Annual Report and Accounts 2006
People capabilities
Learning and development
Our People Strategy sets out our commitment to ensuring all employees realise their full potential. During 2006, we have continued with the roll-out of the Building Commercial Capabilities programme, with 2,000 managers having now participated. The aim of the programme is to improve commercial decision-making and marketing and sales expertise by defining a common Cadbury Schweppes way of marketing and selling. We also began to roll-out our bespoke Cadbury Schweppes people management training programme: Passion for People. Passion for People is designed to equip people managers with the essence of what makes our business a great place to work and the skills to lead their teams to great performance.
Employee communication and involvement
Employee communication and engagement continued to grow in 2006, with all areas of the business introducing enhanced communication structures and programmes. Through our subsidiaries, we have successfully entered into numerous collective bargaining agreements. Our management has no reason to believe that it would not be able to renegotiate any such agreements on satisfactory terms.
Employee share ownership
Share ownership among all our employees is actively encouraged. Employees in Australia, Canada, France, Germany, Ireland, Mexico, Netherlands, New Zealand, Portugal, Spain, UK and US have access to all-employee share plan arrangements which involve participation on favourable terms. Overall, around 40% of all eligible employees choose to participate, and invitations to participate are generally communicated each year.
Details of stock option plans available to employees are provided in Note 26 to the financial statements. During 2006 we replaced our discretionary stock option plans with awards of performance shares. Discretionary stock options plans will only be used in exceptional circumstances.
Equal employment opportunities - Diversity and inclusiveness
Diversity and inclusiveness is one of our top ten priorities. To ensure progress, our agenda is driven by a global diversity and inclusiveness team, led by a member of the Chief Executive's Committee.
In Cadbury Schweppes, diversity means difference and variety. It describes the distinct and original qualities that each individual brings to the organisation. Inclusiveness is about a welcoming workplace climate in which all colleagues feel empowered to bring a rich variety of approaches to achieve our business goals.
We believe that through diversity we will access the best people to increase the quality of our talent pool, and through inclusiveness we will inspire the best in our people to deliver superior business performance. Our objective is to employ and grow the most talented people of diverse backgrounds, races, thinking styles, genders and perspectives. In this way, all levels of our organisation will reflect the diversity of our communities and we will remain relevant to our diverse customer and consumer base.
Diversity is also central to our human rights and employment standards sustainability goal for 2010, which aims to nurture our company as "the place to be", where diverse colleagues are proud to work and are committed and engaged. As part of this goal, we have expressed our commitment to attain 25% female representation in executive management by 2010. This specific gender commitment will serve as a common global indicator of our overall progress towards a more diverse and inclusive workplace at every site. By fostering an inclusive workplace culture, all our colleagues play an important role in achieving our goal.
Our objective and goal are supported by our Group-wide policy on equal employment opportunities (EEO), diversity and inclusiveness and our performance is measured through our annual EEO, diversity and inclusiveness report.
People with disabilities
We employ people with disabilities, though not all are formally registered as disabled in UK terms. If an employee becomes disabled, we aim wherever possible to offer an alternative job, with retraining if necessary. Training, career development and promotion opportunities for people with disabilities are consistent with our Group-wide policy on equal employment opportunities, diversity and inclusiveness.
Health and wellbeing
We provide a number of health and wellbeing programmes for employees at business unit level, ranging from employee nutrition and health education through to whole-family health management schemes. We have in place global HIV/Aids guidelines. The programmes include the provision of nutrition-focused on-site cafeterias; hygiene and health management education; subsidised activity facilities, on or off-site; organised sporting and social activities; and a range of courses and counselling on matters such as work-life management, relaxation and stress management, managing weight change and reducing smoking or drinking. A large number of business units have medical facilities for basic health and safety requirements. In addition, many offer employees medicals of one kind or another to give an indication of fitness to work.
Pensions
The Group seeks to offer retirement benefits to employees in line with local competitive market practice, as well as being consistent with guiding principles established by the Group's Global Pensions & Benefits Committee (GP&BC), previously known as the International Employee Benefits Action Group (IEBAG).
