When Neville Isdell graduated from the University of Cape Town 40 years ago, he seemed an unlikely candidate to become chief executive of Coca-Cola. His degree was in
social sciences and he qualified to become a social worker. But instead of joining the public sector, he took a job with Coke's local
bottler in Zambia.
"I remember going back to my university and one of my professors asked me what I was doing," Mr Isdell recalls. "He was
horrified to hear I was in business. I said: 'You know, I actually believe I can create more value and help more people by working for the Coca-Cola Company than I would be able to do individually as a social worker.'
To Coke's many critics, his
rosy view of the company must seem absurd. For several years, it has faced a growing
drumbeat of criticism over
alleged mistreatment of workers in Colombia, use of water in
drought-stricken parts of India and its role in the childhood
obesity epidemic sweeping the developed world.
With Coke boycotts on university campuses throughout North America and parts of Europe, the company appears to have succeeded Nike, Nestlé and McDonald's as chief corporate
villain for the anti-globalisation movement. While student boycotts have made little impact on sales, the
barrage of negative headlines threatens to
tarnish Coke's most valuable
asset: its brand.
"Coca-Cola has always been seen as a force for good," says Tom Pirko, president of Bevmark, a
beverage industry consultancy. "The danger is that the brand starts being seen as something bad."
Until recently, Coke had a reputation for
obstinacy in the face of criticism. But in the two years since Mr Isdell was appointed chief executive, Coke's approach has begun to change. Shortly after taking the helm, he
gathered together his 150 top managers to set strategic priorities. The result was a list of five goals considered
crucial to long-term growth. One was to make Coke the "recognised global leader in
corporate social responsibility".
For Coke, the target represented an important
acknowledgement that the company must deal seriously with the range of social and environmental issues
casting a cloud over its brand.
Coke's most urgent task was to bring greater transparency to its global operations, which
span more than 200 countries, so it could identify and
tackle social and environmental risks before they became problems.
Most of Coke's bottling and distribution operations are outsourced to independent companies. But, just as Nike was held accountable for labour abuses in overseas sweatshops, Coke has learned that it cannot escape responsibility for
far-flung business partners.
Coke's director of labour relations, Ed Potter, has launched an
audit of labour practices throughout the Coke supply chain. All suppliers are required to
adhere to Coke's own workplace rights policy.
Coke has also sought a more constructive relationship with critics. The company opened dialogue with student groups and forged partnerships with non-governmental organisations.
"One of the ways you get a company not to be seen as an
inanimate object is to talk to
folks," says Mr Potter. "You might not agree. But you develop a relationship."
A similar strategy is being
pursued by Jeff Seabright, head of environmental and water affairs at Coke. He has won the
backing of Greenpeace for an initiative to make vending machines more environmentally friendly, provided funding for freshwater conservation projects and co-founded an alliance of companies and NGOs committed to widening access to safe drinking water and
sanitation in the developing world.
"Our brand has made us a target for critics to attract attention to their causes," says Mr Seabright. "But NGOs are starting to understand they can achieve more with us than against us because our brand and global presence makes us a powerful partner."
While labour rights and water usage are the focus of Coke's
fiercest critics, the issue causing arguably the greatest concern among ordinary consumers is childhood obesity. The company insists it is unfair to blame soft drinks for a problem with multiple causes. But here too it has softened its
stance, embracing industry guidelines restricting the sale of sugary drinks in schools and supporting initiatives to encourage physical exercise among children.
"Taking a leadership position on the school vending machine issue is something that Coke would not have done in the past," says Robert Davies, chief executive of the International Business Leaders Forum, which promotes sustainable business and counts Coke among its
donors. "They have realised they have to respond to
perceptions in the marketplace rather than to what they believe to be the facts."
Ray Rogers, head of the Campaign Against Killer Coke, the company's fiercest foe, rejects the notion that Coke has changed. "They still deal with these issues as a public relations problem," he says. "Anything they have done to clean up their act is in response to political and economic pressure rather than because it is the right thing to do."
Mr Isdell accuses the most vocal critics of spreading misinformation and manipulating people to
advance their political cause. Coke's
aim, he says, is to prevent those arguments gaining wider acceptance.
"You are going to have a small percentage of people who you are never going to convince to drink Coca-Cola and who you are never going to convince about the good intentions of the Coca-Cola Company," he says. "The question is whether they can influence the others."