Coca Cola Hellenic Sustainability and Ethics Management - Report Example

Sustainability and ethics management Contents Contents 2 Executive Summary 3 2. Company Profile 3 3. Stakeholders 4 6 4. GRI and UN Global Compact 6 4.1 Findings of GRI G3 Framework Reporting Indicators of Coca Cola Hellenic 6 4.3 UNGC 10 6. Sustained economic Performance/Profitability 13 7.1 SWOT (Strength, Weakness, Opportunity and Threat) 15 7.2 TOWS 18 7.3 Findings 22 9. References 25 1. Executive Summary Coca Cola Hellenic experiences strong brand equity in the market. It operates in 28 countries across the world. The concerned company is listed in the London stock exchange. The company performs its corporate social responsibility. It abides the 10 principles introduced by United Nation compact. It is the subsidiary of the Coca Cola Company and it has a well-balanced exposure in 28 countries across the world. The company is experiencing profitability in its business operation. Coca Cola Hellenic was established in the year 2000 due to the merger of London based Coca Cola Company and Hellenic bottling company located at Athens. The company is experiencing a problem in its research and development due to low investment. Therefore the company is required to utilize its venture capital for investment in research and development. The concerned company also focuses on its stakeholders and responds positively to the needs and requirements of its stakeholders. The company is facing intense competition in its home market. Therefore it is concentrating on innovation in its packaging in order to compete with its competitors in the market. 2. Company Profile Coca-Cola Hellenic is known as one of the largest Coca-Cola bottlers in the whole world in terms of revenue. The company operates across 28 countries in the world. The company operates across different cultures and geographies of the world. There are 76 bottling companies of the world. There are about 365 warehouses and distribution centers of the company. By the process of sourcing and of sourcing and manufacturing the products of the company the company remains close to the customers and consumers so that the company generates local employment and other benefits for the company. The company generated in €877 million EBITDA, had 76 bottling companies, 2.08 billion unit case sales and had 41,302 employees. The company had the first GRI A+ CSR report in the European Beverage industries. The company also completed the water shed development so that it can ensure 100% waste water is treated by the company. All of the 76 bottling plants of the company are ISO 9001 certified. The company had also purchased and installed 29000 eco friendly coolers. There are about 84000 suppliers of the company who contribute 36% of ecological impacts of the company. 70% of the beverage packaging that is done by the company is collected and recycled or are recovered in 19 countries through recovery system (Coca-Cola HBC, 2015). 3. Stakeholders The company acknowledges the fact that that the company must listen to and respond to the needs of the stakeholders of the company. In addressing the stakeholders all the individuals or groups who are impacted by the company and who in turn affect the company are called into question (Coca-Cola HBC., 2011). The company acknowledges the fact that by engaging with and investing in the development of the stakeholders of the company itself is also benefitted. The company believes in creating shared values whether it is through the caring of the employees of the company or building trust levels in the communities in which the company operates or it’s with the customers. The company believes and acknowledges the fact that it cannot alone achieve the sustainability goals but only through engaging with the stakeholders of the business. The various stakeholders with whom the company engages are employees, customers, consumers, nongovernmental organizations, inter government organization, and governments. The company has incorporated new sets of corporate values after following and extensive internal consultation process. The concerns that were raised by the employees of the company in the recent survey that was conducted is also incorporated in and addressed. Some of these incentives include promoting the work life balance of the company and expanding opportunities for the employees to have input into the business. As a testimony to the practices the company’s score has improved in the employee engagement survey. The company also engages with the customers by the process of certification of the fact that all the bottling plants of the company comply with the international food safety standard certification. The company engages with the customers in delivering environmental benefits. In addressing the health issues that are cited by the consumers the company is committed to in traduce more and more beverages that are low in their calorific content. 