Human rights and a global corporation

Human rights and a global corporation Owners of an iconic trademark, the Coca-Cola Company must have the answers when issues arise. By Ed Potter We hold these truths to be self-evident, that all working men and women and their employers from all regions of this earth in freedom of association should be free from forced labor and discrimination and that their children should be free from inappropriate child labor. Ed Potter, International Labour Organization conference, 1998 The Coca-Cola Company is a global, nonalcoholic beverage company operating in more than 200 countries and territories with more than 500 beverage brands. The company s success depends on our social license that is, our relationships with local partners, suppliers and communities. We produce local products for local consumption. I often refer to our beverages as water cocktails of agricultural commodities commodities that are sourced around the world. Most of the content and packaging for our beverages are procured locally, and most of our 1,000-plus bottling locations are independently operated. Our direct supply chain comprises more than 15,000 businesses with multiple layers below the direct suppliers. In short, it is a system of enormous scale and complexity. In today s increasingly transparent, social-media-infused world, the expectations for companies are expanding across stakeholders, with particular attention 90

paid to what companies are doing to demonstrate respect for human rights. A human rights issue in one locale can be relayed around the world instantly. For the Coca-Cola Company, human rights compliance is both absolutely critical and hugely complex. To make sure we achieve the highest possible standard, we have been following five baseline strategies since 2005 to identify and mitigate human rights risk: 1 2 3 4 5 Early issue identification and expeditious resolution of issues Clearly defining and communicating what the company stands for Engaging stakeholders and critics proactively Global alignment of human and workplace rights and labor strategies across the business system Branding the company internally and externally as one that respects human rights For the last decade, we have worked hard to implement and demonstrate respect for human rights. We have found that the golden triangle of the private sector, government and civil society has been especially important for identifying best practices, building tools, devising global strategies and developing local solutions to complex local problems. Above all, we have come to appreciate that implementing respect for human rights does not occur overnight but requires a sustained, step-by-step, concentrated focus over many years a journey that will never end. In particular, it requires the attention of the Board of Directors and senior executive commitment. Frameworks and tools We were fortunate that, starting in 2005, we worked with professor John Ruggie, the former U.N. special representative for business and human rights, and his team in the development of a framework for respecting human rights. In 2007, we joined the Business Leaders Initiative on Human Rights and later became a founding member of a successor organization, the Global Business Initiative on Human Rights, and we adopted human and workplace rights policies. In 2009, we began engaging with the Danish Institute on Human Rights to identify gaps in our global policies and to develop checklists to identify critical human rights issues. We endorsed the United Nations Guiding Principles on Business and Human Rights in May 2011, prior to their being adopted by the United Nations Human Rights Council. The Guiding Principles establish a human rights framework that has been endorsed by governments, businesses and civil society. It starts with the primary duty of the state to protect its citizens from human rights harm. This framework means that a company can, with some confidence, implement the Guiding Principles without any concern that there will be debate from stakeholders. It is the key touchstone for implementing our human rights policies, conducting human rights due diligence, and mitigating any human rights impacts if they occur. We expect our company, our bottling partners and our suppliers to avoid causing or contributing to adverse human rights impacts as a result of business actions. 91

