Coca-Cola, Long-Term Wealth Creation, and Corporate Social Responsibility

            Allen White argues in Is It Time to Rewrite the Social Contract, that long-term wealth creation is linked to a company’s sustainability and increased investment in human and social capital, and natural resources (White, 2007, p.16).  Short-term quick-win mindsets of companies as is often demanded by the stock market (White, 2007, p.16) is detrimental to a company’s ability to grow in a civil society organization (CSO) or corporate social responsibility (CSR) context.  In other words, when a company is seeking quick wins rather than long-term growth, they go after pure profits rather than continued investment in society.  One company that has built long-term wealth while continuing to invest in sustainability and its corporate social responsibility plan is Coca-Cola.  Regarding a new social contract, Coca-Cola has grasped onto investment in communities, its diverse labor force, its supply chain, and its environments while increasing earnings and increasing margins (Sun, 2019).

            Coca-Cola grows organically, between 3-5% in revenue, every year, with gross margin upwards of 60% (Sun, 2019).  Coke stock is known for being a good stock to hold for high dividend yield.  Warren Buffett’s Berkshire Hathaway owns 10% of Coca-Cola (approximately $22 billion) (Mohamed, 2019), and Buffett is of the philosophy that stock ownership should be forever (White, 2017, p.16).  This demonstrates Warren Buffett’s faith in the long-term growth and the long-term wealth within Coca-Cola.

            From sustainable agriculture to sustainable packaging (Coca-Cola Company: Sustainable Business, n.d.), from supplier diversity to employee inclusiveness (Coca-Cola Company: Diversity and Inclusion, n.d.), to their all-important water stewardship program (Coca-Cola Company: Water Stewardship), Coca-Cola is making huge efforts internally and with their Coca-Cola Foundation towards investment in the environment, their employees, and the community.  They recognize their stakeholders are their sustainability partners.  They list their stakeholders as bottling partners, suppliers, consumers, customers, industry partners, governments, and non-governmental organizations (NGOs) (Coca-Cola Company, n.d.).  Their approach is absolutely one of doing more together, as their statement “Achieving More Together” indicates that creating a better world depends on stakeholder engagement (Coca-Cola Company, n.d.).

            Coca-Cola’s corporate social responsibility program has revolutionized the company with alignment to social and environmental values that are clear.  Coca-Cola explains that its purpose is to “Refresh the world. Make a difference” (The Strategist, 2019).  Their vision statement guides these values:

“Our vision is to craft the brands and choice of drinks that people love, to refresh them in body & spirit. And done in ways that create a more sustainable business and better shared future that makes a difference in people’s lives, communities and our planet” (Coca-Cola Company: Purpose and Vision, n.d.).

Coca-Cola is clearly serious about their commitment to their communities and the environment while providing a great product with people in a sustainable way.  Since the heart of a business is to grow long-term growth to be a sustainable business, Coca-Cola’s vision and values are perfectly in line with this purpose.

            In conclusion, part of the new social contract as outlined by Allen White refers to corporation’s responsibility to society, to communities, to sustainability, and to take care of its stakeholders.  Instead of just profiting off of the world, companies are expected to give back to the world.  Many companies do this via corporate social responsibility (CSR) programs.  For most, it is a public relations effort, while some companies are letting CSR reshape and re-energize their corporate values, mission, and vision.  In order to be effective in giving back to the community, being sustainable, taking care of their employees, and offering increased value to their consumers, companies must be focused on long-term wealth.  Without long-term wealth and a focus on long-term growth, companies chasing short-term profitability will not be effective in CSR efforts.  Short-term profitability is short-sighted, and CSR efforts are not made reflective as short-term wins.  Companies focused on short-term growth will not have a properly focused CSR initiative like Coca-Cola has invested in over the years.

References

Coca-Cola Company. (n.d.). Question: Who are Coca-Cola’s partners in sustainability? Retrieved from https://www.coca-colacompany.com/faqs/who-are-your-partners-on-sustainability

Coca-Cola Company: Diversity and Inclusion. (n.d.). Diversity and Inclusion. Retrieved from https://www.coca-colacompany.com/shared-future/diversity-and-inclusion

Coca-Cola Company: Purpose and Vision. (n.d.). Purpose and Vision. Retrieved from https://www.coca-colacompany.com/company/purpose-and-vision

Coca-Cola Company: Sustainable Business. (n.d.). Sustainable Business. Retrieved from https://www.coca-colacompany.com/sustainable-business/water-stewardship

Coca-Cola Company: Water Stewardship. (n.d.). Water Stewardship. Retrieved from https://www.coca-colacompany.com/sustainable-business

Mohamed, Theron. (2019). Warren Buffett drinks 5 cans of Coke a day — here’s why he switched from Pepsi after nearly 50 years. Retrieved from https://markets.businessinsider.com/news/stocks/warren-buffett-switched-cherry-coke-pepsi-neighbor-don-keough-2019-11-1028727422

Sun, Leo. (2019). Where Will Coca-Cola Be in 5 Years? Retrieved from https://www.fool.com/investing/2019/07/17/where-will-coca-cola-be-in-5-years.aspx

The Strategist. (2019). Why Coca-Cola’s Mission Statement is the Perfect Template for Yours. Retrieved from https://strategist.blog/why-coca-colas-mission-statement-is-the-perfect-template-for-yours/

White, Allen. (2007). Is It Time to Rewrite the Social Contract? Retrieved from https://www.tellus.org/pub/Is%20It%20Time%20to%20Rewrite%20the%20Social%20Contract.pdf

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