4. GRI and UN Global Compact 4.1 Findings of GRI G3 Framework Reporting Indicators of Coca Cola Hellenic The social responsibility report is prepared by the company in consideration with various environmental, social, economic and legal aspects to fulfill the general expectation of the stakeholders of the company. The Global reporting initiative acts as a guideline for preparing the sustainability report of the company. The concerned company is engaged in assessing the various social and environmental issues of the company. The corporate responsibility guidelines of the company are reviewed and monitored on a regular basis for resolving various issues related to the society. In order to maintain a consistency in its sustainability reporting the guidelines of corporate sustainability reporting and the framework of G3 are issued by Global Reporting initiative (Coca-Cola HBC, 2013). The sustainability reporting of the concerned company is eligible for GC Advanced level. This level has been recognized as the highest level for differentiating its program .the internal control system of the company is prepared for ensuring reliable and acceptable data for preparing the sustainability reporting in accordance with the global Initiative Reporting initiative of the company. Coca Cola Hellenic has prepared a report against its key performance indicators focusing on the economic, social and environmental performance of the company. The company has rated itself B grade against the G3.1 GRI guideline in its sustainability report. The sustainability report of Coca Cola has Hellenic been verified by a third party agency and it has rated A+ grade which signifies the transparency of its sustainability report. By observing the GRI reporting format of the company it has been found that the social and product responsibility has been completely discussed and mentioned in the report whereas most of the segments related to human rights has not been discussed and mentioned in the sustainability report of the company. Findings of GRI G3 Framework Reporting Indicators of Coca Cola Hellenic Economic EC1 C EC2 P EC3 C EC4 P EC5 P EC6 p EC7 P EC8 C EC9 C Environmental EN1 P EN2 P EN3 C EN4 C EN5 C EN6 C EN7 C EN8 C EN9 C EN10 P EN11 P EN12 C EN13 P EN14 C EN15 C EN16 C EN17 C EN18 C EN19 P EN20 C EN21 C EN22 C EN23 C EN24 C EN25 P EN26 C EN27 C EN28 C EN29 C EN30 U Social: Labor Practices &Decent Work LA1 C LA2 P LA3 C LA4 C LA5 C LA6 P LA7 C LA8 C LA9 C LA10 C LA11 C LA12 C LA13 C LA14 U LA 15 U Social: Human Rights HR1 U HR2 C HR3 P HR4 U HR5 U HR6 U HR7 U HR8 U HR9 U HR10 P HR11 P Social: Society SO1 C SO2 P SO3 C SO4 C SO5 C SO6 U SO7 U SO8 C SO9 P S10 U Social: Product Responsibility PR1 C PR2 C PR3 C PR4 C PR5 C PR6 C PR7 C PR8 C PR9 U Where: C = Complete P = Partially covered U = Unreported 4.3 UNGC The sustainability reporting of the company along with its GRI format has joined the United Nation global compact for improving the significance of corporate responsibility. The participation of the company acts as a base for increasing the importance of the Global compact around the world especially in the US market. The concerned company has been successful in occupying a significant position in performing various social responsibility and also abiding by the 10 principles introduced by global compact in the areas related to legal, labor, environment and human rights. The Global; impact is considered as the largest and the most remarkable initiative with stakeholders from more than 90 countries around the world, and 2900 participants. Global compact has increased the level of commitment of the company in performing its business by following the universal principles. Principles of UN Global Compact of Coca Cola Hellenic Human Rights Principle 1 Complete   Principle 2 Complete Labor Principle 3 Complete   Principle 4 Complete   Principle 5 Complete   Principle 6 In-complete Environment Principle 7 Complete   Principle 8 Complete   Principle 9 Complete Anti-corruption Principle 10 Complete Principle 1: Business is required to respect and support the protection of human rights internationally. Coca Cola Hellenic is dedicated towards its human rights policies. The company provides equal opportunity to all its employees working in the organization. It maintains occupational health and safety of the employees. It also focuses on its suppliers by providing them a guiding principle. It encourages education and entrepreneurship. Principle 2: Confirming that the human right is free from abuses The concerned company abides its principle 2 by undertaking its projects for providing easy access to water and sanitation facility in Nigeria, Romania and Hungary. Principle 3: Business is required to provide freedom of association and recognition for its collective bargaining Coca Cola Hellenic is committed to its labor rights. It has adopted diversity in its initiative for example it has taken initiative in Hungary for Roma youth development. Principle 4: Elimination of various compulsory and forced labors The concerned company has maintained its protocol for formal communication in more than 23 countries across the world. Principle 5: Abolition