Jun 23, 2021

Profile: Beverage giant The Coca-Cola Company

Coca-Cola
supplierdiversity
benchmarking
Procurement
3 min
"It Had to Be Good to Get Where It Is," Procurement Magazine takes a look at Coca-Cola and celebrates its work in supplier diversity and procurement

Because "It Had to Be Good to Get Where It Is," (Coca-Cola's 1926 slogan) we take a look at The Coca-Cola Company, a non-alcoholic beverage global beverage company, and one of the world’s most recognizable brands.

 

Founded: January 29, 1892, Atlanta, Georgia, United States

Headquartered: Atlanta, Georgia

Chairman and CEO: James Quincey

Revenue: In 2020, The Coca-Cola Company's net operating revenues amounted to around 33.01 billion U.S. dollars worldwide

Fun Fact: Although Coca-Cola did not actually create the legend of Santa Claus, as is widely believed, they did play a role in creating the warm, jolly character with rosy cheeks we have all come to know as Santa Claus, having commissioned illustrator Haddon Sundblom to paint Santa for Christmas advertisements. 

 

 

At The Coca-Cola Company, procurement means much more than just savings and leveraging economies of scale. The procurement team takes a strategic approach to procurement, working not only to ensure an optimal product and service but collaborating with suppliers to foster innovation and drive sustainability and supplier diversity. 

Home to more than 500 beverage brands, some 20 of which are billion-dollar-brands, Coca-Cola stands as owner of the world's largest beverage distribution system, reaching consumers in over 200 countries, and takes supplier diversity seriously, increasing 2021 spending with minority-owned media 5x compared to 2020, and with an ambitious goal to hit $1 billion in annual spending. 

It’s why they made our July Procurement Magazine cover and took the #1 spot in our Top 10 Diverse Companies in Procurement list.

Coca-Cola is “committed to supplier diversity by maximising procurement opportunities and proactively engaging and building partnerships with diverse suppliers.” The company says that its “procurement strategy will develop stronger local communities and create long-term growth.”

In this year alone, Coca-Cola has stepped up spending with minority-owned media companies, enrolled 100% of its US corn supply into a pioneering sustainable agriculture initiative and partnered with AB InBev, Unilever and Colgate Palmolive to spur next-generation of sustainability innovations.

“Following a thorough analysis of our marketing spend, we recognized we could do more to support an equitable media landscape by creating growth opportunities for minority-owned and led outlets,” said Melanie Boulden, Chief Marketing Officer, North America Operating Unit, The Coca-Cola Company. “We must take a leadership role, and that’s why we’re not only committing to increase our investment with minority-owned and led media companies but also are focused on non-media partnerships and empowerment initiatives designed to foster growth and increase competitive advantage of minority businesses and communities.”

The company was also recognised by The National Minority Supplier Development Council (NMSDC) for its commitment to increase its spend ith Black-owned suppliers by $500 million.

So, how does Coca-Cola manage it’s supply chain?

 

Streamlining Procurement— Coca-Cola Bottlers’ Sales & Service

Coca-Cola Bottlers’ Sales & Service (CCBSS) is an independent company owned by nearly 70 independent Coca-Cola bottlers that looks to streamline and synergize Procurement efforts while supporting operations for their bottler owners, bottler-owned production cooperatives, Coca-Cola North America Operating Unit and other beverage partners.

Established in 2003, CCBSS leverages the scale of the Coca‑Cola system and reduces complexities to drive efficiencies and cost savings, and serves as a collaborative “single voice” for the Coca-Cola system in North America to bottlers.

For more on their Procurement efforts click here.

For more on their responsible sourcing principles click here.

Awards

The Coca-Cola Company has a long list of awards and achievements, here are just a few.

Gartner Supply Chain Top 25 2021

THE GEP PROCUREMENT TEAM AWARD (Coca-Cola Amatil, Australia)

Distinguished Supplier Diversity Award - The U.S. Department of Commerce's Minority Business Development Agency (MBDA)

For a list of For a list of Coca-Cola HBC awards see here.

 

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Jul 24, 2021

A Watershed Moment for Sustainability Commitments

Vizibl
ESG
Sustainability
sustainableprocurement
Mark Perera, CEO, Vizibl
5 min
Mark Perera, CEO of Vizibl discusses the Royal Dutch Shell climate commitments and how the ruling has sent ripples through the oil, gas, and energy sector

Last month saw a landmark ruling where Royal Dutch Shell was instructed to significantly step up its 2030 climate commitments and slash absolute emissions by 45% compared to 2019 levels. This ruling represents a considerable advance on Shell’s stated aim to cut 45% of its emissions intensity compared to 2016 levels by 2035 – a target which provided leeway for increasing emissions as long as the relative carbon emitted per unit of energy produced fell. Now, this imposes a much larger climate obligation on Shell in calling for an urgent absolute reduction.

