Coca-Cola: Making Money, Making a Difference

Want to be kind to the planet and your portfolio at the same time? The Fool shows you how in our special series on Earth-friendly investing.

Can big business make money and simultaneously make a positive difference in the world? I think so. In fact, that's what we're highlighting in the series we're running in advance of Earth Day this weekend. Last week, we looked at General Electric's (NYSE: GE  ) efforts to aid emerging markets and to improve the environment, both important in achieving sustainable growth as a global company.

As part of our series on Earth-friendly investing and companies that have been making the most of their socially responsible initiatives, let's see what Motley Fool Inside Value pick Coca-Cola (NYSE: KO  ) has up its (green) sleeves.

Coca-Cola in the classroom
Like General Electric's corporate foundation, the focus of the Coca-Cola Foundation is on education. Coca-Cola's Corporate Responsibility website explains why improving education in the communities it serves is important: "Education is one of the keys to socioeconomic development." And development is critical because it is the incubator of growth for any business.

Back in 2004, 150 of Coca-Cola's business leaders from around the world gathered to form a "new vision for the sustainable growth" of the company. This vision became the Manifesto for Growth, and it was centered on five central aspects of Coca-Cola's business: people, portfolio, profit, partners, and planet. In the "planet" category -- where it pledges to be "a responsible global citizen who makes a difference" -- is where we find its efforts on education.

Last year alone, its corporate foundation contributed nearly $24 million toward projects including higher education, international education, and teacher training. One of the most significant contributions was for a project in Mexico. Specifically, the foundation gave $2 million to Vision Mexico, a group that aids indigenous communities in the country by building dormitories for schools. Digging a little further into the project, I discovered that the $2 million gift in 2006 is actually one of five equal installments that Coca-Cola had agreed to give over a five-year period.

The improvement of education in remote communities appears to be a major effort of Coca-Cola's foundation. In addition to Mexico, funds in recent years have been used to assist aboriginal communities in Australia and establish e-learning centers across seven Asian countries.

A healthier environment
Where the focus of Coca-Cola's foundation is on education, the company itself is concentrating its efforts on improving the environment. As a beverage company, it has identified three areas where it can have the greatest impact in improving the environment: water use, packaging, and energy use.

In terms of water usage, Coca-Cola has launched an initiative called Global Water Stewardship. Its Manifesto for Growth indicates that water is the "lifeblood" of the company, since it is a critical component to beverage production. But water is also a vital resource for people. According to the website, roughly 1.3 billion people do not have access to safe drinking water.

One way the company is looking to help is by improving the efficiency of its own water usage. By applying new technologies, for instance, it was able to improve its water efficiency by 4% in 2005 compared with 2004 levels, all while increasing the product of volume sold by 4% over the same period.

Packaging is another major area that Coca-Cola is concentrating on to improve the environment. Considering that Coca-Cola's products are enjoyed "1.3 billion times a day," it is not hard to see why reusable packaging is valuable not only to the company, but also to the planet.

As it is already, 85% of its packaging is made of materials that are 100% recyclable. But one of the challenges is recovering the recyclable materials out of the general waste system. Coca-Cola's operation in Australia is looking at ways to improve recovery efforts from waste in public places. One method has been to partner with 50 local councils in Australia, in addition to a number of public venues and retail outlets, "to set up and run public place recycling trial programs around the country."

A third critical task of the company is to reduce its energy usage. Coca-Cola has set a goal to reduce its carbon-dioxide usage by 700,000 tons by 2010, "the equivalent of taking 150,000 cars off the road." The bulk of the company's energy consumption comes from vending machines and coolers, which combined create three times as much greenhouse-gas emissions as the company's manufacturing plants, and five times as much as its entire transport fleet.

To address this problem, in 2004 the company joined with forces with Unilever (NYSE: UL  ) and McDonald's (NYSE: MCD  ) to launch "Refrigerants, Naturally!" Since its formation, other companies, including Coca-Cola's biggest competition, PepsiCo (NYSE: PEP  ) , have joined. Together, the companies are testing commercially viable refrigeration technologies free of hydrofluoric carbons.

A sustainable growth company
In a letter to shareholders and stakeholders, CEO Neville Isdell writes, "The Coca-Cola Company must be both a great business and a great corporate citizen." To accomplish this feat, he adds, "We are committed to transforming The Coca-Cola Company into a sustainable growth company focused on the future and respected as a leader throughout the world."

Sustainability is about making money by making a difference. Coca-Cola is clearly on a path to accomplish both.

Further socially responsible Foolishness:

Coca-Cola is a winning pick of theMotley Fool Inside Value newsletter service. To see what other stocks have been outperforming the market, take a free 30-day trial to the newsletter service today.

Unilever is an Income Investor selection.

As part of a graduate degree at Duke University, Fool contributor Jeremy MacNealy is writing an ethics and law thesis paper on corporate social responsibility. He has no financial interest in any company mentioned. The Motley Fool has a disclosure policy.


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