Learning from a decade of experience Implementing respect for human rights is not easy and frequently involves complicated issues and multiple stakeholder perspectives and interests. Here s some of what we ve learned in grappling with these important issues: Just because you don t own it does not mean it is not your problem This was one of our earliest lessons from allegations we have faced across our supply chain. Coca-Cola is held accountable for any abuses under its trademark, whether it occurs at headquarters or at an indirect supplier of raw goods for our beverages. Framed by the Supplier Guiding Principles, this was a key motivation behind the company s new Sustainable Agriculture Guiding Principles that outline expectations down to the farm. Your social license directly impacts your bottom line Our chairman and CEO, Muhtar Kent, often reminds all of us that today s stakeholders including our own employees are judging us as much on the content of our character as they are on the quality of our beverage. In the end, tackling abuses is not just a moral imperative; it is a business imperative as well. Defining what you stand for is essential and having buy-in from the very top is critical Coca-Cola s commitment to human and workplace rights was made clear by our CEO from the very beginning. Kent has been outspoken in his support for respecting human rights, which provides a strong and unwavering message to all employees. What gets measured gets done Metrics and impact reporting help the company track progress over time and ensure accountability throughout business system and supply chain. We maintain and circulate a quarterly scorecard report, which tracks compliance globally. Business integration of human rights responsibility and accountability is necessary It is the responsibility of the procurement associates who work directly and regularly with our suppliers to ensure they undergo an audit and achieve compliance. Additionally, compliance with our standards is part of the supplier authorization process. This ensures the work is mainstreamed into our core business practices. Local problems require local solutions We learned early on that global policy declarations handed down from our headquarters in Atlanta are not enough to catalyze change across over 200 countries and territories. Local networks and strategies are needed to devise local solutions that are both relevant and selfsustaining. 92

On December 10, 2014, the company will adopt a Human Rights Policy that consolidates our earlier policies a Human Rights Statement, a Workplace Rights Policy and a Global Mutual Respect Policy into one set of principles that will eliminate overlap and expressly base our approach to human rights on the Guiding Principles. In addition, although aligned in substance and practice for the past several years, in December 2015, we plan to update and align the language and terminology from our 2002 Supplier Guiding Principles, which apply to our bottling partners and suppliers, with the Human Rights Policy. 2011, we conducted an end-to-end value chain analysis, from raw materials to end use, to identify potential human rights impacts. As a result, we have established seven priority human rights issues with metrics that we report on to the Board of Directors along with our progress toward our 2020 goals. The company utilizes numerous tools to identify human rights impacts. These tools have evolved and been refined over time. In 2007, our primary human rights due diligence tools were drawn from three sources: (1) information provided by critical stakeholders such as the International Union of Foodworkers, Human Rights Watch, socially responsible investors and many others; (2) human rights audits conducted of the company, bottling partners and supply chain; and (3) issues raised by the company s human rights grievance mechanisms. Today, the due diligence tool box is improved and continues to expand. We now conduct 2,500 human rights audits with corrective action plans put in place, as needed, for the company, bottling partners and suppliers each year, and we have a Global Human Rights Scorecard that reflects overall compliance with the company s standards. Our goal for 2014 is 88 percent compliance, well above the global compliance standard of 63 percent. We have several human rights due diligence checklists ranging from plant siting to child labor to migrant and forced labor. In In addition, as a result of our investment in Myanmar in 2012, we conducted comprehensive human rights diligence in the country, and we have filed two Responsible Investment in Myanmar Reports to the U.S. State Department that transparently present our human rights due diligence process, what human rights impacts we found, what our mitigation strategies and results were and what work still needs to be done. Learning from our Myanmar experience, we are beginning to conduct human rights impact assessments in 28 countries for our sugar supply chain on land rights and child and forced labor to be completed by 2020. Remediation of human rights impacts The goal of expeditious corrective action has been a keystone to addressing human rights impacts, whether brought to our attention by stakeholders, For the first time in 60 years, Coca-Cola resumed local production in Myanmar in 2013. 93

