Placing Al Gore on the Board: Accounting for Environmental Risk in the Corporate Governance Model

Head to Coca-Cola’s website today and you will find something unexpected—a position statement on climate change: Across the Coca-Cola system, we recognize that climate change may have long-term direct and indirect implications for our business and supply chain. As a responsible multinational company, we have a role to play in ensuring we use the best possible mix of energy sources, improve the energy efficiency of our manufacturing processes and reduce the potential climate impact of the products we sell. The company was not always this focused on climate change and sustainability initiatives. Coca-Cola’s CEO, Muhtar Kent, explained to Forbes that sustainability was not always a part of the company’s planning process—rather, it was “just a warm and fuzzy word in our corporate social responsibility report.” In order to genuinely fold sustainability into the company’s corporate strategy and sharpen this “fuzziness,” senior management realized they needed to create metrics that could quantitatively measure the success of sustainability initiatives and actually incorporate the company’s sustainability strategy into its core business plan. First, Coca-Cola picked three areas of focus to incorporate into its 2020 vision: water neutrality, recycling, and managing its carbon footprint. Particularly with water neutrality and recycling, the company’s focus on the creation of specific metrics in order to quantitatively assess progress toward these goals is actually lowering Coca-Cola’s cost of production and break-even points