Global Corporate Citizenship Series: Twenty-First Century Capitalism: The New Role Business Must Play

This session was part of the 2009 CFR Corporate Conference.

LEE CULLUM: Thank you very much. Let's get started. My name is Lee Cullum and I'm pleased to welcome you to the closing session of this corporate conference and also the launch of a new program here at the Council on Foreign Relations, which is a series of sessions on the responsible corporation.

Now, the responsible corporation, in our view, is the possessed of an environmental perspective and a social perspective and a planetary perspective. Now, you may think that this is counseling an unwarranted saintliness in time that looks more like the plagues of Egypt married to Noah's flood -- (laughter) -- but in fact, it is the way to not only survive but prevail in this unexpected century.

So -- thank you -- (laughter) -- we're going to be looking at global women leaders -- of course I'm in favor of that -- at emerging enterprises, and other subjects as well that we think are quite germane to the question at hand. And there is nobody better to launch this initiative than Neville Isdell.

When I think of Neville Isdell I'm reminded of something that that philosopher of business Andy Warhol once said, and it is this. "A Coke is a Coke and no amount of money will buy you a better Coke than the one the bum on the corner is drinking. All Cokes are the same and all Cokes are good." (Laughter.) So presiding over this venerable and reliable and lovable product for all of his business life has been Neville Isdell. He has achieved a life of great variety and great continuity, working on five continents.

He was born in Northern Ireland. His father was involved in law enforcement, was an expert in fingerprinting and ballistics, but he moved the family to Zambia, which was in northern Rhodesia, when Neville Isdell was 10 years old. He went to the University of Cape Town, where he played rugby and he wrote editorials against apartheid, which took some nerve in those days, and he majored in social work. His parents were both great social activists and his intention was to be a social worker, but he was drawn to business, went home to Zambia, and went to work for the Coca-Cola Bottling Company.

I am told that it had two trucks, one that worked and one that didn't. (Laughter.) The one that didn't was used for -- I'm using your material, Neville; I apologize. (Laughter.) The one that didn't work was used for spare parts. He fixed it up, had two trucks and double the distribution of the company in a matter of months. So this record was so good that he went on to run bottling companies in Johannesburg, Australia, the Philippines, India, the Middle East, Eastern Europe, the old Soviet Union, Germany and Briton.

He tried to retire from Coke and moved to Barbados and live the easy life, but it just didn't work out. Coke called him back to Atlanta to be CEO and to shore up a situation that was really not good. I may be exaggerating, but from what I read it looks like there was a situation both chaotic and stagnant: alarming turnover at the top and a firm commitment on the part of some on the board to stay forever. Well, Neville Isdell waded right in and he located the problem right in the company among the people of the company. He said -- and I'll paraphrase -- that they had no coherent idea of who and what they were.

So he activated four of them, gathered 400 of his top people to put together something called "The Manifesto for Growth." And it's really a sparkling document. In it they -- it has a lot of heart, which is always a good thing in a business document, and they concluded that their purpose is to refresh the people of the world and to provide them with moments of optimism. Now, that's no small thing to do at all, not in this climate. And they also said that they intended, that they vowed to maintain a constructive discontent. So, in the winter of our discontent we find that Coca-Cola's figures are very ,very good. They are, in the final quarter of 2008, far more than respectable. The Financial Times headline is that Coca-Cola still has its fizz, even in the downturn. That's a very good thing.

Now, I want to tell you that Pete Weissman, who works for Neville, was very kind talking to me on the phone to prepare for this. The last thing he said was, you may be surprised by how tall he is -- (laughter) -- and, indeed, that is the case. So I am very -- he should have played basketball along with rugby, but I'm especially honored to introduce to you a towering citizen of the world -- (laughter) -- who is unusually thoughtful, as you will learn, who comes to us from Northern Ireland but out of Africa. He's the real thing: Neville Isdell.

(Applause.)

NEVILLE ISDELL: Thank you, Lee. I just wondered in part of that introduction whether or not you were introducing the bum on the corner. But anyway -- (laughter).

My thanks to Richard Haas, to Camille Massey and to Helen Belmont, and to everyone here at the Council on Foreign Relations. It's the first time that I have spoken here, and in fact this is my last major address that I will deliver as chairman of the Coca-Cola Company, and I chose to give it here and at this meeting of business leaders because I really believe that we have reached a critical turning point, not just for business but for society as a whole. The economic model of global capital and commerce is being rewritten even as I speak. And for those of you who were, you know, expecting a nice, quiet talk about Coca-Cola after a wonderful lunch, I'm actually going to disappoint you.

I've come here, in many respects, to sound a warning and to issue a challenge. The warning is that the free market system that has lifted incomes for the past half a century is now being revised. In this economic crisis, citizens and governments are reexamining how markets and businesses should function, and already we can see where much of that discussion is headed -- often down a narrow road of populism and protectionism toward policies that will hamper trade, will slow recovery and actually stall long-term growth. That's the warning.

