Drinking in sustainability

With its trailblazing achievements - Coca-Cola HBC (CCHBC) was named the industry leader amongst beverage companies in the 2014 Dow Jones Sustainability Indices (both World and Europe) and awarded an A rating by the Carbon Disclosure Project (CDP), gaining a place in the CDP Global Climate Performance Leadership Index 2014 – the world’s second largest bottler of Coca-Cola products certainly focuses on being ‘the real thing’ when it comes to CR and sustainability.
It is the seventh consecutive year that Coca-Cola HBC has been included in the Dow Jones Sustainability Indices and the first year it has led both the World and European indices. The sustainability indices assess over 2,500 of the world’s largest publicly traded companies on financially relevant economic, environmental and social factors. Following an evaluation, the top 10% of companies within each industry are selected for inclusion.
CCHBC was ranked first in the beverages sector out of 30 companies in DJSI World and 10 companies in DJSI Europe. The company’s overall score was 89%, up from 81% in 2013, and it achieved industry-best scores across the environmental and social dimensions, more specifically in the areas of brand, customer relationship and supply chain management, health and nutrition, talent attraction and retention, human capital development, and within the environmental dimension policy, packaging and water risk management, where the company scored the maximum of 100 points..
On the carbon front, CCHBC was upgraded by CDP to an A rating and awarded a place in the UK’s FTSE 350 Leadership Index, in addition to its place in The A List: Global Climate Performance Leadership Index (which for the first time looked at all climate leader companies around the world, not just the global 500 companies).
Through a number of initiatives including supporting the capacity of the Russian sugar beet industry, (which will eliminate the need to import sugar for the company’s operations this year) and an investment of €3m in 2013 in energy saving programmes throughout the company’s plants, CCHBC reduced its absolute carbon emissions (direct and indirect) by 5.3% (compared to the previous year).
According to ceo Dimitris Lois, the role of being a global sustainability leader enhances the company’s reputation in the eyes of its customers, stakeholders, financial analysts, and the public at large, and this gives CCHBC a competitive advantage. The DJSI and CDP achievements, not only act as ways to measure the company’s sustainability performance, but also to demonstrate how ESG factors are embedded into the organisation’s business model.
To further demonstrate the company’s commitment to sustainability leadership, CCHBC has also moved towards integrated reporting.
“Such a report is a powerful tool, it explains how the way you manage environmental, social and governance issues is at the core of what you do, how these are core to how you create value as a business. I believe integrated reporting is the future of corporate reporting. It demonstrates a sustainable business strategy and how ESG performance is business performance,” Lois says.
Éda G. Pogány, sustainability communications director at CCHBC, says that investors are increasingly interested in a more holistic picture, where non-financial KPIs also influence their decisions. “This is clearly reflected in policy development, both at the EU Commission and at the global level of the UN. The ability of a business to create long-term value in a sustainable way, and to be able to demonstrate that it understands the key material drivers and focuses on managing these is key for our communities and our investors. Value is increasingly shaped by factors beyond financial performance, factors that contribute to the resilience of a business such as reliance on the environment, social reputation, human capital skills and others.”
“We believe that we can only build and sustain value if we manage the full range of input capitals efficiently and responsibly, consciously managing our assets as well as our impacts,” she says. “To this end, we believe that we need to look beyond financials alone, and report on a broader set of factors that are fundamental for the long term success of our business.”
“Our integrated report intends to focus on a diverse set of factors that may impact the long-term financial performance of our business, it communicates how we create value by combining a broad range of resources and we hope to be able to demonstrate how we generate positive outcomes for the environment and society at large that go beyond returns for shareholders and investors,” she explains.
Pogány hopes that CCHBC’s achievements and way of doing business will have a knock-on effect. “I think that more and more companies will opt for reporting on their value creation processes, so more information will be available for investors and other stakeholders to assess their business models from the sustainability point of view. Local and international policies will also govern that, and companies can also encourage the members of the whole business ecosystem to follow this course. We discuss our sustainability approach with our key suppliers and trade partners, as well as key representatives of the communities we operate in, and the reporting approach reflects those conversations.”
Company size is no barrier, she maintains. “In principle, large, mostly multinational enterprises lead the practice of publishing integrated reports. In some countries, like South Africa it is compulsory for companies to report in an integrated way, and EU and global trends in policy-making and various reporting standards also increasingly require reporting on key non-financial performance indicators.” Still, integrated reporting is a minority practice even among large firms.
“I think that the logic behind integrated reporting can also be relevant for small and medium size enterprises that think progressively about their future in a changing external environment. Clearly, this is a strategic choice for any business: to demonstrate integrated strategic thinking, to create and maintain formal management and data systems that are essential to be able to publish an integrated report year on year requires investment into capabilities and systems, which can be a costly exercise that will result in returns on the longer run.”
So is integrated reporting a substitute for sustainability reporting? Pogány points out that while there is still an on-going debate on the subject, according to a recent survey by GRI, about half of all self-declared integrated reports are in fact combined reports. “At CCHBC, we believe that integrated reporting is much more than that, it can and will replace traditional reporting, and more and more organisations and industries will join this practice,” she concludes.