Remarks at the U.S. Chamber of Commerce "New Partnerships, Real Potential: The Coke Side of Progress", Washington, DC

E. Neville Isdell, Chairman and CEO, The Coca-Cola Company

As prepared for delivery

	E. Neville Isdell, Chairman and CEO, The Coca-Cola Company

Thanks for that introduction, Tom [Donohue], and good afternoon.

It's still exciting for me to be in Washington, DC, and to see the public buildings and monuments that are such icons of respect and hope for so much of the world.

My first awareness of this city was not of its buildings and monuments, but the smiling, confident man named Eisenhower in the newsreels in the only cinema in Lusaka, the capital city of what's now known as Zambia.

In those years, I also learned that my parents and teachers were profoundly grateful for the optimism and confidence that FDR demonstrated to the world during the war years.

In my teenage years (when we still only had newsreels in Zambia) the smiling, optimistic images of President John Kennedy became familiar.

Then in 1963, as a student anti-apartheid activist, I read with awe about Dr. King's speech at the Lincoln Memorial. In the fullness of time, the hope and optimism of his dream extended all the way to South Africa and became an important factor in ending apartheid.

So even after all these years, a trip to Washington reminds me of the optimism of Roosevelt, Eisenhower and Kennedy, and the inspiration of Dr. King.

Optimism and hope have been part of our secret formula since the first glass of Coca-Cola was poured 121 years ago. They've been at the center of nearly every Coca-Cola marketing campaign, including "The Coke Side of Life," which launched last year.

Marketers will tell you that stubborn optimism is one of what they call the "core brand attributes" of Coca-Cola. That attribute is hardly unique to Coke, but I do think it would be fair to say that we have had some success over the years inmaking optimism a point of differentiation for Coca-Cola and The Coca-Cola Company.

From a marketer's perspective, optimism works because it always seems to be in short supply around the world. It's also the case that optimism is something like a pre-requisite for any kind of career in business. You have to believe -- in economic growth and social progress... in customers and consumers... in yourself and your company and your colleagues -- if you're going to succeed. Certainly optimism describes my own basic orientation.

Business takes a strong dose of realism, too, and my outlook has also been informed by my personal and career history: growing up in a divided Northern Ireland, and in a racially segregated Zambia in southern Africa... attending university in Cape Town shortly after the Sharpeville Massacre and during Nelson Mandela's banishment to Robben Island... running the Johannesburg Coke bottler during the Soweto riots in 1976... leading The Coca-Cola Company's turnaround in the Philippines in 1981, when Aquino was shot... our entry into Russia and Eastern Europe from 1989... and our return to India in 1993.

To re-state Mark Twain's famous phrase, I've seen a heap of trouble in my life -- and some of it actually did come to pass.

Nevertheless -- I am still optimistic. I believe the human condition will continue to improve. I believe business has an enormous responsibility (and deserves credit) for taking risks... for allocating resources efficiently... for creating economic and social value... and for generally raising the standard of living around the world.

I believe there's an increasing awareness among my colleagues in business that our own efforts, while essential, are not sufficient on their own: If the global economy is going to continue to grow... if income growth, wealth creation and job-creation are going to proceed... if, indeed, we're going to make progress on some of the basic challenges facing mankind... then business is going to have to work more effectively across the spectrum of civic institutions.

I believe this view is increasingly shared around the world. Sustainable communities are the responsibility of everyone, but there are also enormous benefits in specialization. I think businesses, governments and some NGOs are realizing that if we are going to make progress on issues we care about, we need to work together.

Let me begin with the most basic challenge of all -- global economic and social development.

The world's population this year is 6.7 billion. That's 700 million more than in 1999. The natural increase (births minus deaths) in the world's population last year was around 80 million people, which is nearly the equivalent of adding a country the size of Germany to the planet. By 2025, the global population is projected to be 8 billion, and 9.2 billion by 2050. Ninety-nine percent of the population growth will take place in developing countries.

The global demographic divide is one of the world's most profound challenges. On one side of the divide are Europe, Japan and South Korea: mostly wealthy nations with low birth rates and aging, declining populations. On the other side are mostly poor countries with low life expectancies and high birth rates.

It goes without saying that my company and others see opportunities on both sides of the demographic divide. (Very generally speaking, there's high profitability on one side and high growth on the other.) But there's very little point in talking about opportunities for business if communities don't grow first.

And sustainable communities are a job for all of us: economic development and employment opportunities... water and sanitation... education... health care... and so much more.

A few months ago, the Coca-Cola system opened its newest production facility, in Kabul, Afghanistan. We entered Afghanistan -- the first time -- more than 50 years ago, but the country became one of the few serviced with imported product after the old plant closed in 1991. The new plant -- a $25 million bottling facility -- is owned and operated by a Kabul-based company and will employ around 325 Afghanis. At the dedication of the plant, President Karzai commented, "This is another step forward for economic growth, self-sufficiency and better living standards for Afghanistan."

