THE COCA-COLA COMPANY | Racial Equity Audit at THE COCA-COLA COMPANY

Status
16.54% votes in favour
AGM date
Previous AGM date
Proposal number
5
Resolution details
Company ticker
KO
Lead filer
Service Employees International Union (SEIU)
Resolution ask
Conduct due diligence, audit or risk/impact assessment
ESG theme
  • Social
ESG sub-theme
  • Diversity, equity & inclusion (DEI)
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Consumer Staples
Company HQ country
United States
Resolved clause
RESOLVED, shareholders request that The Coca-Cola Company (“Coca-Cola”) conduct and publish a third-party audit (within a reasonable time, at a reasonable cost, and excluding confidential/proprietary information) to review its corporate policies, practices, products, and services, above and beyond legal and regulatory matters, and assess their impact on nonwhite stakeholders. Input from stakeholders, including civil rights organizations, employees, and customers, should be considered in determining the specific matters to be assessed, and the audit should include recommendations for preventing and mitigating adverse impacts. Pay equity analysis by race, which Coca-Cola will analyze in a separate study, need not be included in the audit. A report on the audit, prepared at reasonable cost and omitting confidential/proprietary information, should be published on the Company’s website.
Supporting statement
SUPPORTING STATEMENT
The racial justice movement, coupled with the disproportionate impacts of COVID-19 on communities of color, have amplified calls for institutions to advance racial equity. Racial inequity, including racist and discriminatory policies and practices, may present significant legal, financial, and reputational business risks. In response to George Floyd’s murder, Coca-Cola’s CEO said: “as a company that believes diversity and inclusion are among our greatest strengths, we must put our resources and energy toward helping end the cycle of systemic racism.”1
Research has found that the most racially diverse and inclusive companies are more likely to outperform less diverse peers in terms of profitability.2 While Coca-Cola has recently announced a Racial Equity Action Plan,3 there are concerns around workforce commitments to racial equity that have reversed previously positive trends. Between 2010 and 2020, the proportion of Coca-Cola’s executives that were Black was nearly halved, from 15% to 8%, and the Company’s Black salaried staff also slipped by 5%.4
Additionally, Coca-Cola’s Racial Equity Action Plan does not address potential racial equity issues in its products, and some of Coca-Cola’s advertising and marketing practices have faced backlash from stakeholders. The Company’s most recent make-your-own label promotion prevented users from creating “Black Lives Matter” labels, while allowing the printing of “White Lives Matter” labels.5
A 2018 study from the Rudd Center for Food Policy and Obesity found that Coca-Cola has increased its sugary drink advertising spending by 81% since 2013, disproportionately targeting Hispanic and Black communities.6 It found that Black children and teens were exposed to twice as many advertisements than white youth.7 Increasing rates of diet-related diseases, disproportionately impacting Black and Hispanic teens, have intensified calls for healthier products and more robust responsible marketing practices.8
A racial equity audit is an important step in establishing a transparent system of accountability. An audit conducted by a third party has the additional advantage of providing objectivity, assurance and specialized expertise beyond what would be possible with an internal analysis.
1 https://www.coca-colacompany.com/news/where-we-stand-on-social-justice
2 https://www.mckinsey.com/featured-insights/diversity-and-inclusion/diversity-wins-how-inclusion-matters
3 https://www.coca-colacompany.com/social-impact/diversity-and-inclusion/racial-equity/our-plan
4 https://www.wsj.com/articles/coke-resets-goal-of-boosting-black-employees-after-20-year-effort-loses-ground-11608139999
5 https://edition.cnn.com/2021/06/23/business/coke-label-fail/index.html
6 https://media.ruddcenter.uconn.edu/PDFs/Sugary_Drink_FACTS_Full%20Report.pdf
7 https://www.fastcompany.com/90520068/obesity-researchers-say-coke-and-pepsi-should-stop-targeting-communities-of-color- with-ads
8 https://www.aappublications.org/news/2021/01/01/briefs-obesity010121

How other organisations have declared their voting intentions

Organisation name Declared voting intentions Rationale
Rothschild & co Asset Management For
Anima Sgr For A third-party audit assessing the racial equity impacts of the company's policies and practices would help shareholders assess
the effectiveness of the company's efforts to address the issue of racial inequality and its management of related risks. Furthermore, the audit would demonstrate and track progress of the company's public commitments to its diversity, equity, and inclusion goals.

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