Workplace and Human Rights

We consider workplace and human rights—as articulated in the United Nations Universal Declaration of Human Rights and the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work—to be inviolable. We take a proactive approach to securing these rights in every workplace of The Coca-Cola Company, in our bottling system, in our supply chain and in the communities in which we operate.

The foundation of our approach lies in three key documents: Our Human Rights Statement, our Workplace Rights Policy and our Supplier Guiding Principles. All three are profoundly influenced by the United Nations and International Labour Organization declarations. Together, they describe our high standards and our expectations with respect to human rights and workplace rights. Collectively, they address such subjects as child labor, forced labor, freedom of association, discrimination, health and safety, hours of work and the 30 articles contained in the Universal Declaration of Human Rights.

We expect our Company, our bottling partners and our suppliers to avoid causing or contributing to adverse human rights impacts as a result of business actions, and to address such impacts when they occur. Furthermore, our Company, bottling partners and suppliers are also responsible for preventing or mitigating adverse human rights impacts directly linked to their operations, products or services by their business relationships, even if they have not contributed to those impacts. To meet this expectation, our Company, bottling partners and suppliers have begun the work of incorporating processes for identifying, preventing and mitigating their impacts on human rights. Additionally, all are required to implement a process for remediation of any adverse human rights impacts they cause or contribute to.

In recent years, we have more clearly defined what we stand for in regard to workplace and human rights. We have also begun the complex work of ensuring that our entire business system and supply chain align with our policies. It is a long journey. Much of it lies ahead. And we have made notable progress since our last sustainability report, the 2009/2010 Sustainability Review.

Since 2005, we have worked to support the mandate of John Ruggie, the UN Special Representative for Business and Human Rights, in developing guiding principles for implementing his “Protect, Respect and Remedy” framework for respecting human rights in a business context. As part of that work, we have hosted several meetings of business leaders and others to increase understanding of human rights and share best practices. The meetings were co-sponsored by the International Organization of Employers, the U.S. Council for International Business and the U.S. Chamber of Commerce. In May 2011, we formally endorsed Professor Ruggie’s framework, which the UN Human Rights Council adopted in June.

Our support for the mandate of Professor Ruggie builds on our work as a participant of the UN Global Compact and member of the Global Business Initiative on Human Rights (and its predecessor, the Business Leaders Initiative on Human Rights). Our work in those partnerships continues. In January 2011, we joined 17 companies in launching the Global Compact LEAD program, which challenges Compact members to achieve a blueprint for sustainable corporate responsibility.

Our Company addresses human trafficking and forced labor through both our Workplace Rights Policy and our Supplier Guiding Principles. These policies are supported by independent assessments of both supplier and Company-owned facilities and are conducted by third parties to verify compliance with our standards that prohibit trafficking and slavery in supply chains.

In 2010, we expanded research into the recruitment and employment practices of migrant labor in our supply chain and Persian Gulf area. We will use this research to develop expanded efforts to combat forced labor.

We respect the rights of workers in our system to join unions without the fear of retaliation and engage in collective bargaining without interference or fear of retaliation. More than 30 percent of workers in our system are represented by trade unions. Of those, more than 70 percent are affiliated with the International Union of Foodworkers (IUF), one of our business system’s most important stakeholders.

Maintaining a productive relationship with trade unions enables us to collaborate with them on key issues affecting our Company’s success. It also enables us to solve problems constructively and manage risk. If we are unable to address legitimate labor union concerns, renew collective bargaining agreements on satisfactory terms or address workplace inequities in a timely way, our business could suffer—through strikes, lawsuits, a global corporate campaign or other labor unrest.

Twice each year since 2005, we have met at our Atlanta headquarters with IUF delegates from around the world to discuss labor and workplace issues in our system. These meetings enable us to have frank conversations and address and resolve difficult issues across a table through a serious and practical engagement from both sides. For example, in 2009 and 2010, we were able to resolve a number of contentious labor issues in Pakistan. In October 2010, we joined the IUF in reaffirming our commitment to our semiannual meeting process.

We encourage our bottling partners to collaborate with labor organizations as well. In September 2010, we presented a program to Equatorial Coca-Cola Bottling Company to help that company implement our Workplace Rights Policy. That same month, we hosted a meeting in Athens, Greece, where we achieved further alignment among bottling partners in addressing issues related to labor relations and human and workplace rights. In 2011, we are enhancing our systems for identifying workplace rights problems early. We are also providing bottling partners with resources and human rights due diligence checklists to address such issues as contract labor, plant siting and human rights in the supply chain.

Like many companies, our Company and bottling partners employ contract and agency labor. We believe there are many legitimate uses of contract labor, and we expect contract workers, through third-party providers, to continue to play an important role in our business. We do not track the aggregate number of contract laborers working in our system due to the highly seasonal nature of our business in many parts of the world, and because of the varying circumstances in which our bottling partners and business units engage with contract labor.

Our commitment to human and workplace rights, as well as our commitment to operating a sustainable business, compels us to respect the rights of all workers, including those not directly employed by our Company or bottling partners. What is more, improper treatment of contract laborers would put our business at risk of lawsuits, action by regulatory agencies and damage to our reputation. So we are working with our business units and our bottling partners to develop a proactive, holistic approach to managing contract labor that protects workers and our Company by addressing critical issues at each phase of a contract worker’s engagement with us—from our initial decision to use contract labor through the end of the relationship with labor suppliers or specific workers. We expect our personnel and our bottling partners to understand the risks associated with contract labor and carefully manage the labor agencies engaged. We also expect them to provide training and a safe work environment and to avoid using termination practices that circumvent legal obligations.