The challenge, then, is for us as business leaders to rewire how our companies relate to society. And if we don't do that, we will discover that society has redesigned our businesses for us. So what's the solution? I believe that we need to redesign our businesses so they embody what I like to call connected capitalism, a new model of how businesses must engage with society across four platforms: communities, institutions, social challenges and values. Building these connections I believe is the best way to ensure sustainable and profitable growth in the 21st century.

Throughout history there have been many key turning points for businesses and for markets. One was the shift from the agrarian economy that was brought about by the industrial revolution. Another was the creation of a true global trading system. And another, of course, was the information revolution.

Today we're undergoing another shift, as shift was has many dimensions. There is the shift of rural populations to urban populations. The data is there are more people living in cities today than there are living in the countryside. This whole era of social media that create absolutely connections, and of course, it goes without saying, the global financial crisis. What is different today however is that the debate about how markets should change is being dominated not by positive advances like innovation, but largely by fear and also by justifiable anger. As one commentator put it recently -- it was last week I heard it -- people don't know who to blame but they know that business has a lot to do with it.

So in this period of uncertainty, people are trying to build more personal security into the economy through polices that make it more protective of individuals and of communities, and it's a very, very natural reaction. However, the solution that many are being told will help them will clearly have unintended consequences that hamper future growth. Let's not forget what was called the capitalist model of open markets, open trade and the flow of commerce has helped to grow the world and it has lifted people's living standards continuously right around the world. If we allow populism and protectionism to become the core of the new economic model, growth will stall. If critics actually succeed in creating what many have called -- and I quote -- "walled world," it's going to be a dark century, but particularly dark for the poorest people around the world.

But at the same time, we know that it cannot be business as usual. Simply put, we must change how we practice capitalism if we want the benefits of capitalism to continue. So then what should we do? Well, two things, and neither are going to be easy.

First, we must speak up. All these bad ideas have made the rounds, and most of us in business have not been speaking up about the dangers. That's true. We are in the middle of a terrible economic crisis and all of us -- all of us are putting out daily fires. It's also true that we've also been hurt by our very low level of public standing. The 2009 Edelman Trust Barometer finds that in 20 countries, 62 percent of respondents said that they trust business less today than they did a year ago. As you know, a year ago the numbers weren't very good either. Here in the U.S. trust in business is lower than it was after the collapse of Enron, which is the latest -- the most recent low point. So we must reestablish our own credibility, and it won't be easy, but fortunately the second thing that we must do -- redesign our business -- will help our credibility. So let me just turn to that.

The second step that we must take to preserve capitalism and to allow our businesses to grow sustainably is to rewire our companies so that they follow a new model of social engagement. Are we hearing the outlines of that new model, what Bill Gates has been saying about creating capitalism, what Klaus Schwab of the World Economic Forum has put in a paper about global corporate citizenship. I don't think any of us have figured it out yet, but in the spirit of finding a path forward, I want to share my view and then I'd like to hear your thoughts when we get into the Q&A.

In the last century, the model for business and business's role in society was defined very succinctly by Milton Friedman, who said that the only purpose of a business and the only social responsibility of a business was to enrich its shareholders, and from that the rest would flow. Philanthropy meant donating money to pet projects, and often pet projects which moved when the CEO changed because it was the pet project of the CEO. The relationship between big business in particular and its surrounding communities has often been more transactional and very silent.

That was the last century, and we know the world has changed. Global problems like climate change, energy, water have grown in their severity and their urgency, and expectations have changed as well. Actually, consumers do expect us to be part of that solution, and the way that consumers perceive brands -- and we have research to prove this -- has changed. Consumers now link the reputation of the company with the reputation of the brand, and I believe that trend will be accelerated. Of course, it's especially true for a company like the Coca-Cola Company, where the name on the building is the name on the bottle.

So, business must catch up to these changes and embrace a new model of connected capitalism. It's a way of building your business so it is fully engaged with society. It will require rewarding shareowners and being entirely legally compliant, just as we've done in the past -- or most of us have done in the past. But it requires business leaders to make four critical connections: Number one, connect your business to the communities that you serve. Number two, connect your business with civil society and governments to address relevant large-scale problems. And, very importantly, number three, connect your philanthropy, your sustainability agenda, with core of you business, not tangential but related to the core of your business. And, finally, connect your business with the values of your own employees.

Let me just build on each one of those. First, we much connect our businesses to the communities we serve because we need to be seen and we need to be a functioning part of the local communities where we operate. This means not just being a presence but also being a partner. Now, the Coca-Cola Company is an interesting model because while we're recognized as being quintessentially American, and Andy Warhol put all that very well, we're a franchise system. That means we are a local business in every community in which we operate in some 200 countries around the world. And I can tell you that if look at the places where our business is most successful, you actually find one common element, one common denominator: People actually feel Coca-Cola is theirs. It's part of their society; it's part of their community. They own it. It's part of their life.

