Coca Cola Company Based on Stakeholder Analysis

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Introduction
In recent years, with the advance of globalization and the continuous deterioration of the natural environment, corporations have been required to take responsibility in environmental protection. Based on the theory of corporation social responsibility, corporations not only need pay attention to the benefit maximization of shareholders, but also attach importance to the interests of employees, clients, country, community, environment and other stakeholders. Coca Cola is a large-scale multinational corporation, and it leads the global market in the beverage industry. A large number of people are drinking Coca Cola every day. The development of Coco Cola greatly influences global economy and people’s livelihood. In this way, it is very important to research how Coco Cola company takes its responsibility in sustainable development.
The paper is divided into three major parts. In part one, it firstly introduces Coco Cola and sustainable development with the help of relevant academic and practitioner literatures. It provides a concise overview of Coca Cola’s response to the engagement in sustainable development. In part two, relevant stakeholders for Coca Cola in relation to sustainable development are identified. At the same time, it classifies these stakeholders based on the framework of Mitchell et al (1997). In part three, the paper critically analyzes the approach adopted by Coca Cola towards these different stakeholder groups. Finally, the paper draws out some more general conclusions.
Coca Cola and Its Corporate Social Responsibility Engagement in Sustainable Development
Coca Cola is a publicly-held company listed on the New York Stock Exchange. It began its business in 1886 as a local soda producer in Atlanta of America. The company was selling its products in almost every country all over the world in the end of the 20th century (Torres et al, 2012). Nowadays, Coca Cola is the biggest beverage company in the world. In the meantime, Coca Cola also attaches much importance to corporate social responsibility. As it advertises that, corporate social responsibility is in its DNA. It launched its sustainability framework Live Positively in 2007, which is embedded in the choice of diversified beverages, positive and healthy lifestyle, water resource management, energy conservation, consumption reduction, sustainable packaging and environmental protection (Torres et al, 2012). It seeks to create positive effect on the sustainable development of whole world. It regards corporate social responsibility as an important foundation for the development of corporation.
In last 20 years, the term ‘sustainable development’ has increasingly frequently appeared on academic articles, government documents, public welfare publicity and commercial advertisements. According to the definition provided by World Commission on Environment and Development (1987), sustainable development refers to the development meets the requirements of the present without compromising the ability of future generations to meet their needs. In The Limits to Growth, American environmentalist Donella Meadows (1972) points out that, the planet will reach the limits of growth at some time in the coming century if the population, industrialization, pollution, food production and resource exhaustion keep current growth rate. Ernst Weizsacker et al (1997) argues that, it is important to greatly decrease the use of materials in economic activities. Paul Hawken et al (1999) believe that, governments shall adjust policies of tax and subsidy for the sake of employment promotion and environmental protection rather than energy consumption. In the meantime, Deloitte and Touche stress the important role of corporations in sustainable development. They hold that, it is necessary for corporations to take actions of protecting, keeping and improving the level of resources utilization in order to meet their needs in the future (International Institute for Sustainable Development, 1992). They believe that the sustainable development of whole economy cannot live without the sustainable development practice of a company. Lester R. Brown (1981) points out that, sustainable development of enterprise is not a simple economic idea, but an ecological concept, including the sustainability and harmony between natural resources and various elements of biosystem. Generally, sustainable development becomes a new content and subject that corporates shall add in their corporate social responsibility.
For Coca Cola, it takes the lead in carrying out the strategy of sustainable development and advocating new and positive way of life and working. It also makes detailed goals. For instance, according to its publicly reported 2020 sustainability goals, it seeks to achieve a 25 percent reduction of carbon based on the “drink in your hand” since 2010. It positively refills bottles and cans or helps recover equivalent to what it introduces into the marketplace. It refilled and helped recovered 59 percent of bottles and cans in 2015, 2016 and 2017, and it seeks to achieve 75 percent in 2020 (Coca Cola Company, 2018a). 
