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Container and Packaging
Recycling UPDATE
Summer/Fall 2001 Issue

Investor proposals pressing management at The Coca-Cola Company and PepsiCo Inc. to increase recycling gained more support than expected at annual shareholder meetings in 2001, which assures the proposals can be brought back again next year. For the first time in many years, chief executive officers from two Fortune 500 companies were compelled to address recycling issues raised by shareholders.

Management at both Coke and Pepsi opposed the shareholder resolutions, which call for both companies to use 25 percent recycled plastic in making new soda bottles and reach an 80 percent recycling rate for all of their beverage containers by 2005. However, responses by the two companies to shareholders revealed major differences in addressing recycling concerns.

Coca-Cola Chairman and CEO Doug Daft announced that his company plans to use 10 percent recycled-content in plastic bottles by 2005 and will work with Businesses and Environmentalists Allied for Recycling (BEAR) to increase recycling of beverage containers. While these modest steps disappointed sponsors of the shareholder resolution and environmentalists, it was encouraging to see Coke begin to address the growing beverage container waste problem.

By contrast, Pepsi management sought, unsuccessfully, to block the shareholder resolution from being placed on the proxy statement for a vote. Pepsi filed objections with the U.S. Securities and Exchange Commission (SEC), but the SEC rejected their request to block it. Pepsi's new chief executive officer, Steve Reinemund, listened politely to a parade of speakers voicing support for the recycling proposal, but failed to offer any commitment to stem the waste of billions of Pepsi bottles and cans each year

One possible explanation for the contrasting positions is that Coke has been subject to a four-year grassroots campaign on recycling, while Pepsi "has gotten a free ride," according to GRRN Executive Director Bill Sheehan.

Sheehan told the Pepsi shareholders that GRRN will begin focusing pressure on PepsiCo Inc. to take responsibility for its beverage packaging waste. The Container Recycling Institute teamed up with GRRN and Waste Not Georgia in organizing support for the shareholder resolutions.

percent of shareholders refused to go along with management, either voting 'yes' or abstaining.

PepsiCo Inc. investors holding 83.3 million shares, worth $3.7 billion, voted for the recycling resolution.

Conrad MacKerron, Director of the Corporate Accountability Program at As You Sow Foundation, and Ken Scott of Walden Asset Management, sponsors of the resolutions, called upon Coke and Pepsi management to stop opposing bottle bills or come up with alternative means to achieve comparable results.

CRI provided technical support to shareholder funds developing the resolutions, and CRI Executive Director Pat Franklin addressed Coke and Pepsi annual shareholder meetings. She made two key points, that beverage container waste is growing at an alarming rate - increasing more than 50 percent since 1992 - and that financial incentives are essential to increase container recycling.

Shareholder resolutions are non-binding and typically gain support from a small percentage of total shareholders. Resolutions still often are a catalyst for meaningful changes in corporate practices.

The Atlanta Journal Constitution urged Coca-Cola to take up the recycling challenge contained in the shareholder resolution, noting that Home Depot and others have responded positively to pressure from investors.

If real commitments to boost beverage container recycling fail to materialize, Coke and Pepsi shareholders have vowed to bring the issue back next year.

An advertisement in the Wall Street Journal southeast regional edition headlined 'A Moment of Refreshment, An Eternity of Waste' urged shareholders to support the resolution.

Media campaigns and outreach by investment funds informed and educated shareholders, and secured meaningful support for the resolutions.

Investors holding 88.9 million shares of Coca-Cola stock, worth more than $4 billion, supported the recycling resolution. Nearly 10