While Coca-Cola is, for now, an exception in Afghanistan, Afghanistan is not particularly unusual for Coca-Cola. In 2000, we invested $44 million in two plants in Born Jesus and Lubango, Angola. Three years ago we opened an $8 million facility in Mogadishu, Somalia.
The Coca-Cola system operates more than 800 plants, and we're present in more than 200 countries around the world. Nearly all of our products are made in the communities where they're consumed, by local people, using local resources. In providing millions of little souks and dukas and sari-sari shops with the opportunity to sell Coca-Cola products, we create enormous value... and not just economic value, but social value too.

Social value goes hand-in-hand with economic value, and they are both indispensable for sustainable communities. In Wealth of Nations, Adam Smith wrote, "When the greater part of people are merchants they always bring probity and punctuality into fashion." As the operator who led Coca-Cola's entry into Russia in 1991 and our return to India in 1993, I can tell you that this is absolutely true. In both countries, as the merchant and entrepreneurial class has exploded, there's a focus on customer-satisfaction that was simply unimaginable 20 years ago.

"Probity and punctuality," as Smith called them, have an awful lot to do with competitiveness. They have to do with keeping commitments... keeping promises... and therefore with keeping customers. They also have to do with trust. Trust is required not just to do business... it also has to result from business.

I want to make two related points here.

First, meeting the challenges of the future will require the economy to continue to grow. And the only way to ensure sustained economic growth is through open markets. Adam Smith understood this, too:

"The pieces of a chess-board have no other principles of motion besides that which the [invisible] hand impresses on them," he wrote. "In the great chess-board of human society, every single piece has a principle of motion of its own, different from that which the legislature might seem to impress on it."

Globalization has challenged and continues to challenge businesses and economies in the US and Europe. Unfortunately, some political and business leaders have responded to these challenges by seeking to close their countries to competition -- by attempting to impress their own principles of motion on the global economy. It won't work.

The only effective response to globalization -- the only way to bridge the demographic divide -- is to remove barriers to trade and investment so that our economies and industries are free to be as productive and as competitive as they can be. That's why I think it's so important for the Doha round of trade talks to be successfully completed. And it's why I'm grateful to Chancellor Merkel for proposing a partnership to increase commercial exchanges across the Atlantic by reducing non-tariff barriers. I urge the forthcoming EU-US Summit to endorse and incorporate the Merkel Initiative in its communiqué and subsequent work plan.

Second, like many other business leaders, I am concerned about the escalating backlash against global trade taking place around the world. There are many reasons for it, and most of them in my view are of the confusing-correlation-with-causation variety. However, one complaint I've heard resonates with me. It's not that global trade doesn't produce benefits, but rather that the benefits are not always dispersed broadly enough... that in some countries, they're skimmed off the top through corruption and graft. The benefits of globalization need to be more widely shared in both developing and developed countries.

Now I know it is fashionable to complain about the burden of America's corporate legal and regulatory requirements -- and in general I prefer as few as possible. But I have lived and worked in countries with corruption problems. And I can tell you that while complying with the Foreign Corrupt Practices Act, the OECD Anti-Bribery Convention, paying taxes and obeying local laws and regulations may seem to place Coca-Cola and other American firms at a competitive disadvantage in the short-term, over the long term it will help us build equity in the community as a trustworthy customer, supplier, employer and neighbor. Even more important, if customers, suppliers, consumers and employees can benefit from our growth, then countries with corruption problems can begin to restore their reputations and attract foreign direct investment again.

So the creation of economic and social value is an essential condition for sustainable communities, and there is no substitute for business in this function. But again, it is not sufficient on its own.

Today, about 1.3 billion people around the world do not have access to safe drinking water, and around 2.5 billion lack access to adequate sanitation. By 2025, an estimated two-thirds of the world's population will face severe and chronic water shortages. While school attendance has generally increased in the last decade, only around three-quarters of children ages 10 to 14 in developing countries attend primary school, and the rate decreases for secondary school attendance. HIV/AIDS is an epidemic in much of the developing world while access to basic health care lags considerably.

I want to be clear here. Business exists to make a profit and to create economic returns for its shareowners. The Coca-Cola Company is not a social service agency or an NGO. But these issues have everything to do with sustainable communities, and therefore with the health of business. The most effective way to address them is through partnerships.

Partnership is at the heart of our approach to water.