And as I look at other industries I think the backlash that we're seeing against global business in general is driven by a sense that companies are not part of the local fabric. Globalization without localization creates alienation. I want to repeat that. Globalization without localization creates alienation. It breeds an us-versus-them outlook in which people defensively try to lock in what they have but in ways that reduce what everyone can have. So the way that we rewire our businesses is to connect it with the fabric of the local communities.

The second change that we must make is to connect businesses with civil society and governments to address global challenges. Issues like climate change and the availability of fresh water are so large and so complex that they require work that no one can do on their own -- not business, not government, and not civil society. It will take new partnerships amongst those three elements of our society. I call it the triangle -- the triangle of sustainability, and that allows us to create a multiplier effect, to create scale and also eventually speed.

Now, the relationship between business and NGOs has often been adversarial, but today -- we see it already -- far-sighted NGOs have realized that if they want to get a multiplier effect on their impact, they need to -- they must work with enlightened companies, and obviously the reverse is also true. The economic crisis is going to impact them as well, and it's interesting because what this is going to mean for them is going to separate somewhat the wheat from the chaff. It's separating the businesses that are really serious about a sustainability agenda from those that are merely, in environmental terms, green-washing, because those are the ones in today's world -- including, obviously -- there are exceptions where people have the survival at stake, but those are the ones that are not serious about working with NGOs and are not really serious about investing in the long term.

We have a multiplicity of linkages and partnerships with various organizations, obviously with the U.N. through the global compact, the WWF, CARE, and governments -- USAID, agencies of governments -- all around the world because that's how we scale and that's how we speed up. That's how we work against the global challenges. So therefore the second change is going out and building those new partnerships, building that level of trust between business, government and civil society.

The third is that we must connect our philanthropy and our corporate social responsibility investments right into the core of our business. I call it line of sight -- replacing philanthropy with line-of-sight community engagement, because it's no longer about just providing money. We must provide intellectual capital; we must provide people with expertise to address these issues. It is not just about money. And when your efforts are aligned with the core of your business and with your business strategy, they are sustainable and they get the full support of the shareowners, the board members, and even more importantly, of the employees themselves, they make your business more sustainable.

One example. The Coca-Cola Company -- it's just so obvious. The key ingredient of all our products is, guess what, water, so that's our number-one priority. And as we have our own goals with regard to reducing our handprint and our footprint with regard to water, we're also making clean water available to the communities that we serve through partnerships here with USAID, WWF, and with the Gates Foundation. So that line of sight is something that's fundamentally important for those efforts to be sustainable.

The fourth connect for business is that it must be about the value system that you're putting in place in your organization. It's internal. It's having a deeper resonance in terms of the values of your own employees because businesses don't have values; people have values. Businesses don't have ethics; people have ethics. And it's how we capture that and use that that is fundamentally important. And all of our employees, all of us -- I'm sure everyone in this room is involved in one way or the other in civil society. It may be a volunteer at one of your children's schools, in church or a community food bank.

Now, think about it. If they enter a workplace which is in a way is hermetically sealed, which is not involved in that way, you know what? They don't fully connect. They'll do as asked of them, but what you get is actually compliance and not engagement, and more importantly, commitment. But, however, when they enter a company -- and we've seen this in our engagement scores -- which seems to be improving society, employees bring their whole selves to work. It makes them better employees, it makes them better ambassadors, and by the way, it also makes it easier for us to attract top talent.

So these are the four connects business, in my view, must make: one, connect your business to the communities you serve; two, connect your business with civil society and governments to address large-scale problems -- and I emphasize relevant ones; connect your philanthropy, your sustainability agenda, with the core of your business; and, finally, connect your business with the values of your employees.

Who is going to win in this changing world? Well, this is the year of the 200th anniversary of the birth of Charles Darwin. It's the 150th anniversary of the publication on the origin of the species, to take a shortened title. I'm not a biologist but I did study social science, and I believe that in this era of change it is businesses that connect and adapt correctly with this broader social agenda that will survive and that will thrive. This is a turning point for capitalism, but the question therefore is, turning towards what -- the walled world where people turn inward, where trade barriers and tax policies make products more expensive and where global growth is stalled, or a more open and a connected world where enlightened, sustainable and connected capitalism delivers growth and improves lives. Each day decisions are being made that shape the answer to that question.

We each have a role to play by using our voices and by changing our course. Yes, it's hard work, particularly with everything else on our agenda, and, as you manage through a crisis it's very difficult to look at the long term, but when we come out of this crisis, know that the companies will be standing tall, and those that will be well-positioned to flourish, they will be those that are properly and fully engaged with society at large.

