Remarks at the Globes Conference on Social Responsibility

Muhtar Kent, Chairman and Chief Executive Officer, The Coca-Cola Company
Tel Aviv, Israel
August 31, 2009

As prepared for delivery

Thank you, Chaim (Romano), for that kind introduction, and good afternoon everyone. It's an honor to join you today in Tel Aviv for this timely and important discussion.

On behalf of Special Olympics and The Coca-Cola Company, I also want to personally thank each of you for your participation, including our media partner, Globes. The work that Globes and Maala have done over the years to promote awareness of sustainability issues here in Israel is truly inspiring.

I read with keen interest the most recent annual update of the Maala-Business for Social Responsibility-CSR Index for Israel. It paints a compelling portrait of just how embedded corporate social responsibility has become in this great nation. There's no question that the Corporate Social Responsibility movement is transforming the way Israel -- and the world -- conducts business.

As much progress as we have seen in recent years, though, we're just at the beginning stages of what I believe will be an era of unprecedented sustainability innovations.

This afternoon, we're going to explore the forces that are driving these innovations and examine the implications for our brands... our stakeholders... and our communities. I specifically was asked to talk about "Brands and Social Responsibility" as a precursor for our panel discussion that will follow. These are topics that are near to the heart of everyone in the Coca-Cola family.

Over the course of 123 years, the men and women of the Coca-Cola system have built one of the world's most recognized and valued brands. In fact, today, Coca-Cola is the second-most universally recognized term on the planet. Only the term "okay" is recognized by more people around the world.

The strength... the resolve... and the sustainability of our brand is directly related to the social license that we have earned from billions of consumers around the world over all these years. It's an honor and a responsibility we don't take lightly and which we will never take for granted.

In today's connected global economy and interwoven social networks, a brand with 123 years of credibility can be discredited -- and even destroyed -- in a matter of 123 seconds.

I would contend that as business leaders there is absolutely no responsibility that is more important for us to manage and uphold than our social license to operate. Without it, we are lost.

History has proven this time and again. In fact, while "social responsibility" and "sustainability" have gained great attention in recent years, these are by no means contemporary 21st century concepts. The values of business social responsibility are as old as written history. And their origins spring from this very soil.

Ancient Jewish Talmudic law dating back to 1,000 BC talked about the ideals of business social responsibility in very profound and insightful ways. The Hebrew term " lifnim mishurat hadin " -- translated as "beyond the letter of the law" -- basically says that that the responsibility of a business enterprise transcends simple financial gain. This responsibility also includes the welfare of the people and the communities touched by commercial endeavors.

The ancient Greeks were essentially saying the same things when they pointed out that a community's economy and ecology were inseparable. Indeed, economy and ecology share not only the same root word but also the same house.

So, too, I would say, a sustainable brand -- an enduring brand -- must also be a socially responsible brand. A brand, of course, is more than a logo, a design, or a slogan. Much more. It has a heartbeat, a soul and a psyche. It is the very core, the very essence, of an organization.

A brand is a promise made to your consumers and customers, your employees, your investors, communities, vendors and suppliers. And trust is the glue that holds all those relationships together. Break a promise and you destroy a relationship. If a good brand is a promise, then a great brand is a promise kept.

Today, as we endure a global financial crisis brought on largely by a series of broken promises, the virtues of trust and socially responsible brands have never been more relevant.

Consider just a few alarming statistics. According to the most recent Edelman Trust Barometer, nearly two-thirds of informed citizens trust corporations less than they did a year ago. When respondents were asked about trust in business in general, only 38 percent said they trust business to do what is right -- a 20 percent drop over last year. According to the same survey, less than one in five people today say they trust information from a company's CEO. These, my friends, are among the lowest levels of trust ever recorded.

The Edelman survey also points out that a company's values towards social responsibility and sustainability are of paramount importance to consumers today. Similar studies across the world draw the same conclusions. About 60 percent of global consumers, for instance, now say they would be willing to pay more for a product that helped reduce carbon emissions. The majority of global consumers claim that a company's social responsibility efforts carry nearly equal weight to price and brand quality when making a purchasing decision. Most consumers today feel that companies spend too much money on advertising and marketing and should put more resources behind social responsibility. The vast majority of consumers say that during a recession, they are more loyal to brands that are perceived as socially responsible.

