A Critical Analysis Of Coca Cola Hellenic Bottling Company Environmental Disclosure

Introduction

The United Kingdom has a non-mandatory disclosure system, and thus companies that disclose various financial and non-financial information do so because of their interests or motivations. Most companies however choose to disclose both financial and non-financial information to retain the current stakeholders and attract new ones. Different researchers have tried to establish a list of comprehensive factors that motivates companies to disclose various information to the public but most of the results have been inconclusive, contradictory, or partial. Therefore, this paper aims to critically assess the quality and quantity of environmental disclosure of the Coca Cola Hellenic Bottling Company using the company’s reports on sustainability in its three years’ report that is from 2016 to 2019. The United Kingdom is among the first countries in the world that enacted various policies on environmental disclosure, but since the law allows to companies to disclose such information voluntarily, some companies have resorted to partially disclosing the information or providing insufficient information to the stakeholders that cannot be used to make meaningful predictions and plans. Since the enactment of the environmental disclosure laws in 2005, there have been various amendments, developments, and changes that have taken place to improve the quality of environmental disclosure in the company. By 2012, the United Kingdom Environmental Agency stated that from the studies they had conducted, it was evident that most companies had incorporated various measures in environmental disclosure (Radu and Francoeur 2017, p. 902). However, most of these companies did give the stakeholders the relevant and comparable figures that can spur confidence and decision making among the audience.

Research Questions

The study will seek to answer the following questions

1. What is the quality of Coca Cola Hellenic Bottling Company’s environmental disclosure?
2. What is the quantity of Coca Cola Hellenic Bottling Company’s environmental disclosure?
3. How is the environmental discloser serving the company’s voluntary disclosure purposes?

Views on selected voluntary disclosure theories Currently, there is no universal measure of environmental disclosure quality. Even so, Ioannou and Serafeim (2017, p.23) try to define quality by relating the value of environmental disclosure to interests of the external parties and auditors. They report that the quality of environmental reporting is determined by the usefulness of environmental information for enhanced decision-making ability. Mahmood, Ahmad, Ali, and Ejaz (2017, p. 1142) added that the quality of environmental reporting is determined by the extent to which the information assists the users to appreciate the social and environmental activities of the organisation and to invoke the management’s approach to CSR.

Theories on Environmental disclosure

The neo-institutional theory has been used in past studies to relate both social and environmental disclosures basing on the assumption that companies would disclose their environmental activities as a response to various environmental institutions. Oliveira, Amorim, Abreu, and Ponte (2017) argued that the main feature of the institutional theory is an isomorphism. Oates, G. and Moradi-Motlagh, A., (2016, p. 195) argued that in the context of the United Kingdom environmental disclosure is a result of pressure from the Environmental Agency, which stipulates on the process of regulating CSR practices with a focus on the environment.

Apart from the institutional theory, the stakeholder theory also gives a theoretical perspective as to why companies would disclose their environmental and social activities. According to the theory, companies disclose their environmental and social activities because of the influential demands and preferences of stakeholders. The theory assumes that companies majorly focus on the broader concept of being accountable to different stakeholders. The theory provides a clear explanation for the reason companies would disclose their information.

The dependence theory also compliments the aforementioned theories by acknowledging the influence of external factors on the organizational behaviour Bae, Masud, Kaium, and Kim (2018, p. 2611) stated that managers will avoid any form of dependence on their external environment and lessen the rate of uncertainty by focusing on the resources of the firm. One way of reducing a company’s dependence on the external environment is by undertaking the duties which would have otherwise been taken by the external environments, and one way of doing this is by participating in social and environmental issues. To satisfy the external environment, a company will disclose to them, their activities in the society and the environment.

Brief on the company and Sector Overview

The Coca Cola Hellenic Bottling Company is currently ranked as the third-largest anchor bottler in the world. Anchor bottling is a term used by the Coca Cola company to refer to the manufacturers of Coca Cola products around the world. In short, the Coca Cola Hellenic Bottling Company manufactures Coca Cola products such as the Coca Cola soft drink, Fanta, Sprite, and bottled water among others (Ali, Ahmad, Rehman, and Kamal 2018, p. 224). The company faces minimal company because the global soft drink industry is controlled by Coca Cola and PepsiCo. However, the larger global market and the United Kingdom market is majorly controlled by Coca Cola. This means that Coca Cola and its anchor bottler companies enjoy the privilege of controlling the market price, and larger market share, which means that the company is likely to be profitable as compared to those in other industries who do not enjoy similar privileges (Jamalnia, Yang, Xu, Feili, and Jamali 2019). At the same, the position of the company gives it an advantage to bargain with suppliers and reduces the client’s bargaining power because the substitute products are less popular in the market.