of practice of child labor effectively Coca Cola Hellenic has undertaken various initiatives for restricting and abolition of child practices around the world. Principle 6: Elimination in the discrimination that exist in relation to occupation and employment. The concerned company has adopted various initiatives for eliminating the discrimination which includes the initiatives for minimizing the diversity in gender. It has also adopted an initiative of paying significantly for the entry level positions above the minimum wages. Principle 7: Business is required to support the precautionary measures and approaches for facing the environmental challenges. Coca Cola Hellenic has participated in the partnership of using water in the production of sugar. It has established more than 20 national recovery organizations. 72 bottle plants of the company are certified by ISO 14001. Principle 8: Initiative for promoting greater responsibility towards its environment. The company has focused on climate or environmental friendly refrigeration. It has adopted community water program in more than 26 countries across the world. Principle 9: Encourages and motivates the improvement of environmental friendly technologies 100% of its water is now utilized for the treatment of more than 44 waste water plants treatment. The concerned company has also taken initiative for renewable energies. It has launched CHP unit for promoting the use of low carbon technologies in its operation. Principle 10: Business is expected to continue its operation against all forms of corruptions which mainly includes bribery and extortion. Coca cola Hellenic is committed in maintaining its code of conduct and reviewing its operation. It is engaged in providing protection of maintaining confidentiality in reporting, assessing the risk on a regular basis by the internal audit department of the company. The suppliers of the company are expected to abide by the code of conduct of the business. It supports anti-corruption initiatives for example Latvia, America and Ukraine. 6. Sustained economic Performance/Profitability The profitability analysis of the concerned company indicates that the financial performance is feasible for meeting its short and long term debt obligations. The financial performance of the company has improved from 2012 to 2014 which is favorable for the business. But the net sales of the company have decreased in 2014 as compared to previous years which might affect the net profit margin of the company in the long run. Therefore the company is required to increase its net sales along with its net income. The return on investment has increased significantly from 2012 to 2014. It has increased subsequently in each year. The return on investment has increased due to the rise in revenue or net income for the successive years. The long and the short term investment of the company have increased successively from 2012 to 2014. But the return on investment is constant for 2013 and 2014. Therefore the company is expected to increase its return on investment in order to enhance its return on investment. The Return on equity has also increased by 1% in each consecutive year which implies that the company can fulfill the expectations of its shareholders by providing adequate return to its stockholders. The Net margin of the company has also increased significantly for the three consecutive years from 2012 to 2014. The net margin of the concerned company has increased by 2% in 2014 which indicates that the company is profitable. The Return on asset of the company has remained constant from 2012 to 2013. But it has increased in 2014.Therefore it indicates that the company has increased its asset base which is a good indicator for the financial progress of the company (Chesters, 2013). 7. Sustainable Strategic Competitive Advantage 7.1 SWOT (Strength, Weakness, Opportunity and Threat) Strengths S1. Coca cola Hellenic experiences a strong brand equity in its local market S2. The concerned company is considered as the largest bottler’s brand of the coca cola company. S3. It experiences large market share in the domestic market. S4. Coca Cola Hellenic performs corporate social responsibility activities. S5.It is considered as the most favorable brand in respect of its value S6. The concerned company experiences a development in its distribution channel. S7. The concerned company experiences high profitability. S8. The management accountable for running the business is skillful. S8. It acts a barrier for entry of another company in the market. S9. The company experiences an increase in its cash flow position. Weaknesses W1. The company has no individual brand equity W2. The concerned has experienced low investment in its research and development W3. Coca Cola Hellenic experiences too much competition. W4. It is a small business focusing on the manufacture of beverage bottles W5. Coca Cola Hellenic maintains an undiversified portfolio. W6. Its inability to take decision quickly may provide a competitive advantage to its competitors. W6. The