Clearly, now is not the time to cut back on our sustainability efforts. In fact, I believe that businesses that effectively invest in sustainability innovations today will not only be in a better position when we come out of this crisis but that many will also make leapfrog gains in the marketplace.

Historically, times of recession and economic decline have spurred some of the world's greatest business models and innovations. To borrow from the words of President Obama's Chief of Staff, Rahm Emanuel, "we must not waste this crisis."

We are truly entering a new era of resetting priorities and values and expectations. This is being driven not only by the financial crisis but even more so by a host of massive global forces that will reshape the world over the next decade.

For instance, between now and the year 2020, we're going to see a billion new consumers ascending to the middle class. Even despite the current economic difficulties, our estimates on this number are lower than projections from World Bank and the WTO, among others. This rising middle class underscores a broader global economic development. By 2020, the world's economic power will radiate from many nations and not just a few.

Of course, we're already seeing this shift as China and Asia seem to be on the verge of leading the world out of the current economic crisis.

With middle class growth, we're also seeing a huge influx of urban migration. Today, the world's cities are growing by 65 million people each year, and that will continue for at least the next decade. That's the equivalent of adding a metro Tel Aviv to the planet every 18 days for the next 10 years.

And as population and wealth grow, we will also see a constant scarcity of energy, food and other natural resources. Longer life spans will be the new norm as advances in medicine and biotechnology come to fruition. Average life expectancy will likely increase by 5 years by 2020.

At the same time, many parts of the world -- including the Middle East -- will experience a surge in youth populations. And almost everywhere we will no doubt see greater government intervention into commercial and economic affairs.

Collectively, these economic, demographic and political shifts are creating what I call the New Equilibrium, or the "new normal." What we have here is a world of incredible dichotomy. A world of both extraordinary opportunity and promise on the one hand... and a world of incredible challenge on the other.

In this world where headwinds and tailwinds are in constant collision, we're most definitely going to see an even more heighted "global sustainability consciousness." Brands that can navigate this environment and appeal to consumers' expectations of social responsibility will thrive. Those that fail to navigate this New Equilibrium will fail.

In the few minutes I have remaining, I would like to briefly outline three key lessons we have learned at Coca-Cola in our journey towards enhancing the social responsibility of our corporate brand.

The first is "Integrate sustainability into your business model." Sustainability and social responsibility are not public relations initiatives, or compliance check-offs, or nice to-dos. In a world where populations are growing, where natural resources are stressed, where communities are forced to do more with less, and where consumers' expectations are expanding... sustainability and social responsibility are core to our business continuity and survival.

Our vision of sustainability at Coca-Cola is a world where all people have access to safe water, where our packaging is a valuable resource for the future, and where our communities and our neighbors are prosperous. We have seen through our own experiences -- time and again -- that our business in any market is only as healthy and sustainable as the community in which we operate.

For instance, here in Israel, our great bottling partner, Central Bottling Company (CBC), has placed a great deal of innovation focus on water use. These initiatives have resulted in the highest rates of water efficiency among the 200 countries we serve. And they carry a clear environmental message in a country -- and a planet -- where water preservation is of utmost importance.

Last summer I had the great privilege of being here in Israel to celebrate the 4 th anniversary of CBC with my good friends Muzi Wertheim and Ronnie Kobrovsky. Under their leadership, CBC has become one of the first Israeli food and beverage companies to earn the prestigious ISO awards for quality and environment. No question, they are truly committed to business social responsibility.

And this leads directly to the second lesson we have learned -- "Socially responsible brands can only be managed by socially responsible leaders." Critical to this is finding leaders who possess a world view and who embrace diversity. Multi-national businesses need people who can move seamlessly across borders and cultures and feel as comfortable working in Tokyo as they do in Tel Aviv.

At Coca-Cola, we make a point to find young managers who want to be stretched -- who relish the challenge of working outside their comfort zones and can develop deep relationships outside their own culture. The next generation of leadership will need to be able to recognize and harness the power of diversity.

