Current Initiatives

National recycling rates for aluminum, glass and plastic hover at between 30% and 40% and have been dropping in recent years. States with container deposit legislation have much higher recycling rates averaging 78% (Michigan boasts an impressive 95% rate).

Industry beverage leaders like Coca-Cola and Pepsi must take more responsibility for the solid waste caused by discarded beverage containers, and move to increase the level of recycled content in their plastic bottles. For many years, Coke, Pepsi and the National Soft Drink Association have fought container deposit ("bottle bill") legislation that could lead to an increase in recycling levels.

We are working with other shareholders to encourage Coke and Pepsi to set minimum recycled content goals for plastic beverage containers, and to set goals for container recovery to reverse the recent slide in recycling rates.

Coca-Cola Co.

Recent Activity

On behalf of the Educational Foundation of America, we have been in dialogue with the company since 1999 to increase levels of recycled content in plastic bottles and container recovery rates.

In late 2000, we became concerned with the lack of progress by the company and filed a resolution with our dialogue partner Walden Asset Management asking the company to use 25% recycled content in plastic bottles and to set an 80% container recovery goal by 2005. At the April 2001 annual meeting, the resolution received the support of received 5.2% of shares voted (88 million shares).

As a result of the resolution and our dialogues, Coca-Cola introduced 2.5% recycled content into three-quarters of its plastic beverage containers. Subsequently, the company pledged to increase recycled content in plastic containers from 2.5% to 10% by 2005.

We congratulate the company on the progress it has made on recycled content and its commitment to achieve a 10% recycled content level in North American plastic beverage containers by 2005. We are pleased by this progress but believe a 25% level is achievable and will continue to urge the company to set recycled content goals closer to our 25% goal.

Multi-Stakeholder Study

The company has made less progress on the issue of container recovery. In early 2001, a multi-stakeholder group called Businesses and Environmentalists Allied for Recycling (BEAR) convinced Coca-Cola Co. to participate in a study called Multi-Stakeholder Recovery Project (MSRP).

The study grew out of a desire by all parties to advance the issue of container recovery. BEAR is a unique alliance of businesses, recyclers and environmentalists working to maximize the recycling of beverage containers. BEAR's goal is to double the national recycling rate of beverage containers to 80 percent.

We have also praised the company for its willingness to be a full participant in the MSRP. Its initial willingness to openly engage these stakeholders was admirable and set its apart from and ahead of its competitors.

In January 2002, the MSRP group released a new analysis of the economics of beverage container recycling system that concluded that deposit systems result in the highest level of recovery but also have the highest gross costs. California's container redemption law has a redemption rate of 54% and among the lowest costs identified, according to the report. The data seem to suggest that deposit systems are much more cost effective than Coke and other bottle bill opponents have suggested. Click here for a link to the full text of the report.

Coke Backs Out

Coke was committed to participating in a second phase of the project that would involve setting container recovery goals but backed out of the project in February 2002. We have conveyed our strong disappointment to the company over its decision to back out of the process. As a result of this action, we intend to proceed with a shareholder resolution on the 2002 proxy asking the company to study the feasibility of achieving an 80% container recovery rate and 25% recycled content.

For more information on the 2002 resolution and arguments in its favor, go to www.adrzx.com.

PepsiCo.

The Number Two soft drink maker has done far less than Coke on recycled content and container recovery matters. The company has balked at serious discussions with shareholder proponents. Our partners Walden Asset Management are leading an initiative at Pepsi similar to the one we jointly lead at Coke. The company has not been proactive in the same manner than Coke has in actively addressing the issue.

Walden filed a resolution with Pepsi similar to the one filed with Coke, asking that it adopt a goal to recycle at least 80 percent of its beverage containers, and to use at least 25 percent recycled content in beverage containers, by 2005. "Two out of every three plastic PepsiCo containers are not recycled and this trend has worsened in recent years," said Kenneth Scott of Walden Asset Management, the lead proponent of the resolution. "PepsiCo has a responsibility to assure that its products and operations are environmentally sustainable. This resolution suggests a benchmark by which employees, consumers and investors can measure the company's environmental progress," said Scott.

On May 1, 2001, 8.1% of those voting (representing 83.3 million shares worth $3.7 billion voted to support Walden's resolution.

Recent Developments

On Feb. 21, 2002, Pepsi moved away from its longstanding refusal to use any recycled content in its plastic containers to commit to a "goal" of 10% recycled plastic by 2005. The commitment is far less impressive than Coke's--only U.S. sales are affected, not Canada or Puerto Rico; only Pepsi bottles are affected, not other Pepsico beverages) but it's a start.

Walden has filed a resolution at Pepsi for 2002, asking the company to study the feasibility of achieving an 80% container recovery rate and 25% recycled content.

For more information on the 2002 resolution and arguments in its favor, go to www.adrzx.com.