DEAR FELLOW SHAREHOLDERS:

Coca-Cola’s 2022 Business & Sustainability Report is replete with pledges to reduce certain types of waste, and even has a seven-page section titled, “Packaging: World Without Waste.” But it never once addresses, nor even references, food waste. Neither does its 2023 Environmental Update (published August 2024).

This is perhaps especially relevant for Costa Coffee.

Coca-Cola owns Costa Coffee, which has nearly 4,000 cafés and 14,000 self-serve coffee bars worldwide, the food waste from which poses significant social, environmental, and economic concerns. For example, decomposing food in landfills generates significant greenhouse gas emissions and wasted food production consumes vast amounts of freshwater, fertilizer, and cropland.

Reducing food waste, however, mitigates such concerns—while also providing financial advantages.

In fact, a study by Champions 12.3—whose leadership includes the CEOs of Nestle and Rabobank, as well as the U.S. Secretary of Agriculture and Chief Economist for the U.N. Food & Agriculture Organization—found that “for every $1 restaurants invested to cut down on food waste, they saved on average $7 in operating costs over a three-year period. That’s a 600% return on investment.”

Further, Glass Lewis calls food waste “a growing issue that affects companies and their stakeholders and that has significant economic and environmental and social ramifications.” And Institutional Shareholder Services (ISS) says it’s “a growing area of concern globally and...is also starting to be addressed by regulators.”

Yet, neither Coca-Cola nor Costa discloses food waste measurements or measurable/timebound reduction targets.

Coca-Cola has such targets for other waste though. So does Costa—like serving 25% of its beverages in reusable or refillable containers by 2030. Costa also has a surplus food donation policy and states, only generally, that it has some other food waste objectives.

But for years now, Costa’s website has included this claim: “We’re striving to get better data on exactly how much food gets wasted across our stores, so that we can put in place interim targets to achieve our ultimate aspiration that ‘no edible food should go to waste’.”

After years of striving though, shareholders still await the data and targets.

By contrast, for example, Starbucks—a major Costa competitor—measured and disclosed the types/quantities of food and beverages in its waste streams (including disposal methods) years ago and has a measurable target to halve its food waste by 2030.1,2

We agree with BlackRock: “The need for solutions that...lower food waste and provide alternatives to scarce resources has never been greater.”

Looking ahead, we believe identifying food waste totals and implementing timebound reduction targets would substantially advance the company’s management of this hugely consequential issue. Thank you.