I'm convinced that one of the most important factors fueling Israel's innovation prowess is the incredible diversity found in a nation where people from over 70 countries have immigrated since 1948.

At Coca-Cola, diversity is an absolute business imperative as we conduct business in literally every corner of the planet. One of the most fulfilling diversity programs I am personally involved in is serving as the chair of our company's Women's Leadership Council. In this role, I work with senior women executives throughout our company to identify strategies to attract and develop more women into leadership positions. The insights women bring to our business are profound, to say the least. Today, women account for the majority of purchase decisions for our beverages. Globally, women make up 70 percent of all grocery shoppers.

Israel, of course, has long been a beacon of women's leadership in business, education, government, military, science and the arts. Golda Meir -- one of the great leaders of her time -- really reflected the national psyche towards sustainability and social responsibility when she said... "We do not rejoice in victories. We rejoice when a new kind of cotton is grown and when strawberries bloom in Israel."

The good news for us as employers is that the next generation really wants -- and expects -- to step up to this role of socially responsible leadership.

A recent survey of young global professionals in their 20s shows that the ideal employer reflects (quote) "a down-to-earth blend of idealism and pragmatism, of concern for self and others. " As a group, these young professionals share the belief that business should benefit both the individual and the broader society.

I know from talking to my own children, that they have much higher expectations of what they want out of an employer than I certainly did when I entered the workforce over 30 years ago. I also hear the same sentiments when we interview young job candidates and when I go speak on college campuses. People want to work for companies that share their values.

The third lesson we've learned is that "Building a culture of social responsibility begins at home, within the four walls of your company." In order to be real and beneficial, corporate social responsibility has to be a movement. A way of life. A way of thinking about the world.

We believe so much in this idea at The Coca-Cola Company that we introduced a concept called Live Positively last year. Live Positively is a way for us to think holistically and globally about all of the sustainability efforts we're working on system-wide. It includes goals and metrics and several agreed upon principles. We've set goals for our community work... for our active, healthy living programs... for our environmental work... and for our workforce and employee engagement efforts.

Ultimately, Live Positively is about making the right decisions -- the smart decisions -- to run our business better and to satisfy the needs of our customers and consumers. It's about creating a culture of sustainability -- and continuing to challenge ourselves about how we can improve and do more towards this necessary goal.

A great example of a socially responsible culture-building experience is the relationship we've cherished over the years with Special Olympics. There's no question that The Coca-Cola Company has seen further -- and gone further -- through our 41-year partnership with Special Olympics.

When Eunice Shriver first approached Coca-Cola 41 years ago to be a founding partner of Special Olympics, she saw that we shared a vision of celebrating humanity and moments of connection, community, optimism... and living positively.

I personally experienced the power and emotion of Special Olympics when I had the opportunity to attend the opening ceremonies of the most recent Summer Games in Shanghai and Winter Games in Boise, Idaho. I felt a deep sense of pride and gratitude for the tens of thousands of people who were engaged as volunteers for the Games, including some of our very own Coca-Cola employees.

Like millions of people around the world, I was saddened by Eunice's passing earlier this month. We are all better for her kindness and grace and for the gift of love and happiness that she brought to so many.

I spoke to her son, Tim Shriver, the Chairman of Special Olympics, just the other day as we stopped in Boston on our way to Tel Aviv to pay tribute to the Kennedy family on the loss of Eunice and her brother, Senator Ted Kennedy. Tim wanted me to pass on his warm regards to all of you and to thank you for your support of Special Olympics.

Special Olympians and their family members like Tali Kornhauser right here in Israel are truly special people. Last year, I had the good fortune of meeting Tali and several Special Olympic athletes from Israel, including her daughter, Lin. Tali graciously invited me to be here today.

Let me just again say that it's an honor to be here... and to represent the Special Olympics Movement. I understand we have a newly appointed Board for Special Olympics Israel, and my best wishes go out to you and to everyone associated with this inspiring and important movement in Israel.

And finally, my best wishes go out to everyone here today as we all continue on this journey towards developing socially responsible businesses, brands and leaders.

Thank you for your time and attention. Thank you.