Relevant Stakeholders in Sustainable Development
When it comes to the engagement of Coca Cola in sustainable development, the interests of shareholders, staffs, suppliers and business partners, consumers, governments, communities and environment are closely related; while competitive beverage companies, media, trade groups and labor unions are not included. For one thing, shareholders and staffs’ interests are important to Coca Cola, since shareholders are the major suppliers of capital and human resources greatly determine Coca Cola’s competitiveness. Suppliers and business partners provide great support for Coca Cola in energy conservation and emission reduction. Furthermore, the consumer is one of the key stakeholders because consumers’ dissatisfaction directly influences the commercialization of production and the achievement of profit. Coca Cola shall also take the interests of governments and communities into consideration. Governments and communities tend to make various regulations which presenting demands for Coca Cola. As Coca Cola is a large-scale multinational corporation, it needs to abide by local laws, regulations and rules. For another thing, there is no need for Coca Cola to care about the interests of competitive beverage companies since they are in competition and their interests tend to be conflict. Meanwhile, the interests of media and trade groups and labor unions are not important for Coca Cola as they are not closely related to each other. For example, labor unions tend not be interests in Coca Cola when it fully respects the interests of its staffs.
What is more, the stakeholders mentioned above can be divided into three types based on the framework of Mitchell et al (1997). Specifically, shareholders and consumers can be classified as definitive stakeholders; governments, suppliers and business partners are expectant stakeholders; while environment and community can be regarded as latent stakeholders. For Coca Cola, the voice of shareholders cannot be ignored. The capital provided by shareholders is the source of finance for Coca Cola’s development. Shareholders own property rights of Coca Cola, and they have the power to decide the development strategy of the company. At the same time, shareholders have legal rights in sharing corporate profit and take legal responsibility in bearing risk. Managers in Coca Cola have to pay immediate attention to shareholders’ claims. When it comes to the consumers, Coca Cola spends much money in advertising every year since its development cannot live without the support of consumers. Coca Cola has to take responsibility for breach of contract or liability for tort if its products are harmful to consumers’ health. Once consumers have new claims and demands, Coca Cola will rapidly adjust its strategy and adapt to the consumers. For instance, as more and more people pursue healthy lifestyle and expect to keep fit, Coca Cola closely follows the tendency and launches Coke Zero, a no-calorie, full-flavor product. Furthermore, even though there is no legal relationship between Coca Cola and governments, it is necessary for Coca Cola to pay much attention to the newest regulations made by the governments, which may greatly influence its development strategy and business pattern. In the meantime, suppliers and business partners provide powerful backup force for Coca Cola to achieve high profit at low a low cost. Coca Cola establishes contractual relationship with its suppliers and business partners in term of supplying materials, packaging and consumables or other services. Therefore, the cooperation between suppliers and business partners also affect Coca Cola in a significant way. In addition, as a member of local community, Coca Cola shall take its responsibility in developing local economy, positively influencing local residents’ life and protecting local environment. 
Coca Cola’s Engagement in Sustainable Development
Coca Cola’s Approach toward Suppliers and Business Partners
As for supplier management, Coca Cola Company has its special Supplier Guiding Principles. It expects its suppliers and system partners to uphold the principles of its Human Rights Policy and embrace responsible workplace practices. What is more, Coca Cola routinely utilizes independent third parties to asses suppliers’ compliance with the Supplier Guiding Principles. Coca Cola provides opportunity for suppliers to improve their practice and implement corrective actions once they fail to uphold one of the requirements of the principles. Furthermore, Coca Cola will immediately terminate its contract with suppliers who are failed to implement appropriate remedial action or refuse to uphold the requirements of the principles (Coca Cola Company, 2018b). What is more, a regular training is provided for suppliers to make sure that these suppliers understand and align to the requirements of Coca Cola. Coca Cola seeks to achieve 95 percent compliance of authorized and direct suppliers and 98 percent compliance of bottling partners with the Supplier Guiding Principles (Coca Cola Company, 2018b). In the meantime, Coca Cola also set a goal to more sustainably source its priority ingredients in 2013 and made Sustainable Agriculture Guiding Principles. It sourced more than two million tons of more sustainable sugar, 25-50 percent more sustainable grapes, and procured nearly 100 percent of its globally sourced tea and coffee from more sustainable sources in 2017 (Coca Cola Company, 2018c). 