concerned company is too much dependent on the consumer related factors and the weather conditions. W7. It experiences seasonality in sales W8. The company is vulnerable to increase in cost input. Opportunities O1) The water consumption growth of the company has been bottled. O2)Introduction of new products in the market O3) The demand for healthy food and beverages has increased significantly. O4) The concerned company experiences growth potential in the emerging market. O5) Intensive competition existing in the market O6) The company has switched towards innovation in its packaging O7) It has quickly created its existence in some markets where beverage industry is far from maturity. O8) It has expanded its business in 28 countries across the world. O9) The company receives large venture capital (Bill and John, 2013). Threats T1. Extensive competition both from the local as well as international market T2. Increase in the commodity cost. T3. The concerned company encounters risk due to volatility in currency. T4. Coca Cola Hellenic experiences macro-economic and political instability in some countries T5. Decrease in the net sales. T6. The private label products may affect the margins negatively. T7 The company encounters challenges due to change in its tax rates and increase in interest rate of the company. T8. The price changes very frequently. 7.2 TOWS Strengths (S) S1. Coca Cola Hellenic experiences a strong brand equity in its local market S2. The concerned company is considered as the largest bottler’s brand of the Coca Cola company. S3. It experiences large market share in the domestic market. S4. Coca Cola Hellenic performs corporate social responsibility activities. S5.It is considered as the most favorable brand in respect of its value S6. The concerned company experiences a development in its distribution channel. S7. The concerned company experiences high profitability. S8. The management accountable for running the business is skillful. S8. It acts a barrier for entry of another company in the market. S9. The company experiences an increase in its cash flow position. Weaknesses (W) W1. The company has no individual brand equity W2. The concerned has experienced low investment in its research and development W3. Coca Cola Hellenic experiences too much competition. W4. It is a small business focusing on the manufacture of beverage bottles W5. Coca Cola Hellenic maintains an undiversified portfolio. W6. Its inability to take decision quickly may provide a competitive advantage to its competitors. W7. The concerned company is too much dependent on the consumer related factors and the weather conditions. W8. It experiences seasonality in sales W9. The company is vulnerable to increase in cost input. Opportunities O1) The water consumption growth of the company has been bottled. O2)Introduction of new products in the market O3) The demand for healthy food and beverages has increased significantly. O4) The concerned company experiences growth potential in the emerging market. O5) The company has switched towards innovation in its packaging O6) It has quickly created its existence in some markets where beverage industry is far from maturity. O7) It has expanded its business in 28 countries across the world. O8) The company receives large venture capital SO Strategies With its strong brand equity and leveraging on the fact that it is one of the largest bottlers of Coca Cola it can target the growth potential of emerging market. S3 S2 S1 O4. It can leverage its brand equity and the fact of being the most favorable brand in market to introduce new products and introduce packaging for healthy foods and beverages. S1 S5 O2 O3 Since it is most favorable in respect of value and has good profitability and cash flow position it can introduce innovation in packaging and expand market share. S7 S9 O5 O7 For further development in distribution channel and the fact that the management is skillful it can use funding from venture capitalist S6 S8 O8 WO Strategies The company has undiversified portfolio and this should be overcome by introducing new products in the market especially in health food and beverage section. W4 W5 O2 O3. The fact that company has low investment in R &D should be overcome by bringing innovation in packaging.W2 O5 Since the company is facing strong competition in the home market enter emerging market with growth potential W3 O4. Since it is a small business it can use funding from venture capitalists to fuel its expansion. W4 W5 O8. Threats T1. Extensive competition both from the local as well as international market T2. Increase in the commodity cost. T3. The concerned company encounters risk due to volatility in currency. T4. Coca Cola Hellenic experiences macro-economic and political instability in some countries T5. Decrease in the net sales. T6. The private label products may affect the margins negatively. T7 The company encounters challenges due to change in its tax rates and increase in interest rate of the company. T8. The price changes very frequently. T9) Intensive