PROFESSIONAL DEVELOPMENT OF COCO COLA

QUESTION

Assessment 3b:     Greenhouse Business Challenge and Carbon Footprint

                                                             COCACOLA ORGANIZATION

On October 12^th, 2011 the Australian Parliament passed the Carbon Pricing Legislation Bill mandating a price on carbon from June 2012.  The 500 largest carbon emitting organisations will be required to account for their carbon usage and pay the Carbon Tax @ $23 Tonne. Organisations have been auditing their carbon footprint since 2009.

Organisations measure their carbon footprint in three distinct areas.  These are titled Scope 1, Scope 2 and Scope 3.

Scope1 carbon footprint is called the direct footprint and relates to the carbon footprint from manufacturing a product or delivering a service. An example of scope 1 for Coca Cola would be the carbon footprint from directly manufacturing their soft drink product. This however does not include electricity usage.

Scope 2 carbon footprint is called indirect carbon emission from key indirect sources ie: purchased electricity sources. This footprint relates to the amount of electricity used in an organisation. An example of scope 2 for Coca Cola would be the carbon footprint from the amount of electricity used both in manufacturing and head office and other areas. This should be easy to measure.

Scope 3 carbon footprint is called the supply chain footprint. This relates to the carbon footprint generated by the distribution of a product along a supply chain or delivering a service along a supply chain. An example of scope 3 for Coca Cola would be the carbon footprint generated from delivering Coca Cola into vending machines.

These, taken together, constitute an organisation’s emissions inventory. The emissions inventory contains the main sources of emissions and therefore identifies the opportunities for abatement, and covers all areas of a business including energy use, operation of stationary equipment, transport, supply chain engagement and waste generation. http://www.bendigobank.com.au/generationgreen/sustainable-living/work/carbon-friendly-business.asp

Once organisations have audited their carbon footprint they then typically respond in three broad ways;

Carbon Footprint Responses

• Response 1:  “What management structure, internal processes, policies and procedures will we use to manage our Greenhouse Challenge” (Corporate Governance Response ),
• Response 2:”how will we lower our Scope 1, Scope 2 and Scope 3 footprints” What are the physical steps we need to take to lower our footprint (Operations Response),
• Response 3:”how will we act responsibly”  How do we respond in order to enhance our reputation and protect our brand (Protect our Brand-CSR Response).

You will investigate a business to examine how the Greenhouse Challenge and Carbon Footprint are impacting on that business.  Further you will explore the problems and solutions an organisation may use to respond to the Greenhouse Challenge. Your team will be assigned a business to investigate.  The main problems that the top 500 Australian (Malaysian and Chinese) organisations are facing include:

Assessment Requirements:

As a team you will complete and be assessed on:

• Problem Solving – Brainstorm, mindmap, KT situation analysis and Duncker diagram.

SOLUTION

Carbon footprint response of Coca-Cola on Corporate Governance

Coca-Cola has released a report in the year 2011 named “Global Reporting Initiative” in which it discloses its key performing indicators that measure the company’s performance across different parameters. We will focus mainly on the company’s environmental performance and different policies and initiatives taken by the company to address the issue of the Greenhouse Challenge. The company has addressed the issue by setting up a new office of sustainability (The Coca-Cola Company, 2011) which acts as a team in order to strategize as well as implement decisions with respect to the Carbon footprints issue. The organization has implemented many strategic initiatives (The Coca-Cola Company, 2011) in order to decrease the carbon footprints due to its manufacturing operations, some of them are:

• Improve water use efficiency with Water Stewardship programme
• Setting goals and targets with respect to Energy Efficiency and Climate Protection
• Implementing new innovative Sustainable Packaging techniques
• Contributing to efficient uses of resources by improving Supply Chain Management and Research & Development related processes in the organization (Cogan D, Good M, Kantor G, and McAteer E, 2008)
• The company has implemented few Corporate Social Responsibility initiatives which form a strategic step in giving back to the society

The figure below shows the different components involved in designing a sustainability strategy for an organization:

Figure 1: Complexity of Sustainability Requires a Holistic Approach, Mines C, 2011

A research was undertaken to study best practices in the area of corporate governance related to carbon footprints, and it was found that the following were one of the key practices (Mines, C, 2011) which the organizations should follow:

• Setting goals: Organizations need to set targets related to the carbon emissions which require the organization to assess the current situation related to the issue
• Creating Initiatives: Motivating the employees to implement the sustainability initiatives
• Formalizing Structure: Defining specific roles would improve the process of achieving the sustainability goals that have been set

Oracle has sponsored a detailed report (The Economist Intelligence Unit, 2009) on how IT can be used for sustainable operations of organizations in order to indirectly help the organizations decrease carbon footprints. The figure below shows the top companies with respect to corporate sustainability governance:

Figure 2:  Top ten performing organisations for the ‘Governance’ criteria group, Accaglobal, 2009

Issues with carbon footprint responses of Coca-Cola and Recommendation:

The main issue that the organization is facing is that it needs to educate the customer on the consumption level of carbon for every purchase. That means that the products being sold should contain information not only about the ingredients but also the carbon related information (Shankleman, J, 2012) so that the customer is at least aware of the amount of carbon intake. Such an initiative would act as a new step into the carbon footprint response for the organization and help achieving its goals related to sustainability.

References

Cogan D, Good M, Kantor G, and McAteer E, 2008, ‘ Corporate Governance and Climate Change Consumer and Technology Companies, A ceres Report, Authored by RiskMetrics Group’. [online] Available at: <http://www.ceres.org/resources/reports/corporate-governance-and-climate-change-2008> [Accessed on 12 May 2012]

Figure 1: Complexity of Sustainability Requires a Holistic Approach, Mines C, 2011, ‘ 3 Best Practices for Managing Corporate Sustainability Projects’. [online] Available at: <http://www.greenbiz.com/blog/2011/08/04/3-best-practices-managing-corporate-sustainability-projects> [Accessed on 12 May 2012]

Figure 2:  Top ten performing organisations for the ‘Governance’ criteria group, Accaglobal, 2009, ‘Disclosures on corporate governance’. [online] Available at: <http://www2.accaglobal.com/pubs/australia/general/research/latest/ACC1620_CorpGovReport02.pdf> [Accessed on 12 May 2012]

Mines C, 2011, ‘ 3 Best Practices for Managing Corporate Sustainability Projects’. [online] Available at: <http://www.greenbiz.com/blog/2011/08/04/3-best-practices-managing-corporate-sustainability-projects> [Accessed on 12 May 2012]

Shankleman, J, 2012, ‘Coca-Cola champions personal carbon budgets’. [online] Available at: <http://www.businessgreen.com/bg/news/2169107/coca-cola-champions-personal-carbon-budgets> [Accessed on 12 May 2012]

The Coca-Cola Company, 2011, ‘2010/2011 GRI Report’. [online] Available at: <http://www.thecoca-colacompany.com/sustainabilityreport/TCCC_2010_2011_GRI_Report.pdf> [Accessed on 12 May 2012]

The Economist Intelligence Unit, 2009, ‘ IT and sustainability: Bringing best practices to the business’. [online] Available at: < http://www.oracle.com/us/products/applications/green/056899.pdf> [Accessed on 12 May 2012]

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