Coca Cola and Pepsi Sustainability Report

Keywords: coca cola sustainability, pepsi sustainability

During the rapid growth of the world economy, environmental sustainability, corporate social responsibility and social accounting become the core factors for current organization. Coca-Cola and Pepsi are both well-known America beverage brands in the world. Coca-cola is the world’s largest beverage company which provides sparkling, sports drinks and food in over 200 countries and markets (The Coca-Cola Company 2010.). On the other hand, Pepsi is also a world leader in convenient snacks, foods and beverages which is the major competitor to Coca-Cola (PepsiCo Inc 2010). As a global company, they invest in innovation to achieve sustainability and produce the sustainability report. For the sustainability of Coca-Cola, it is to make a positive difference in the world (The Coca-Cola Company 2010). Besides, “Pepsi is performance with purpose and investing in sustainable growth” (PepsiCo Inc 2010). The reports provide the companies approaches to social and environment sustainability and social accounting. Therefore, the evaluations of the two companies’ sustainable reports are critical to all stakeholders and communities.

1.2 Aim of the report

The purpose of this report is to develop an eco-audit report for Coca-Cola and Pepsi. The report is to evaluate the sustainable report of the two companies and compare the company approaches on social accounting.

1.3 Scope of the report

The report will mainly discuss the concept of social accounting, comparison of Coca-Cola and Pepsi on social accounting. It will structure the topics into two parts. Each part will detail discuss in the report.

1.4 Source of information

The source and information is mainly come from Internet and external textbooks. It will combine texts and journal articles.

2.0 DEFINE AND EXPLAIN THE CONCEPT OF “SOCIAL ACCOUNTING”

2.1 Definition of social accounting

As the Ghosh (n.d.) define that, social accounting means the development of a measurement system to monitor the internal or external business activities on social and environmental impacts to stakeholders with non-monetary units. Social accounting is concern of the organization performance and involvement in the social and environmental activities. It includes all the detail activities participation and contribution from organization. Social accounting is same as the sustainability report to identify and measure the social contribution of the company, determine the company strategies on the communities and social segments¼Œprovide relevant information of firms goal, polices and performance to the social goals (Ghosh n.d.). The concept of social accounting is developed by the social, community and stakeholder which under the economic growth. It stimulates more intensive business activities and productions which causes the environmental damage, such as water and air pollutions from the increasing manufactories. For the increasing concern of sustainability, organization behaves in the social and environmental issue is the significant component after profitability. The intention of social accounting is provide a chance for stakeholders to understand the ways or attitudes of the organization work in sustainability. Therefore, many of the companies provide the sustainability report to earn the reputation and fulfill the corporate social responsibility.

2.2 The principles of “good” social accounts and global standards

To maintain the quality of social accounting, there are five basis principles to practice. The five principles are completeness, comparability, regulation, external verification and continuous improvement. The first principle is completeness. To provide a report, it should cover all the areas of the organization’s activities rather than the positive parts (Crane & Matten 2007). Company always selects the favourable performance to involve in the report. The report only covers the positive side will lose the reality. It is common for company hiding the unfavourable information because it will reduce company reputation and expose the weakness. The second principle is comparability. The assessment of the report should be available to comparable, suitable for the external verification and global standard in a different periods and countries (Crane & Matten 2007). Under the globalization, the current organization is not only deal with one region and looking for the market expansion to the world. Therefore, the global standard report will be easier for different countries to comparison and assessment. The comparability report will be critical for the business expansion and expression of sustainability concept. For the principle of regulation, the report should conform to all the policies and laws which provided by government and company. It should avoid the inappropriate terms and illegal factors. Beside, the external verification is about the outsiders have the right to verify the reality of the report publishing (Biz/ed n.d.). Stakeholders have power to evaluate the report and increase the certainty. The final principle is continuous improvement. Social accounting is also a method to reflect the insufficient and deficient company performance which encourages the company improvement (Crane & Matten 2007). The continuous improvement can maintain the company in a high competitive level.