Thank you very much.

(Applause.)

CULLUM: Thank you very much, Neville Isdell. You talk about connective capitalism, and I wonder if we could talk a little more about this. On Monday the Financial Times is launching a series on the new capitalism, and the question is, what is its composition to be? Is it to be social capitalism, as is practiced in Germany, or statist capitalism as the French prefer, or Bill Gates's creative capitalism, which is dramatic corporate philanthropy, your connective capitalism, or a combination of all of them? Do you see them all working in some way together?

ISDELL: I lean much more towards what Bill Gates is saying because the French and the German model are really reiterations of the model that they have worked with over a period of time. I've lived in Germany, I have a home in France, so I know how the level of bureaucracy that is created within that is actually a hindrance, and part of what I'm talking about is, you know, allowing the creative flow and that energy flow to go through, and I think Bill Gates -- that's why I quoted him as being one of the thought leaders on this.

And, you know, where he is innovating is in a very specific area, but I think that's the model and I think that's what people are looking for. That's where we have to deliver value. But, you know, he's doing it of course outside of this business. You can't do it as a philanthropic foundation within your business, and I was very clear in saying that, you know, if we don't make a profit and we don't make a return to our shareholders, we won't exist. And certainly as CEOs and chairmen we won't exist either, and that's what happens.

But, you know, profits are one of the prerequisites, but how do you make the profit, and how do you enable that profit to be a sustainable profit over time? And that then comes back -- it's a self-reinforcing loop. It's a very positive reinforcing loop because we get back into people believing that we add value back into society. And right now they see us as rent-takers and, you know, we've been let down by what people have done, and somehow we have to break that negative view that is there. We know the data about the way that CEOs are perceived today. It's going to be an uphill struggle, but if you don't take it on, where are we going to end up?

CULLUM: Well, you're talking about connective capitalism and creative capitalism, and you're really counseling companies in the worst of times to spend money on the environment and spend money on social causes. Are you worried that you'll be considered unrealistic?

ISDELL: No. You see, if you take water, right -- I think it's pretty clear why we're involved with water, but if you look at what we do, we're looking in three areas. One is reduce, the other is recycle, and the other is replenish, okay? In the first two we actually save money. What we've discovered as we move -- it's not true in every single initiative, but as we move into these initiatives, we save money. One of the technologies that we've been working on developing -- and we opened up -- Muhtar Kent, my successor as CEO, opened it up just six weeks ago in Spartanburg, South Carolina -- the largest plant in the world for recycled bottles. So taking -- this is a whole closed-loop recycling whereby you take a bottle that's been used -- a PET bottle that's been used -- we collect it through using a recycle bank. It comes back in. It's broken down back into its essential polymers, clean, and we're able to put it back in to the market at a level of 30 percent of this material into a bottle. We still need virgin material. We'll get to 50 percent fairly easily, then we'll need another technological breakthrough.

But you think of that, you know, what's that doing? It's certainly reducing our need for petrochemicals, so it's got a very large climactic footprint. It is reducing waste because we're taking it out of the waste stream, so you've got reuse. It is providing jobs. Oh, you're question -- it's cheaper.

CULLUM: Even better. That's great.

Well, you accomplished an amazing renewal at Coca-Cola. It wasn't just the "Manifesto for Growth." You also bought the Glaceau Company, which makes Vitamin Water and moved Coke beyond the sparkling beverage business to some extent. And what else? How did you do it? What were the other elements?

ISDELL: Well, I have a fundamental belief that the people in the business know what's wrong with the business better than any consultants or outside experts you can bring in, and that if you engage them in the right way, they'll tell you what's wrong. You know, when you sit at the top of an organization you have these wonderful "aha" moments that you've discovered something that needs to change, and what happens lower down in the organization -- don't forget, I started at the bottom so I've come all the way through. Lower down in the organization, you know, they don't see it as being very clever. They actually say, what took you so long to discover that? (Laughter.)

So if you can cut that -- if you can actually cut that short by actually bringing those key people into a room -- which is basically what I did right at the beginning -- and say, what's wrong; let's just talk about it, and get it out there, and then saying very simply, okay, so it's our company; what are we going to do to fix it, you come up with a pretty decent strategy, and also you come up with people -- I'm talking about connection or engagement. People are engaged. You know, they wrote the strategy, so then you don't have to go out and stand at podiums and say, we have a new way forward and everyone says, well, why did they say that, why did they do this, why did they do the other? They wrote it, you know.

So that was at the core. It is about people at the very beginning. It's also about looking at the problems -- and, you know, you've got to do some tough things. I got support of the board to take $400 billion off the bottom line -- it tanked our stock -- to reinvest in innovation and marketing because we weren't doing that. So, you know, there are issues like that you have to do. And you've got to go out -- so we got our innovation pipeline starting to move, because innovation is a long process. You'll see these innovations coming out now in Muhtar's term because -- there's some out there. Coke Zero is one of them, but, you know, there are many more that are coming down the pike.