competition existing in the market ST Strategies The company can use its strong profitability and cash flow position to create value addition to packaging and drive away competitors. S7 S9 W3. The efficient management of the company should make quick decision and use its reputation in the market to diversify its portfolio and enter new market. S1 S3 S8 W4 W5 W6 WT Strategies It can acquire or merge with a company in new or existing market w3 w4 w5 T1 T4 T9 7.3 Findings Coca Cola Hellenic has strong brand equity in the market. It has acquired a significant market share in the market as compared to its competitors. The company has focused on maintaining its corporate sustainability. The concerned company has joined hands with United Global compact. The company is committed towards its 10 principles. The GRI framework of Coca Cola Hellenic reveals that the company has not reported and mentioned anything related to its human rights. The social and environmental aspect of the company has been properly mentioned in the report. The concerned company has faced a constraint in maintaining sound liquidity Position. The Company is focusing on fulfilling its legal requirements. The long term goals of the company are associated with the environmental sector. It is operating in more than 28 countries across the world and the geographical exposure of the concerned company is well maintained and balanced. Coca Cola Hellenic represents an important characteristic in the food and beverages industry with the increase in its expansion and development in the emerging markets across the world The main weakness encountered by the company is that the company is exposed to the change in the exchange rate due to its operation in non-Euro zone countries of the world which might affect profit of the concerned company in the long run. The company is also facing operating risk due to increase in the cost of raw material and energy consumption. The company is also facing problem due to low level of investment .The rate of investment has also remained constant for the last two years. Therefore the company is required to focus on increasing its investment in order to enhance its net margin in the long run. The company encounters intense competition from its local distributors and producers in respect to its price from those who sell diversified quality brands at lower price as compared to Coca Cola Hellenic. The SWOT analysis of the concerned company has been translated into TOWS analysis which can be discussed as follows: Strengths and Opportunities Strategies: The concerned company is experiencing profitability in its business operation. The return on equity, return on investment, return on asset and net margin of the company has increased in the present year as compared to the previous year’s which signifies that the company is profitable and it has been operating in 28 countries across the world. The beverages company is largely dependent on Coca Cola Hellenic for bottling their product. The company experiences a strong brand equity in the market with which it can target a large segment of the market and can compete effectively with its competitors. The concerned company also has an added advantage of large dependence of the beverages company. Weaknesses and Opportunities Strategies: The company is encountering challenges due to its low level investment in Research and development. Therefore this issue can be minimized by bringing innovation in its packaging. The problem related to small business can be overcome by funding through venture capital. Strengths and Threats Strategies: The company is operating its business profitably therefore it can utilize its cash for innovation in its packaging in order to compete with its competitor. The management of the company is required to take quick decision for diversifying their portfolio. Weaknesses and Threats Strategies: The extensive competition in the home market can be overcome by merger or acquisition with other company in the market. 9. References Bill, A. and John, G., 2013. Coca-Cola HBC. [Online]. Available at < http://www.indeepanalysis.gr/sites/default/files/arxeia/Coca%20Cola%20HBC.pdf > [Accessed 10 May, 2015]. Chesters L., 2013. Market report: genie back in bottle at Coca-Cola HBC. [Online]. Available at: < http://www.independent.co.uk/news/business/sharewatch/market-report-genie-back-in-bottle-at-cocacola-hbc-8911903.html > [Accessed 10 May, 2015]. Coca-Cola HBC., 2011. Social responsibility report 2011. [Online]. Available at: < http://www.coca-colahellenic.com/~/media/Files/C/CCHBC/documents/ar-2011cocacolahellenic-csrreport.pdf > [Accessed 10 May, 2015]. Coca-Cola HBC., 2013. Coca-Cola HBC 2013 global reporting initiative communication on progress (GRI COP) report. [Online]. Available at: < http://www.coca-colahellenic.com/~/media/Files/C/CCHBC/reports-and-presentations/CCH-GRI-COP-2013.pdf > [Accessed 10 May, 2015]. Coca-Cola HBC., 2015. About us. [Online]. Available at: < http://www.coca-colahellenic.com/aboutus > [Accessed 10 May, 2015]. Read More