Beside the principles, the adoption of global standards is making more comparable to the report. The global standards involve two aspects which are auditing and reporting. As Crane & Matten (2007, p.217) claim that, “Auditing is about the global workplace standard, SA 8000, which cover the working hours, discrimination and independent accredited auditors”. For SA 8000 is grounded on the principles of core ILO conventions, UN Conventions, and an ISO-style management system, it is applicable to all industrial sectors to measure their performance and responsibly in supply chains (Social Accountability International n.d.). SA 8000 protects the labour and human right in workplace under the global qualification. For reporting, the Global Reporting Initiative (GRI) of G3 Guideline is common adopted and accepted by the current company to their sustainability report. According to Crane & Matten (2007, p.217) explain that, “GRI as a global reporting standard, which create a common framework for voluntary reporting on economic, social and environmental performance triple bottom line of sustainability”. “G3 Guidelines are framework of GRI Sustainability Reporting and involve the principles to define report in materiality, stakeholder inclusiveness, comparability and reliability” (Global Reporting Initiative n.d.). It ensures the report content and quality in a standard level. There are still some of the other global standards for social accounting. The principles and global standards develop the social accounting report in a professional and comparable level.

3.0 CRITICAL EVALUATION THE SOCIAL AND ENVIRONMENT REPORTS OF COCA-COLA AND PEPSI

3.1 Coca-Cola on social accounting

Coca-Cola is the world leading company in food and beverage industry. As the leading stage, there is a huge responsibility to establish a positive and active image in social and environmental sustainability. “Coca-Coal believes that investing in the economic, environmental and social development can assist the business grow” (The Coca-Coal Company 2010). “The value of Coca-Cola is to make a positive difference in the world through redesign the living way to driving business growth and creating a sustainable world” (The Coca-Coal Company 2010). The organization value is concern on the personal health and green living. Meanwhile, Coca-Cola contains seven core areas to business sustainability which is more particularities than Pepsi. It includes “Beverage Benefits, Active Healthy Living, Energy Management and Climate Protection, Community, Sustainable Packaging, Water Stewardship and workplace” (The Coca-Coal Company 2010). Each areas provide different extend of the sustainable actions. The targets of sustainability from 2008 to 2009 are included in the report. However, Coca-cola only mentions the achieved targets and performances, such as reduce the water and energy rate, and open the world largest PET recycling plant for reusing the bottles (The Coca-Coal Company 2010). Moreover, the large part of the report is about the company’s future targets, innovations and plans in sustainability for the next four years. The actions taking in the sustainability are quite similar with Pepsi in such areas. For instance, it provides the sugar free drinks and footprint reduction. The company report commit to the principles of the United Nations Global Compact, against the Global Reporting Initiative (GRI) G3 guidelines and CEO Water Mandate (The Coca-Coal Company 2010). Coca-Cola more participates in environmental and governance, commitments and engagement sections which will provide the full GRI G3 Report in late year (The Coca-Coal Company 2010). To increase transparency of the report, company invites the Board of Directors and BECO Verification Statement as the members are not employees, to supervise the ethics and information certainty (The Coca-Coal Company 2010). It ensures that the report is high level of compliance to the standards. Social accounting is part of the business goals and strategy in Coca-Cola.

3.2 Pepsi on social accounting

“Pepsi as a world beverage company, they promise to deliver sustainable growth by investing in a healthier future for consumers, planet and communities” (PepsiCo Inc 2010). The continuity of sustainable growth and positive impact in the environment are the major value in Pepsi. Pepsi develop their responsibilities and commitments into human, environmental and talent sustainability. According to the PepsiCo Inc (2010), “the human sustainability aims to encourage people to live healthier by addressing diverse and complex global nutrition needs”. For example, reduce the average sugars amount and eliminate the direct sale of full-sugar soft drinks to school (PepsiCo Inc 2010). However, Pepsi always face the challenge in the high sugar and calorie on their products. To deal with this problem, the purpose of human sustainability is concentrate on the nutrition by adopting the global nutrition standards and natural ingredients. Pepsi work hard to control the nutrition and make their products healthier. For the environmental sustainability, “Pepsi continues to innovate and efficient use of land, energy, water and packaging in operations for protecting the natural resources” (PepsiCo Inc 2010). Pepsi take action to minimize footprint, achieving positive water balance and moving toward zero landfill within 10 years (PepsiCo Inc 2010). The environmental sustainable goals are realistic and attainable for company. Pepsi receive the Environmental Excellence Award from the U.S. Environmental Protection Agency leadership and 2010 Global Water Awards with “Environmental Contribution of the Year” (PepsiCo Inc 2010). Nevertheless, some environmental goals are also involve in the Coca-Cola sustainable report, such as package re-design and reduce carbon footprint. Talent sustainability is the last responsibility area cover in the report. “Pepsi continues to remain the highly skilled, diverse workforce and provide a safe and healthy workplace” (PepsiCo Inc 2010). Workers are the asset for company to success. Pepsi spend a lot of resources in workers’ health and associate with different management levels to achieve the sustainable growth. Pepsi uses G3 Guidelines of GRI without disclose the entire report. The sections of Pepsi’s GRI report are not mention in the sustainable report and difficult to do the comparison. The level of the compliance to the standards is uncertain. Pepsi set up many goals and commitments in human, environmental and talent sustainability for the coming years. Pepsi will try to meet the targets base on these three areas. The result can only see in the future.

