
• PORTFOLIO, which is our brands;
• PARTNERS, which are our suppliers and our customers and that linkage is increasingly an important one in what I'm talking about.
• And then what we call PLANET, not "corporate social responsibility" but PLANET.

They're all interconnected. No one is more important than the other.

Water
The Dean mentioned one of the major commitments that we've made under PLANET and that is, to return every drop of water back to nature. We do that in three ways -

• by reducing, which is simple -- stop dripping taps;
• by recycling -- we now have effective recycling in nearly 90 percent of our operations worldwide, which returns all of the water back to nature in a form which can support aquatic life. Our goal in three years is for that to be 100 percent.
• And then by replenishing, by rebuilding aquifers.

The Dean also mentioned our commitments on carbon and our recycling of PET plastic bottles in the U.S. We're also working on technology whereby we can get a completely "closed loop" with a plastic bottle. Today, we're able -- we have them in Sweden and Switzerland, to actually take a used bottle, break that back down into what is essentially almost a virgin material and re-use that in another bottle.

Workplace Rights and HIV/AIDS
And of course, it's what we do with our own workplace -- our own Workplace Rights Policy but also our alliances with the UN, the UN Global Compact, etcetera. But then it's what we do and what we choose to do with regard to workplace activism, in Africa in particular, but also in India and China.

I was actually speaking at an HIV/AIDS function for the Global Fund on HIV/AIDS in Moscow last night, through what we do with HIV/AIDS, both in education, prevention and treatment.

Improving Access to Safe Water
But the water one, of course, is very important because that is the one which connects directly with what we do. It is a direct global footprint that we have and therefore, that is why we've come out with that as our major aspirational goal.

But there is another side to the water equation that we are also involved in and that is the availability of safe water to many communities around the world. The efforts that we're making there span some 40 countries with 70 community projects, which are enabling a multiplier effect to take place so that people who never had access to fresh water are able to have the correct access.

Africa
Africa is where that problem is probably the most evident. It's a very important part of the business for The Coca-Cola Company and we, in fact, are extremely important for Africa. We're the continent's largest employer. We estimate, in fact, that even though we directly employ 11,500 people, for every job that we create in a Coca-Cola factory, there are 16 other jobs that are created, just supplying us or supplying our products.

Of the billion people who don't have fresh water in the world, 300 million are in Africa and about that number doesn't have access to basic sanitation.

Water-borne diseases kill millions of people every year and most of them children. They calculate that about half of all Africans have one of six water-borne diseases. I've survived one of those and malaria as well. So I can identify very personally with those diseases, but I was lucky enough to be close to the right public health and to the right medication.

A New Era: Partners Multiplying Their Impact
So addressing the crises, obviously, is multifaceted. It means governments, it means civil society, public health, technology, humanitarian assistance and of course, investment.

Nobody can take on all of that alone. Certainly not governments, certainly not NGOs, and not business. So that's why we believe there is a new era. We believe that this linkage between civil society, NGOs, governments, and business is how we're going to create that multiplier effect.

And the business linkage, by the way, isn't just us but us bringing other businesses into other coalitions as we do with the Global Water Challenge, to be able to leverage up what we do. And we work with CARE, with UNICEF USA, World Wildlife Fund and -- where we're able to -- with the relevant government authorities, but also with private foundations like the Gates Foundation and of course, with our bottling partners.

We are about to reach some 90,000 school children and families in Kenya, for example, through a project that is focused on the purification and storage of water and on hygiene.

We are working in Mali on extending municipal water taps and rebuilding watering systems, to stop women having to walk miles to fetch water from rivers, which are, in fact, polluted.

We're working also to improve water quality and productivity in Egypt and also preserving the quality of what is becoming a very polluted lake, Lake Malawi. That's work we're doing with the World Wildlife Fund.

That's a bit of a recitation of some of the projects that we're in, and I don't believe that recitation can actually demonstrate what it means to the people who are actually living those difficult lives. But if you go there, as I do, and listen to the stories from people who have to walk those miles to get that polluted water, you really understand. And I do go out there. I think I am the only chairman of a public company who opened up a well at a school. That's probably not unique, but I also opened up an ablution block with a local Member of Parliament. That was to demonstrate the real commitment that we have from the top down in terms of what we're trying to do.

I believe that with this multiplier effect that we really can start to make a difference.

Tackling the "Impossible"
When I look at the scale and I look at the complexity of moving from availability to sustainability, I think of something that Nelson Mandela once said. "It always seems impossible . . . until it's done." And you know, impossibility has stalked us at other points in human history.

Think of the Green Revolution. That really chased away the perennial famine in parts of Asia and other parts of the world. It was also said that India and China were too poor, too bound to the past, to create real vibrant economies. The most vibrant economies in the world today are to be found in India and in China. And it's through the determination of individual people. It's through education, it's through trade and cooperation that millions of people have been lifted out of poverty.

Big change can happen, but it also comes with demands. We must all wake up to the fact that the health of business is absolutely inseparable from the health of the planet and all who share it.

As you go out into the world, I ask you to step up your responsibility to change some of the destructive paths of past decades. We all must measure up to that responsibility with clear commitments and with true accountability. If we can do that, we can change the world, and we can change it for the better. Thank you very much.

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