GPamp;&BC consists of senior representatives from Finance, Treasury, Risk Management and HR (including one main board member, the Chief Human Resources Officer), and was established to review and oversee governance across the Group's UK and overseas retirement and related benefit arrangements and provide a structure to approve and facilitate changes to such arrangements in the areas of governance, plan design, financing, and accounting, with a particular focus on risk management.
During 2006, GP&BC has been involved in the Group's benefits redesign arising from UK Pensions Simplification and the implications of the UK Age Discrimination regulations. In addition, GP&BC has considered changes impacting its retirement and related benefit arrangements outside the UK, in particular in countries affected by the integration of the Adams businesses. Such arrangements are a mixture of defined benefit and defined contribution plans.
Details on Group pension arrangements are provided in Note 25 to the financial statements.
Corporate and social responsibility (CSR)
We explicitly include CSR in one of our business goals: "nurture the trust of our colleagues and communities". We believe this is an important foundation for the creation of a long-term sustainable business that will grow and thrive.
In 2006, we undertook a review of our CSR strategy and created a new set of goals and commitments from 2006 to 2010 specifically for CSR, outlined in the table below. In 2006 we launched our third biennial CSR report which provides a progress update on our CSR performance, and outlines these goals and commitments. Cadbury Schweppes' CSR Report 2006 is accessible via the Group's website, www.cadburyschweppes.com. Cadbury Schweppes is a signatory to the UN Global Compact and endorses its principles.
| Five pillars of CSR | Goal | Commitments. By 2010, we will… |
|---|---|---|
| Marketing, Food and Consumer Trends | Contribute to consumer diet, health and lifestyle solutions |
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| Ethical Sourcing | Maintain ethical sourcing standards, and develop sustainable agriculture programmes |
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| Environment, Health and Safety | Minimise the environmental impacts of our business, and embed a zero accident culture |
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| Human Rights and Employment Standards | Nurture our Company as “The Place to Be”, where diverse colleagues are proud to work, and are committed and engaged |
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| Community Investment | Help create prosperous, educated, inclusive and healthy communities |
|
Our CSR strategy and policy is directed and assessed by a Board CSR Committee, established in 2001. From 2001 to 2006 this committee was chaired by non-executive Director Baroness Wilcox. From 2007, the committee will be chaired by non-executive director Lord Chris Patten. The terms of reference for the Board CSR Committee are available to view on the investor centre page of the Group's website, www.cadburyschweppes.com. Alternatively, they are available in hard copy format from the Group Secretary.
The CSR Committee oversees an agenda covering five activity areas:
- Marketing, Food and Consumer Trends;
- Ethical Sourcing and Procurement;
- Environment, Health and Safety;
- Human Rights and Employment Standards; and
- Community Investment.
Our CSR activities involve an active engagement programme with stakeholders to both inform policy and resource allocation, and to assess the effectiveness and appropriateness of activities undertaken. We undertook independent CSR auditing (external assurance) in 2006 of the following CSR areas: environment, health and safety; ethical sourcing; community investment, our CSR Report 2006 compilation process, and internal signed commitment to the Business Principles. This is described in our CSR Report 2006. In 2007 and beyond, we will broaden our scope to cover other areas.
Marketing, Food, Consumer Trends
Within the overall context of our business as a manufacturer of confectionery and beverages, we aim to contribute to consumer diet, health and lifestyle solutions. We are innovating and evolving our product portfolio to meet changing consumer needs and provide more choice. Responsible consumption of our products is important to us and to the long-term success of our brands. We are including improved nutritional information on products and messages to reinforce the role of treats encourage responsible consumption and help consumers achieve a balanced lifestyle. We have already begun to introduce alternative products with lower fat, sugar, and salt options, as well as organic, nutrient-enriched, functional, and natural ingredients.
We have a global Food Insights and Action Group, led by Todd Stitzer, Chief Executive Officer, that reviews and establishes our strategy in this area. Our regional Food Strategy into Action Groups help translate strategy into action. We engage with a broad range of stakeholders and work hard to understand their views and expectations of us so that our decisions are based on knowledge and sound science. Our 12 Point Action Plan and global Marketing Code of Practice support our strategy - these and more information about what we are doing in this area can be accessed via our CSR Report 2006 and corporate website, www.cadburyschweppes.com.