Presentation of Data and analysis

The data collected used in this study was collected from 2017, 2018, and 2019 sustainability reports. Given a chance, these publications would have been analysed independently. However, due to limited space, the data from the three reports will be generalized. A quick examination at all the three reports, several factors were constant. First is that the company aimed at reducing the number of plastic wastes in different cities around the world through a program referred to as ‘Zero Waste Cities,’ which was first launched in Thessaloniki, a city in Greece. Apart from waste management in 2017, the company announced that it was adopting the use of environmentally friendly plastics to reduce the effects of waste plastics on the environment (Coca Cola Hellenic Bottling Company 2017). Later in 2018, the company admitted that the number of plastic wastes had risen sharply, to appoint that the company’s recycling plant could not keep up with the wastes. To deal with the problem the company resorted to installing plastic recycling plants in different towns rather than have one at a central place, which could easily be overwhelmed and at the same time reduce the cost and time used in the transportation process.

In 2018, the company amended its environmental assessment and impact matrix to include the production of CO2 using the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard (Coca Cola Hellenic Bottling Company 2018). The matrix helped the company not only to assess its emissions but also to assess the environmental practices of its suppliers. Coca Cola Hellenic Bottling Company wanted to be associated with companies that have sound environmental policies to avoid environmental double standards. Through this assessment, the company was also able to notice the gap in its supply chain, and in the 2019 sustainability report, it documented that it aims at making its supply chain more environmentally friendly (Coca Cola Hellenic Bottling Company 2019).

Discussion and Evaluation

What is the quantity of Coca Cola Hellenic Bottling Company’s environmental disclosure?

Coca Cola Hellenic Bottling Company assumes that investing in environmental and social development could help in making a business grow. 2019, the sustainable report has seven major areas in business sustainability as compared to its competitors in the industry. These areas majorly include sustainable packaging materials, climate protection, active healthy living, beverage benefits, and water stewardship. Every area offers a different extension to environmental sustainability. However, the company only documents what it has achieved and performances but fails to document the progress of the existing environmental projects or those projects that it failed to achieve due to one reason or the other. The company prepares its sustainability according to the guidelines of the United Nations Global Compact, instead of using the Global Reporting Initiative (GRI) G3 guidelines.

What is the quality of Coca Cola Hellenic Bottling Company’s environmental disclosure?

For the sake of measuring the quality of disclosure, this study will have to compare the sustainability report of Coca Cola Hellenic Bottling Company with its competitor which in this case is the PepsiCo company, which also produces sustainable reports with almost the same standard. Comparing the two Coca Cola give more details and a comprehensive report as compared to Pepsi. Both companies believe in the growth of human and environmental factors. However, PepsiCo discloses general information in comparison to Coca Cola (Li et al. 2017). Additionally, Pepsi documents its future goals and fails to report on whether it achieved the previous targets or not- the same was also experienced in the case of the Coca Cola Hellenic Bottling Company. The Coca Cola Hellenic Bottling Company gives a long-term blueprint and strategy on environmental improvement while Pepsi fails to do so. From these two factors, it is clear that the Coca Cola Hellenic Bottling Company provides more quality environmental disclosure information.

Conclusion

Coca-cola provides an in-depth, comprehensive, and transparent sustainable report that could help stakeholders to make various decisions as compared to its competitors in the market. Even so, the Coca Cola Hellenic Bottling Company needs to improve on environmental disclosures by documenting the projects that they failed to achieve and also give an update on the current projects being conducted on environmental sustainability.

References

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• Coca Cola Hellenic Bottling Company, 2018. In Good Company: Annual Report. Retrieved from; https://coca-colahellenic.com/media/3562/coca-cola-hbc-2018_iar_15mar2019.pdf
• Coca Cola Hellenic Bottling Company, 2019). In Good Company: Annual Report. Retrieved from; https://coca-colahellenic.com/en/investors/2019-integrated-annual-report/
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