3.3 Compare and Contrast of Coca-Cola and Pepsi on social accounting

Coca-Cola and Pepsi are the competitors in the food and beverage industry. Both of them are produce the sustainable report with similar content and standard. However, Coca-Cola provide a more complete and comprehensive report than Pepsi. The value of Coca-Cola in sustainability is to invest social and environment for changing the people’s living style to create a sustainable future and business growth. They believe that change of the personal life style and live positive are the best ways to establish a sustainable world which include seven core areas in sustainable issues. In contrast, Pepsi aim at place the positive environmental impacts to achieve the sustainable growth. Sustainable growth is concentrate on the human, environmental and talent. The value and area concern of the stakeholders are more general than Coca-Cola. For the target setting, Coca-cola mentions the achieved targets from last years in the report. Although it only picking the achieved targets and hiding the unattained targets, it still provide the information for stakeholders to know what the company successfully do in the sustainability. Besides, Pepsi just involve the upcoming goals and commitments in the report. It did not include any previous targets. Stakeholders will be questionable to the success or failure of the last targets. Coca-cola is setting the report for four years which is appropriate for the rapid changing world. For Pepsi, there is not including a concrete time in the report and setting as a long term plan. Sustainability plans and targets should be up-to-date and verify during a period of time. On the other hand, both of Coca-Cola and Pepsi are using the G3 Guidelines in GRI. Coca-Cola discloses their GRI report with the sections or indicators in such areas. Unfortunately, Pepsi is not public their GRI report to make the comparison. In addition, they also listed in the Dow Jones Sustainability World Index and Sustainability North America Index. However, Coca-Cola also commits to the UN Global Compact and CEO Water Mandate set of principle in human right and implementation of water respectively (The Coca-Coal Company 2010). Compare to Pepsi, Coca-Cola have high level of the compliance and transparency to the global standards. Both Coca-Cola and Pepsi are embedding the environment sustainable into the integral part of the business operation and mission.

4.0 CONCLUSION

After critical evaluation of Coca-Cola and Pepsi on social accounting report, it can be concluded that:

Social accounting is a measurement system to monitor the company performance and involvement in social and environment. The five good principles, SA8000 and GRI as the global standards develop a professional and comparable social accounting report.

Social accounting on Coca-Cola is better than Pepsi. The report of Coca-Cola is more complete, comprehensive and transparency compare with Pepsi. Coca-Cola develops seven core areas in sustainability which is more specific than Pepsi. The timeframe and targets are clearly mentioned in the report. It against the GRI, United Nations Global Compact and CEO Water Mandate as the global standard and invite the Board of Directors and BECO Verification Statement which provide the report in good principles of social account and global standards.

Pepsi on social accounting is more general than Coca-Cola. The value of company is to achieve the sustainable growth. Pepsi is insufficient to concern in human, environmental and talent sustainability. Also, the previous targets and GRI report are not disclosed in the report. The sustainable targets and actions are set as a long time plan without a concrete timeframe. Nevertheless, Pepsi also against the GRI similar with Coca-Cola.

5.0 RECOMMENDATION

It is recommended that:

Coca-Cola and Pepsi can develop industry-specific agreement to work together in the sustainable issues. They can establish codes of conduct or practices to the particular areas. For example, industry-water or workplace agreement.

Coca-Cola can disclose the ongoing targets in the report for letting the stakeholders know the targets progress. Under the faster changing world, it should regular review and modify the report on every year. It can keep the targets up-to-date.

Pepsi should increase concern areas and more specific. The report can involve the processing and achieved targets. In addition, it should set a concrete timeframe to the report, such as two or five years. Pepsi should disclose GRI report and invite external audits to verify the report for enhancing the transparency.