And then, as you think about broadening the portfolio -- because Coke Zero was also about bringing back belief to carbonated soft drinks, which actually it has done. It's the most successful product launch we've had in 25 years, and it's still in this what people think -- the dying carbonated soft drink world, which is not dying. But we need to broaden the portfolio with other opportunities. Then where you don't think you -- you know, you do a build-buy calculation, and that's why we bought Glaceau.

CULLUM: Now, is it true you drink six cans of Coke Zero a day? That's what the New York Times said. I see they're on the table before you. Nobody else got any.

ISDELL: Yeah, and I'm six-foot-five.

(Laughter.)

CULLUM: Well, you need six cans.

I just have one more question. Then we want to hear from everybody else. One thing you said in one of your speeches that struck me as important was -- or maybe it was the press who wrote this about you -- you promised change but only in small increments. There wasn't going to be some dramatic overhaul. You didn't get carried away with yourself. Would you say that was important?

ISDELL: Well, it wasn't a dramatic overhaul in terms of, you know, a massive prescription, but if you look at the strategy document when it came out, it addressed absolutely every element of the business of what we needed to do. So there was a fundamental look at everything that we do and how it's connected. And again it comes back to this whole connectivity thing. There is this -- you know, we're trained for problem solution, but if you address a problem in a narrow frame, you don't think of the other collateral damage that is there. So the way I put it was slightly different, that we needed to go slow to go fast later, and that was what we did.

So it wasn't just being incremental; it was actually pausing, really analyzing. I was criticized by various people about, you know, what on earth is happening? I don't see things happening. And then eventually as it rolls, out, then the speed comes and then of course it's all based on a very -- not very, but a much sounder foundation.

CULLUM: Well, it strikes me as very wise.

Are there questions? Yes, back there. Please tell us who you are and who you're with.

QUESTIONER: Yes, and thank you for your comments. It was very refreshing. Gary Miller from the Boeing Company. In this area of downturn there's a lot of blame being fixed but there's not many problems being fixed. So everyone is looking for who did it and why, and fixing the blame and not the problem. As you said, CEOs, because of a small few, do have a bad name. What is your opinion -- and obviously this is not attribution -- what is your opinion on the unions, not only within the U.S. but global unions, with your theme of capitalization, survival of the fittest, competition -- free and fair open competition?

ISDELL: Well, the press is here so this is for attribution.

CULLUM: It is on the record.

ISDELL: It is on the record. I mean, Lee said I've worked around the world. I worked in Germany. I worked in Germany with co-determination where you sat with union members around the table in terms of joint decision-making. It's not -- it wouldn't be my recommended system, but you can't say that it doesn't work. And the answer is that unions -- how were unions born? Because workers were exploited. There's no question about it. We all know that. So they were there to protect the workers.

The model that I'm talking about is one which should either create strong connectivity with unions or be a situation where the employees are so connected to the company that they don't need an intermediator. And, you know, that's why the unions came into being. So I don't think there is one prescription. I think it's very clear there are situations where unions are absolutely needed to protect the employees, but also of course, as happens, as institutions become old and entrenched, they also protect their own interests at the same time, and I think where that happens then that's up to us to challenge. But we would only, as businesses, be able to challenge that if we passed the sniff test of how we're connecting with our own employees.

Now, I know that's a very simplistic answer, but I honestly think that there is a role and that they can be used very positively, but I am not advocating mass unionization either. And, by the way, I'm talked to Jim yesterday. We discussed some of the issues that we're talking about. You've got a great leader there. You really have.

CULLUM: Laurie Garrett. Laurie is with the council. She's a great expert on public health. If you don't know her, you should. Laurie?

QUESTIONER: Thanks for the introduction.

(Laughter.)

CULLUM: Yeah.

QUESTIONER: Around the world, if you look at corporations that have stepped up to the plate on global health and general philanthropic efforts, it's a preponderance of manufacturers and distributors. What we don't see are what I call the money businesses. What does creative capitalism look like, or connected capitalism look like if you're in a bank, if you're in a hedge fund, if you're in the mortgage business? That's who's in this room.

ISDELL: Well, I was involved in some discussion of that yesterday at the Clinton initiative -- CGI. I think that if you look at -- we were talking about globally, we were talking about emerging markets as well. I think there have to be new funding mechanisms, and insurance is a part of that. One of the things we're talking about is poor farmers who don't like taking out loans because the very prospect of failure of one year's crop means they lose their land, so they would rather plant a third of the acreage than take out loans to do the -- to plant it all because of their fear.