In general, different from the way of simply excluding irregular suppliers, Coca Cola’s evaluation system and train classes not only benefit its employees and local environment, but also make more parties participate in protecting environment and developing sustainable economy. As Husted and Allen (2007) point out that, the strategic management on the basis of corporate social responsibility shall pay attention to five issues. Firstly, it is important to build stakeholder awareness of product with corporate social responsibility value added. Secondly, strategic corporate social responsibility stresses the relationship between corporates and stakeholders, therefore, corporates can obtain resources and supports from various stakeholders. Thirdly, corporates need to participate in social action beyond that demanded by law voluntarily. Moreover, corporate also needs to create value through service or product innovation linked to social issues. Finally, Bryan and Allen suggest corporates to anticipate changes in social issues which present market opportunities. In the case of Coca Cola, it firstly attaches importance to the understanding of suppliers on its Supplier Guiding Principles and corporate social responsibility. With the help of good relationship with suppliers, Coca Cola makes it possible to quantify greenhouse gas emissions, energy use, water use and other measures of sustainability performance. During the process of sustainable development, Coca Cola creates economic opportunities for its suppliers and business partners, including smallholder farmers and women. It helps protect the land rights of local communities. 
Coca Cola’s Approach toward Consumers
As for consumer management, Javier Rodriguez Merino, the Global Marketing Director for Sustainability Strategy and Communication at Coca Cola, argues that, it is significant to hear and let the customer be the star of the story. In 2010, Coca Cola launched a project named ‘Every Bottle Has A Story’. The project made it possible for any person from anywhere has the chance to share a story about how their local neighborhoods benefit from new sustainability initiatives (Mainwaring, 2014). In addition, facing with consumers’ shift toward green and health, Coca Cola also positively shift its business culture. 20 or 30 years ago, consumers paid more attention on how the drink made them feel and did not take time in looking inside the bottle, but now consumer expect less sugar and more natural, healthy or other functional products. When dealing with this, a senior manager of Coca Cola, James Quincey argues that, Coca Cola makes bold moves on a regular basis in order to respond to and anticipate the rapid shifts in consumer preferences as quickly as it possible. Specifically, Coca Cola has removed 96,000 tons of sugar from its portfolio in Western Europe and cut the average calories per litre by 12% since 2007 (Curtls, 2017). 231 low or no-sugar products have been introduced to the consumers in Western Europe since 2010, and there are 375 low and no-sugar choices across the portfolio (Curtls, 2017). In addition to the inside the bottle, Coca Cola also takes actions outside the bottle. Smaller and more convenient packaging is provided for people to better control the calories. 
Hill and Jones (2007) argue that, in modern enterprises, principle-agent relation not only exists between shareholders and managers, but also creditors, staffs, suppliers, clients, governments, communities and other stakeholders. Under the situation that corporations are clear about their state of business while stakeholders have few information, a dynamic game tends to form between corporations and various stakeholders. On one hand, corporations expect to achieve various resources and good environment for business management. On the other hand, various stakeholders have no idea that which corporations are reliable. In order to solve the problem of information asymmetry, it is necessary for corporations to send certain signal to various stakeholders, and make others know that they are reliable. At the same time, it is not easy for the stakeholders to believe the signal; therefore, corporations need to pay the price when sending signals to avoid another corporation’s imitation. The activity of taking corporate social responsibility can be regarded as sending a signal. Through engaging in solving or helping solve social issues, corporations can win the trust and support from the stakeholders. It is a basic pattern for any company to achieve sustainable development (Jones, Wicks & Freeman, 2002). For Coca Cola, its approach toward consumers including ‘Every Bottle Has A Story’ and “Our Way Forward” is sending the signal that it is reliable to the consumers. It seeks to make consumers feel that all their needs and requirements toward beverages can be meet through Coca Cola. 