In November 2005, my Company began a series of efforts with the U.S. Agency for International Development (USAID). The first group of projects included work in Asia, Africa and Latin America. Near Jakarta, our partnership has improved water supply services, hygeine, household water disinfection and watershed management for 25,000 underserved residents. In Mali, 21,000 people received better access to clean water, improved sanitation and hygiene, and 1,000 people began to carry out small-scale garden irrigation to improve nutrition. In Malawi, we worked with USAID to rehabilitate gravity-fed water systems and build new spring box systems to improve access of potable water.

In March, USAID and my Company announced a $7 million joint investment in nine new water initiatives in Africa. The new projects will be located in Angola, Ethiopia, Kenya, Mozambique, Nigeria, Tanzania, Uganda and Ghana/Ivory Coast and bring the partnership's total level of investment from $3 million to $10 million. Along with our implementing partners in 16 countries, USAID and The Coca-Cola Company are helping more than 300,000 people who struggle for daily access to safe and sustainable sources of water.

This month, Coca-Cola India began working with the United Nations Human Settlements Programme (UN-HABITAT) on a series of projects to improve access to safe drinking water and adequate sanitation as part of the UN-HABITAT's Water for Asian Cities Programme. The partnership's projects in India will include providing safe drinking water to 150 schools in West Bengal and construction of rainwater harvesting structures at 10 schools in Madhya Pradesh. In Nepal, the partnership will launch a sanitation awareness campaign and provide access to potable water through World Health Organization-approved household-level purification methods.
I could go on around the world, but I wanted to mention these projects because they're in parts of the world where the water crisis is particularly acute. They also demonstrate the relationship between clean water and other aspects of sustainable communities: Better access to clean water means fewer waterborne illnesses, lower child mortality, and improved maternal health, among many other things. It also improves the educational prospects for girls in societies where water is regarded as a woman's responsibility. It also demonstrates our commitments to these societies.

As useful as these efforts are, we know we need to do more. All sectors -- including business, government, NGOs and philanthropic organizations -- need to take coordinated, concerted action to protect and preserve global water resources.

That's one reason we've helped establish the Global Water Challenge -- GWC -- which we hope will be a catalyst for an international movement to meet the urgent need for safe water and sanitation. GWC is operated by the UN Foundation, and members include Cargill, Dow, the Wallace Genetic Foundation, Emory University, Millennium Water Alliance, UNICEF, CARE and several others. I'm convinced GWC is vital for stimulating the cooperation, long-term investment and international commitment required to meet the world's future needs. If your company or institution would like to play a role in helping provide access to clean water for all people on earth, I hope you'll consider joining The Global Water Challenge.

To be sure, our partnerships are not limited to water or developing countries.

• Along with Greenpeace and the United Nations Environment Programme (UNEP), we co-founded a food and beverage industry alliance called Refrigerants' Naturally! to promote HFC-free refrigeration technology to reduce emission of greenhouse gases.
• We're also supporting a new company called RecycleBank that is pioneering an innovative incentive-based recycling program. Philadelphia, Wilmington and other communities that have signed up with RecycleBank have seen significant increases in recycling rates thanks to incentives provided by the more than 250 businesses that support this terrific program.
• And last year a partnership between the American Beverage Assocation (which includes Coke, Pepsi and Cadbury Schweppes), the American Heart Association and the William J. Clinton Foundation led to the voluntary creation and adoption of New School Beverage Guidelines.

I realize these examples don't exactly add up to a global trend -- yet. But I wanted to mention them because water and wellness are so critical to sustainable communities... because the tenor of our partnerships in these areas has changed dramatically in recent years... and because we're actually making progress.

A generation ago, issues with the kind of global implications I've mentioned almost surely would have been left for the government to address. The partnerships I've discussed today reflect an important shift in our thinking.

The Coca-Cola Company's legendary chairman, Robert Woodruff, absolutely wanted to make the world a better place. His main strategy year after year was to demand high performance from every employee of the Company... to extend the Company's reach and to grow volume and earnings.

Today, of course, we still embrace all of those goals. But Mr. Woodruff's dedication to making the world better through high performance has some new dynamics in today's global economy and global village. That legacy also means embracing the work and the purposes of these new partnerships I have described.

Embracing the work of these partnerships may be a new wrinkle in the way we work, but I am very confident that in taking this approach we are doing what we were long ago programmed to do.

In closing -- I want you to know that my understanding and my education about American politics is still a work in progress. But I understand that everyone who gets elected and comes to Washington has to be prepared for the folks back home to ask, What have you done for me lately?

I also understand that sometimes public officials will turn the question around... they'll ask, what have you and your company done for the people -- for my people -- today?

If we can get this partnership concept right, I believe business can go to its customers... elected officials can go to their constituents... NGOs can go to their members... and governments can go their citizens... and we'll be able to say, "We have taken on the world's most difficult issues together... because we understand that we are all in this together."

I believe we can get there. I am that much of an optimist.