So there you're going to have to have some level insurance or first-failure forgiveness or something of that nature. And that I think is where this linkage comes in of raw financial capitalism and also the philanthropic world and some philanthropic working whereby you're able to create models to intermediate somehow there, to allow these people to be able to create some level of leverage and be more productive. Now, you know, that's the emerging world. But I think, you know, you've got micro credit, but that's really, really at a very low level. It's the level above that where I think that new models in terms of financial capitalism can come about.

And I think if you grow out of that, you're then going to find, again, some other form of intermediation -- I'm not an expert in finance -- that allows some of this elevation to take place. I mean, we're in a terrible situation right now where good companies are going bankrupt and good ideas are being lost. And I understand -- you know, I was on a bank board for a while -- thankfully I'm not on one now -- but, you know, your job is to protect your balance sheet, and that's what's happening, but the freeze that we had is easing up a bit now -- September, October when, you know, the commercial paper market literally froze -- has been destructive, and we need to think of new ways that are able to provide -- insurance is part of it. We could all -- I don't want to answer any questions on AIG either -- but insurance is part of it.

I think we've got to explore those new models and also be able to work with entrepreneurs and also more particularly in emerging markets because that's where the growth is going to be. That's going to be the growth of financial services, going to be the growth for us, capital equipment. If we let this moment pass and we let some of -- I mean, that's the most -- those are the most vulnerable societies for going to populism because it's very easy to take people who don't have a high level of sophistication and promise them something if they'll follow you. We see some examples of that in the world today, and unless we're able to come to their assistance with the right financial models, that's going to jeopardize what I'm preaching.

CULLUM: Yes?

QUESTIONER: I'm Gregory Marish (ph) from the Relatin (ph) Group. So, being from the non-financial sector, I'd be interested in knowing your opinion on corporate compensation, executive compensation, which is very much in the news and also raises animal spirits, especially in third world countries. The other one is, given your social view on what business should be doing, do investors recognize this and give you a better multiple for your efforts, or are you actually being penalized on an evaluation basis, and therefore suffer as a CEO who has been pushing really good initiatives, as you expressed?

ISDELL: Corporate compensations pay for performance, and we have certainly, at the Coca-Cola Company -- and if you look at our 10-K, we've tried to structure it around performance. So there's base salary, there's bonus, but that's performance; it's all performance-based on the metric. You'll see that I got less bonus this year than I got last year.

QUESTIONER: : I'm not criticizing --

ISDELL: No, no, no, I'm just saying it's the way it should be, okay, because our performance -- our performance was pretty darn good for last year, but it wasn't right up -- it wasn't up to where we wanted it to be. The metrics were there; we didn't -- you know, we didn't meet them completely.

So I think -- but it has to be performance over time, and that's been the problem. That's where the short-termism has come in. I think that's been the issue. We need to design programs that reflect performance over time. For example, we judge our business unit of the year. We do it on a rolling two-year basis, so that takes out an awful lot of this year-end type stuff.

In terms of the view of the financial community, clearly I've got board backing. That's not a problem, but why -- because of the connectivity to the business. If I was -- our philanthropic area was something to do with vaccines, you wouldn't get any support whatsoever. I'm taking a ridiculous example, but that's the connectivity.

And we certainly have not been penalized by investors. I mean, I get the questions, but that everything we do about water I can justify. I can stand up and I can go into detail and I can justify what we do. And I think we're getting into an era -- I mean, there are funds that are buying us now that didn't buy us before, because we didn't tick the boxes -- meet some of those criteria. And I think we're going to see more and more of that. I don't like the "tick the box" thing. I think you've got to be a little bit more holistic about it, but that's another issue.

But I think we are being rewarded -- it's not a major way, but by certain funds and more and more that is going to be the case. So we need to positions ourselves for that in the future anyway.

CULLUM: Here and then Pete Peterson.

QUESTIONER: Betty Marsham (sp).

Obesity is a big, big problem and especially with the juvenile community and a lot of that leading to juvenile diabetics. Some of the school districts are attributing a lot of this to over consumption of things like Coca-Cola, Pepsi and other sweets and the school boards are trying to take the vending machines out of the school cafeterias.

Now, how are you working with communities to make people aware of this and to sort of increase moderation?

ISDELL: Well, I mean, two years ago -- together with the American Heart Association -- we withdrew all of our beverages that were containing any sugar whatsoever -- actually, vending machines from anything below -- the definitions all escape me -- but really up to 10-year-olds -- for 11-year-olds, actually. And then we had a different prescription. We agreed through to high school. And at high school, we left in -- the only carbonated soft drinks that are left in are actually the diet drinks.

So we've crossed that bridge with regard to schools. You know, I talked about handprint and footprint and blueprint. So that's what we're really doing with regard to handprint.