We take a number of steps to ensure responsible engagement of the contract and agency workers we employ, including:

• Our Human Rights Statement, Workplace Rights Policy and Supplier Guiding Principles outline our commitments and expectations for treatment of all workers. Any allegation of worker abuse—including abuse of contract laborers—is a very serious issue that we fully investigate.
• We conduct continuous assessments of our operations and of key authorized contract labor suppliers to ensure the responsible treatment of contract laborers.
• We engage with key stakeholders to understand their perspective regarding potential abuse of contract workers. The subject of contract and agency labor is a standing agenda item for our semiannual meetings with the IUF (please see “Collaborating with labor,” above). Through these meetings, we have successfully addressed a number of concerns regarding contract workers in India, Pakistan and the Philippines.
• We are providing our largest bottling partners with contract labor risk-mitigation checklists and other similar tools to help them manage contract labor appropriately.

Our Human Rights Statement, Workplace Rights Policy and Supplier Guiding Principles prohibit the use of child labor. While there is no child labor in our Company-owned operations, we are aware that child labor persists on the farms that grow cane for our sugar suppliers. The Company does not typically purchase ingredients directly from farms, nor are we owners of sugar farms and plantations. Sugarcane harvesting is especially hazardous because of the machetes used in the work. Yet poverty and local social norms often result in children working in the cane fields.

We have taken an approach to child labor in sugarcane fields that is at once global and local. We set policy, convene experts, and engage with governments, NGOs and other companies around the world. At the same time, we collaborate with suppliers, industry groups and local stakeholders to address the issue with farmers at the local level.

Since our 2009/2010 Sustainability Review, we have taken action in countries including El Salvador, Honduras, Mexico and the Philippines. Here are our recent activities:

• In El Salvador, we have continued participating in collaboration with ILO-IPEC, the Salvadoran sugar industry, governments, NGOs and others. These efforts have helped to reduce child labor in cane fields by 72 percent between 2003 and 2008.
• We helped Honduras’s Sugar Association Board of Directors arrange for all the country’s sugar refineries to commit to addressing child labor. The initial plan calls for evaluation, intervention and education; benchmarking and contracting; and enforcement and monitoring activities to be implemented on a long-term basis starting with the 2011 harvest. The first stage was developed by completing an independent assessment of child labor in the country’s sugarcane supply chain, which revealed minimal presence of child labor in the Honduras sugar supply chain.
• Our partnership with IPEC in Mexico resulted in a commitment by two sugar suppliers to pilot child labor awareness and education programs at their mills’ cane farms. If the pilot succeeds, other mills will replicate it through the 2011–2012 harvest.
• In September 2010, The Coca-Cola Foundation joined the ILO-IPEC director for the Philippines, the government of Bukidnon province and the Sugar Industry Foundation in launching a four-year initiative to eliminate child labor in Bukidnon.

In addition to our farm-focus work, we are also engaged in the ongoing global conversation about eradicating child labor. We are part of a 13-member U.S. Department of Agriculture consultative group on child and forced labor that will serve by U.S. Congressional mandate through 2012. Also, in 2010, our workplace rights team participated among 450 delegates from 80 countries at a two-day Global Child Labor Conference in The Hague organized by ILO-IPEC and the government of the Netherlands. Delegates adopted A Roadmap to 2016, which sets measurements for eliminating the worst forms of child labor over the next five years.

Eradicating child labor is a complex and often frustratingly slow process, requiring consensus and cooperation among many stakeholders. It is made all the more difficult by persistent poverty and lack of access to education in cane-growing regions. Still, based on our progress and the lessons we have learned to date, we are hopeful about our opportunities to contribute to substantial, lasting change.

In addition to our work on child labor, we have made progress in addressing several other human rights and workplace concerns since our 2009/2010 Sustainability Review.

Compliance with local work-hours and overtime laws is a fundamental component of our Workplace Rights Policy and Supplier Guiding Principles. To help bottling partners and suppliers understand and manage hours-of-work issues, our business unit in Brazil—where regulations cap worker hours at 40 per week—identified reasons for overtime and rest-day violations and sought to mitigate them. Bottling partners first noted that overtime was often logged mistakenly because workers were not clocking out for coffee and meal breaks and other “off the clock” activities. Once they addressed that issue and others, bottling partners then tracked hours of work per month compared to the previous year, as well as the associated economic impact. After a year of focusing on stricter compliance, 11 bottling partners reported an 86 percent reduction in overtime, $3.8 million in annual savings and increased “off work time” for more than 34,000 workers. Based on the work in Brazil, we have developed a guidance document to help other facilities in our system reduce overtime.

Protecting human and worker rights in a company as large and complex as ours is a challenging and continual process, so we welcome signs that we are moving in the right direction. In January 2011, Calvert Investments announced that we met its “environmental, social and governance criteria as a result of clear progress in labor and human rights.” For more information, read Calvert’s analysis of our progress.