local events, the findings of our 2500 annual audits or through social or print media. Resolving and preventing abuses can be very complex and multifaceted, particularly across an entire country or several countries, requiring the involvement of government, community leaders and industry leaders to address the problem. To illustrate how the process works, I ll draw on a recent issue. In early 2009, the Coca-Cola Company began auditing its suppliers in the Middle East and Gulf Region. This included the 19 independent bottling plants plus two others owned and operated by the company. The countries covered included Bahrain, Kuwait, Oman, Qatar, United Arab Emirates and Yemen. In the first several assessments by third-party auditors, it became immediately clear that almost all of the supplier facilities in the region were withholding the passports of migrant workers. When asked why this was taking place, managers typically informed the auditors that it was required by law, or was a customary practice or a requirement of insurance companies to safeguard against significant cash theft. Our response to these findings was immediate. The company commissioned a third-party review of national laws and regulations of the countries concerned and followed up with an immediate tour of our suppliers in the region by senior management from regional and global headquarters. We also engaged with the International Labour Organization and the U.S. Departments of State and Labor to provide us advice on the issues. In 2008, in conjunction with the ILO, we held our first global human rights conference in Atlanta on forced labor. On the basis of this research, consultation with the ILO, human rights organizations and government officials in the region, the company developed further guidance and implementation guidelines on the issue of passport retention. The guidelines were supported by face-to-face training Evolving a concept of human rights In the wake of WWII, as the full extent of the Nazi atrocities became known, a movement arose to codify a set of rights belonging to all people, regardless of where they might reside or work. In 1946, the United Nations created a Commission on Human Rights and charged it with drafting a Universal Declaration of Human Rights. The drafting committee was headed by Eleanor Roosevelt and members were drawn from 18 nations. The declaration they formulated consists of 30 articles that spell out specific rights, such as the right to life, prohibition of slavery, the right to freedom of association and others. It was adopted by the United Nations General Assembly on December 10, 1948. The declaration has been translated into 438 languages. As a declaration rather than a treaty, it carries no legal weight but nonetheless has had significant influence on the formation of international laws and treaties pertaining to human rights and has been used as a basis for national constitutions. It continues to serve as the moral compass for international groups and diplomats seeking to monitor and ensure human rights compliance. Fifty years after the Declaration was adopted, the International Labour Organization adopted the Declaration on Fundamental Principles and Rights at Work. This document, along with the Universal Declaration, became the cornerstone of the United Nations Guiding Principles for Business and Human Rights (Guiding Principles), adopted by the United Nations Human Rights Council in June 2011. The Guiding Principles have become the backbone of human rights frameworks for companies around the world, including the Coca-Cola Company. 94

involving the ILO, ongoing written communications and one-to-one followup with supplier relationship managers. Once the new guidelines had been distributed, a one-day seminar was held by the company for all of its suppliers in these countries. The seminar offered suppliers the opportunity to discuss the new policies, raise questions about them and address next steps in implementing operational changes. This consultative process and the clarity of the new guidelines led to agreement by suppliers and the implementation of changes. In order to sustain this improvement, the company maintains ongoing monitoring and has built the issue and guidelines into routine supplier communications and forums globally. Building on the success of this engagement, the company has implemented a human rights due diligence migrant labor checklist and additional global policies and guidance to address risks of forced labor among migrant workers. The policies cover both the recruitment and the employment phase and require that: Work shall be represented in a truthful, clear manner and in the local language Workers shall not pay recruitment fees (including transportation to and from the host country) Workers shall have access to personal identity documents The future? The Coca-Cola Company s social license is built on trust and respect. This is core to our DNA and extends not only to the Coca-Cola system but also to the communities where we operate. As a corporate leader on respect for human rights, the company has and will continue to use its voice to help to ensure high levels of corporate accountability and transparency within our business system. In addition, through our actions and engagements with others, we will continue to serve as a call to action to others to show respect for human rights. This is an ongoing process, and I have no doubt that the Coca-Cola Company will continue to dedicate the time, resources and energy required to improve and strengthen its human rights processes and live up to its human rights aspirations. 3500+ PRODUCTS WORLDWIDE About Ed Potter Ed Potter is the director of global workplace rights at the Coca-Cola Company. He is chairman of the U.S. Council for International Business Labor and Employment Policy Committee, a member of the Department of Agriculture s Consultative Group on Forced and Child Labor in Agriculture, the Department of Labor s National Advisory Committee on Free Trade Agreements and Worker Rights, and a member of the World Economic Forum s Global Council on Human Rights. Potter became the U.S. Employer Delegate to the International Labour Organization (ILO) Conference in 1997. 1,322,000 TWEETS PER QUARTER 128 YEARS OF HAPPINESS OUR PRODUCTS ARE AVAILABLE IN 200+ COUNTRIES Source: The Coca-Cola Company 95