You know, obesity is multi-factorial, but we believe -- certainly with us -- that we have the answers. First of all, Club Zero is one of the answers. We can provide you with the Coca-Cola taste with no calories and that's why that's been allowed into high schools. And the Clinton Foundation endorsed that as well, in terms of their initiative, at the same time.

Now, people will then say, "Aw, yes, but you use artificial sweeteners." And I can go into defensive mode and I can say, well, all of the research -- not all of the research, but all the valid research -- shows there's no issue. Well, we've just announced recently that we're launching a number of products with a natural non-nutrient sweetener. So we're using R&D to come up with natural ways to be able to offer low-calorie offerings. We've just launched now our Vitamin Water with the 10-calorie version as well. So we're very aware of that as an issue. And that's why we've also broadened our overall portfolio.

But when I go to multi-factorial, then in terms of where are we with regard to the health component of our philanthropy, we are involved in fitness programs, because in fact, there's various data, but largely, the calorie intact -- it depends what they've taken -- of children today is not much higher than it was 15 years ago. What's happened is they're not exercising. They're sitting in front of computers; they're sitting in front of TVs and an awful lot of the school programs have been taken out with regard to sport. And that's another issue. So we're engaged in that area as well, but not just to say it's someone else's fault. It's multi-factorial. We need to address that; we are addressing our side of the equation at the same time.

CULLUM: Pete Peterson.

QUESTIONER: In your concept of connecting capitalism, you spoke of the need for CEOs to speak up, to get involved. And yet, columnists like Tom Friedman -- justifiably, I believe -- call us MIAs -- missing in action.

So I have a three-part question: Do you agree that the CEOs of today are less likely and less involved in terms of speaking out on major issues? If so, why do you think that's the case? And third, what do you think needs to be done to get them more involved?

ISDELL: Well, I think that you can't contest that right now they are not speaking out, because -- and I think the reason is very simple. The reason is that everyone's got their head down below the parapet trying to look at rejuvenating their companies internally and beating the crisis.

The problem is -- it's always this way -- that the time when you need to speak out is the time when you're least able to speak out, and I think that's the major problem. That's why I'm making the call. We just have to do both. It's absolutely necessary.

You also, the first of your question was "historically". I'm actually not -- you're a better judge of that than I am, Pete, because you bridge that history. I was way down in the bowels not actually noticing the degree to which CEOs were speaking out. I'm not sure it's very different, although the level of business leadership overall was probably -- an engagement with politics was probably higher, I would imagine, 20-30 years ago, but I'm not a good judge of that.

And the third part was?

QUESTIONER: (Off mike.)

ISDELL: What do you do about it? Well, I guess I'm trying to do something about it today.

We have to take it on and the more that those of us who are engaged, I mean, a Jeff Immelt -- someone like that -- raises their voices. Even as he has got many, many problems at this point, Jeff is still someone who engages in a major way. Speak out -- the more we're going to be able to attack it. But obviously, we do it within our own grouping -- the business roundtable and the like -- in terms of power of persuasion to make them do it.

Because it isn't just "we need to speak out", it's making the case as to why we need to speak out. And that's what I tried to pull together here today, is that there's a very, very important long-term strategic need for us to do it, otherwise the moment's going to be taken away. And everyone is talking about it -- it's a shame to miss a crisis. Well, everyone's trying to grab the crisis and I'm not sure we're trying to grab it as much as we should be. That's what I'm saying.

CULLUM: Finally, do you have any advice you might offer us from your long and eventful career?

ISDELL: Oh, enjoy every minute of it! No, I mean, I'm actually serious about that, because young people ask me the question all the time. And I sort of surprise them. I say, look, I'll tell you what: If you're not enjoying what you're doing today -- we all have bad days; leaving that aside -- you're never going to get anywhere in your career. And you know what? It's going to effect your life.

I just happen to be lucky. As I say, it hasn't been happy every day, that's the way it is. But I find that those that do well love what they do. If they love what they do, they have a much, much better life and they can go into retirement an awful lot happier. And that's what I'm going to try and do now.

CULLUM: Well, I think we're so happy you could be here and that Pamela Isdell could be here. You're actually on your way to Jordan to have a good time at Petra.

ISDELL: Yep, we are indeed.

CULLUM: And thank you very much.

ISDELL: You're all that stands between me and my wife going on vacation! (Laughter.)

CULLUM: I know! That's why we're wrapping it up! (Laughter.) That's why we're cutting it off.

Richard will say a few brief words so that you can be on your way. Thank you! (Applause.)

RICHARD N. HAASS: Standing between a man and his wife about to go on vacation, about to retire, is probably only between standing between this crowd and a bar -- (laughter) -- not an enviable place to be.