 

A ruling that sent ripples through the oil, gas, and energy sector

A watershed moment, this ruling is sure to cause significant alarm amongst fellow oil and gas giants who recognise – for perhaps the first time – that national courts can compel organisations to accelerate their reduction of harmful emissions under the Paris Agreement. Not only does it have "far-reaching" consequences for Shell itself and may even curb the potential growth of the company, but the decision is also likely to set a legal precedent for other energy companies and corporations. According to Thom Wetzer from Oxford University, who heads up the sustainable law programme: “all companies in the energy industry and all heavy emitters will be put on notice and have to accelerate their decarbonisation plans.”[1]

This court mandate applies to not only the Shell group’s own operations but notably also to all the suppliers and customers of the group – strongly implying that Shell is being asked to tackle its Scope 3 emissions. Consequently, it is clear that Shell cannot meet the ruling’s demands alone; to make an impact across all carbon emissions scopes, Shell and other large businesses must immediately look towards forging new, productive partnerships with supplier stakeholders. Failing to do this not only means missed targets and mounting legislative action but also the reputational damage that this will cause to its brand and the company.

 

Activist investor warns of existential business risk

Reports on the Shell ruling were almost immediately followed by news of a coup attempt in American oil and gas corporation Exxon Mobil. Due to concerns surrounding Exxon’s strategic direction, hedge fund Engine No. 1 ousted sitting board members, stating that the climate crisis poses an "existential threat to the business", which the board has been reluctant to confront.

This small hedge fund accused Exxon of "a failure to take even initial steps towards evolution" and of "obfuscating rather than addressing long-term business risk", partly due to a historical lack of energy industry experience in Exxon’s board. This signalled an imminent shift in the company’s sustainability strategy, which was well received by the market, with Exxon’s shares rising 1.2% the day after the event.

 

The drive to reduce Scope 3 emissions

And if that wasn’t enough of a shakeup, this was followed by American multinational energy corporation Chevron’s shareholders voting 61% in favour of a proposal to cut Scope 3 emissions at their AGM, signalling frustration with the company’s slack approach towards climate change. Chevron has thus far failed to match its competitors’ net-zero targets with any commitments of its own.

For those less familiar, corporate emissions fall into three categories: Scope 1, 2, and 3. Scope 1 covers emissions from sources that an organisation directly owns or controls. Scope 2 refers to emissions from purchased electricity, steam, heating, and cooling that the reporting company consumes over the course of its operations. And Scope 3 is everything else – all other indirect emissions that occur within an organisation’s value chain, both up and downstream.

Why is this significant? Until now, Scope 3’s heady combination of difficult-to-manage and thus far easy-to-ignore has led large companies to abdicate responsibility for their value chain and sweep its emissions under the carpet. However, the Shell ruling indicates that this approach is no longer viable for big business. With courts stepping in and dictating climate policy to corporations as well as governments, the pressure is mounting on all heavy emitters to tackle their true impact and reduce Scope 3 emissions.

As organisations like Shell, Chevron and Exxon are considered responsible for the actions of their entire ecosystems, sustainability performance becomes contingent on supplier behaviour. The clearest example of this lies in Scope 3 emissions which, for many organisations, considerably exceeds the CO2 they emit directly.

Therefore, the time for green-washing and lip service is now over as pressure mounts from all stakeholder groups for large corporates to take decisive action on sustainability in the supply chain. However, businesses cannot turn promises into concrete progress without actively collaborating with stakeholders across the value chain.

 

For every five weeks that pass, we lose 1% of the decade

2030, the deadline for achievement of UN SDG-related climate commitments, is fast looming, and with every five weeks that pass, we lose 1% of the decade. The imperative to take immediate action has never been clearer. It’s now down to procurement, wider business leaders, and their associated supplier ecosystems to put sustainability strategy into action by:

 

      Defining, aligning, and communicating their corporate sustainability goals to focus suppliers, partners and the wider stakeholder groups on how they can make an impact.

 

      Collaborating systematically through technology using transparent processes that develop trust with suppliers and partners.

 

      Harnessing the innovation and IP within the supplier ecosystem, turning ideas into projects that can be managed and reported on transparently, and adding clear value trackers to prove impact.

 

Working closely with stakeholders in the supply chain is an infamously complex process, but it can be made that much simpler using Supplier Collaboration & Innovation (SC&I) technology. This ensures strategic alignment between buyer and supplier and provides comprehensive relationship governance and real-time performance visibility. This allows companies and their suppliers to work on sustainability initiatives more cohesively and develop innovative ideas through collaboration.

 

Here at Vizibl – through our SC&I platform combined with our knowledge and expertise – we are helping large enterprise organisations in the energy sector better leverage their supplier relationships and move closer to meeting those lofty 2030 sustainability goals.

 

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