Coca Cola’s Approach toward Environment
Coca Cola has carried out many approaches toward environment. In the first place, it pays much attention to invest in water quality and availability. Take the reuse of water as example, according to the 2017 Coca Cola System Water Use by Source, Coca Cola used 143,069 billion liters ground or surface water, 157,952 municipal water 2.633 rainwater and other (Coca Cola Company, 2018d). It replenished more than 100 percent of the water used in its finished beverages back to nature and communities. What is more, it seeks to further safely return to nature and communities an amount of water equal to what it uses in its finished beverages. Furthermore, it improves its water efficiency. In 2004, 2.7 liters of water was needed to make 1 liter of product; while 1.92 liters of water was enough to make 1 liter of product at the end of 2017 (Coca Cola Company, 2018e). It pursues to improve water efficiency in manufacturing operations by 25 percent compared to the baseline in 2010 at the end of 2020. Facing with water risk, Coca Cola implements Source Water Vulnerability Assessment, Source Water Protection Plan and Water Resource Sustainability program. Coca Cola forms and trains specific and professional water resource management team to maintain and update the protection of water. 
In the second place, Coca Cola also attaches importance to energy efficiency and climate protection. It uses more fuel-efficient modes of product reduce and delivery emissions. It uses more environmental refrigeration equipment. It also increases the energy efficiency in manufacturing facilities and other alternative energy solutions. In 2006, the CO2 emissions in millions of metric tons was 863.5, but it turned to 776.7 in 2010 (Coca Cola Company, 2018g). 
Kytle and Ruggie (2005) point out that, corporate social responsibility is the duty that corporate shall fulfil, otherwise, corporate will eat its own bitter fruit and take social risks. In other words, once corporate ignore its social responsibility, various stakeholders will punish it with various ways, including damaged reputation, legal sanction, increase of transaction cost, brain drain, difficulties in finance and even termination of business. With the development of corporate social responsibility, perfect of management mechanism of enterprise and worsening of environment, governments all over the world put forward higher requirements in term of the corporate social responsibility. Wild, Bernstein and Subramanyam (2001) argue that, enterprises’ engagement in corporate social responsibility not only create values for various stakeholders and the whole society, but also create values for themselves. Through taking corporate social responsibility, it is possible for enterprises to lower the risks, reduce waste, improve their relationship with supervision department, increase brand reputation, improve the work efficiency of employees, decrease the cost of finance. In this way, enterprises can create more commercial values. For Coca Cola, its engagement in protecting environment not only greatly improve its brand reputation, but also attract more consumers, local communities and social groups to support it. At the same time, the reuse of water resource and use of environmental and efficient productivity tools also bring huge economic benefit to Coca Cola. 
Conclusion
Taking corporate social responsibility is inevitable requirement for the development of modern corporations. Through taking corporate social responsibility, modern corporations can perfect their mode of business practice and improve the level of management. Coca Cola is one the biggest beverage enterprises all over the world, and its development cannot live without using natural resources such as water resource and crops. As environmental problem becomes more and more serious, it finally will restrict the further development of corporations such as Coca Cola. In this way, it is necessary and essential for Coca Cola to set the example and take its corporate social responsibility in sustainable development. Meanwhile, the goal of corporations is the maximization of enterprise value rather than the maximization of shareholders’ wealth. Enterprises’ interest is the common interest of various stakeholders, rather than the interest of shareholders. Coca Cola relies on the capital and resources invested by shareholders, suppliers, business partners, governments, communities and environment. Therefore, Coca Cola needs to take the interests of these stakeholders into consideration when taking its corporate social responsibility. 

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