One of the great things about this job -- there's many great things about it -- but in the course of the year you get incredible talent that comes through here. And there may be, as Pete pointed out, a shortage of corporate statesmen, but we've been lucky. This conference we began with Bob Rifeld (sp); we end with Neville Isdell. It doesn't get much better than that! We had Sam Palmisano not long ago; Jim Owens is a member of our board.

There is extraordinary talent in that group of people and it always reinforces my sense that the two biggest drivers in the world -- the two things that essentially make history -- are ideas and people. And I think we just had today over lunch was how someone who didn't simply go through a career and simply, if you will, experience history, but also someone who both shaped it and learned from it. So it's been a real treat.

So thank you very much, Neville.

ISDELL: Thank you. (Applause.)

HAASS: Let me say one or two things to rest of you. First of all, thank you. You've all got extraordinarily busy schedules, yesterday and today, but also more generally, so thank you for taking time out and coming here. We hope that as you go home, you are changed and changed for the better because of it.

For our part, let me just sort of reiterate our commitment that here at the Council on Foreign Relations we are committed to making the corporate program one of the centerpieces of what it is we do, why we're here; to offer our corporate members first-rate programming as often as we can and to try to reflect in that programming things that are of real interest and real importance to you.

We want to make sure, quite honestly, that your investment in us is seen by you as a wise investment. We look forward to your staying involved. And here I'd only disagree with Neville to some extent: I want us to be your pet project! (Laughter.) And the reason I think we have a chance of being that is in a global world, an organization such as this -- which deals day in/day out with questions of globalization, with questions of international relations, with questions of American foreign policy -- I'd like to think is very close to your core, because increasingly, to be a successful business you've got to be a successful business on a global scale. So again, I think there is a close-knit connection between what it is many of you do and what it is we tend to do day in/day out.

So this is -- the corporate conference is the highlight of our corporate career -- or corporate program during the year. It's not the only thing, obviously. We do dozens and dozens -- indeed, more than 100 events in the corporate program every year here as well as in Washington -- dozens and dozens of conference calls. And that's what they used to say about voting in Chicago -- we hope you take advantage of it early and often.

We've got lots of particular emphasis on this, given what's going on. As Bob Dillon once said, "You don't need to be a weatherman to know which way the wind is blowing." Well, you don't need to be an economist to know that you've got to focus a great deal these days on economics, but narrowly.

And one of the things we're trying to do -- you saw a little bit maybe this morning when Madeleine Albright was talking -- is look at the relationship between what's going on in the economic world and what's going on in the larger world -- both directions. What's going on economically will have consequences for what happens strategically within and between and among countries and vice versa -- what goes on within, between and among countries will have consequences for what goes on economically.

Academic departments may be stovepiped, the world is not. And what we will try to do is take as often as we can an integrated look at the economic and political worlds. We'll try to do it in our meetings, we'll try to do it in our publications, on our conference calls, on our website, in Foreign Affairs and so forth.

Conferences like this don't just happen. Spontaneous combustion is not really the name of the game. It takes people and ideas, so let me just for a minute thank and recognize a couple of people who brought a lot of ideas, but also a lot of calories to making this happen, beginning with our vice president, Camille Massey, who heads up our corporate program. Camille, take a bow. (Applause.)

And let me just recognize the people around Camille who make her look as -- or help her look, rather -- as good as she looks: We have Nancy R. Mosbach (sp); we've got Amy Carter -- where's Amy? (Applause.) We've also got Helen Belmont, Caroline Martinez and Madeleine Gray. (Applause.)

Let me just -- Amy anchors our Washington program. Let me say one special word about Nancy. This is really her last event with us after what -- more than a decade here? We wish her and Yale University well, but we want to thank you and we will miss you for all you've done. (Applause.)

Lastly, as good as we are, we are prepared to recognize the possibility that we are not perfect. In that spirit, we will provide surveys for all of you -- your ideas about what we can do to make next year's conference even better than this one. And more broadly, to make this relationship with the Council on Foreign Relations as useful and as interesting as it can be for you and for your colleagues at your businesses.

So again, let me thank also Lee Cullum, who shows you what a fantastic difference a fantastic presider can make. Let me thank Neville again.

And by the way, with your retirement, one of the things I really do hope you will do -- if you haven't done it -- is sit down and write a book. You have got so much to say and you say it so well. You could make a real contribution to the literature. So I hope you will think of using some of those hours to do that, because people -- beyond those who are lucky enough to be here today in this room -- I think would benefit a great deal.

I apologize for saying that and taking him away from you -- (laughter) -- but sometimes, as I was once told, you married him for better or worse, but not for lunch. And one day, you may thank me for that recommendation.

Again, this is the end of this year's corporate conference. For us it's been a real treat to have so many of you here so much of the time. And again, we look forward to seeing you back here at the Harold Pratt House in New York, at our new digs in Washington on F Street between 17th and 18th. We look forward to seeing you there soon and often.

So thank you very much. (Applause.)

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