We will continue to listen to what our consumers and stakeholders tell us while we remain true to our sustaining core purpose - to create brands that people love and trust.
Environment, Health and Safety (EHS)
We recognise our responsibility to help preserve the future of our planet while continuing to create sustainable value for the business. We will do this by minimising environmental impacts and being cost effective. We are determined to reduce the carbon intensity of our global operations and use energy more efficiently as a key part of our commitment to sustainable growth and to help combat climate change.
We have in place an integrated EHS policy and standards. The standards are based on both ISO 14001 and OHSAS 18001. Our EHS policy and standards deal with environmental issues related to the manufacturing of our products, energy, water, packaging, protecting bio-diversity and the eco-systems from which we source raw materials, the management of our supply chain and the distribution, sale and consumption of our products.
All of our manufacturing sites are audited on a rolling programme by the Group EHS Assurance Department and areas for improvement are identified. Some sites are also externally audited and certified to one or more of the internationally recognised standards, such as ISO 14001 or OHSAS 18001.
Our EHS performance is described in our CSR Report 2006.
Protecting the health and safety of employees is fundamental to Our Business Principles. In 2006, we established a Quality Environment Health & Safety Group, chaired by our President of Global Supply Chain. This group consists of board level representation and senior leadership from different functions to drive forward our agenda in this area. The remit of this committee includes quality and food safety. We are implementing additional programmes to strengthen performance.
Human Rights and Employment Standards, and Ethical Sourcing and Procurement
Ethical trading and respect for human rights are deeply held values at Cadbury Schweppes. Our Human Rights and Ethical Trading (HRET) policy has been developed taking into account international standards - such as the International Labour Organisation conventions, the UN Declaration of Human Rights, and OECD guidelines - as well as cultural and industry best practice from our local markets. Adopted by the Main Board in 2000, it covers core labour rights and dignity at work; health and safety in the workplace; fair remuneration; diversity and respect for differences and opportunity for development.
The HRET policy is there to guide all Cadbury Schweppes' business units, as well as our suppliers and the business strategy in this area. The review of the effectiveness of policy is led by a group of senior managers who regularly assess progress.
Ethical sourcing and sustainability are two key elements of how we manage our Global Supply Chain. Ethical Sourcing Standards for the Group were put in place in 2002. These standards continue to be underpinned with a system for supplier assessment, training for employees and a programme of engagement with our suppliers. Our aim is to make sure our products are sourced and produced in a sustainable manner.
In 2006, we continued to play a leading role in the multistakeholder alliance of the International Cocoa Initiative. We play a significant role with others in our sector to promote responsible labour practices and to stimulate more prosperous and sustainable cocoa farming, working with farmers. Having achieved a target for developing certification in 2005, the next milestone is to introduce the certification process in at least 50% of cocoa farmers in West Africa by July 2008. There is strong support from Governments in Ghana and Ivory Coast although progress in the latter continues to be challenged by civil and military unrest. With 1.5 million smallholder farmers in West Africa, only a fraction of whom are engaged in "FairTrade" infrastructure, we believe we can make a greater impact in ethical trade by working broadly on the root causes of poverty in these areas through education and technological development. Farmer field schools have helped over 25,000 farmer families, both increasing awareness of acceptable labour practices and generating increases in farmer family incomes.
Sustainable agriculture is an important opportunity for us, as well as for the farming communities we work with. We have partnered with the Earthwatch organisation since 2005 in an innovative programme in Ghana with Cadbury Schweppes' colleagues working with local scientists and farmers on sustainable cocoa growing and biodiversity within cocoa farming.
We continue to be an active member of the Roundtable for Sustainable Palm Oil, and are now part of the newly formed Responsible Sugar Cane Initiative.
At Cadbury Schweppes, we aim to build a business where employees are committed and engaged. We also want to reflect the diversity and inclusiveness in our workforce and in our leadership teams. Our global employee climate survey helps the business assess the commitment and engagement to the business of its employees, including opportunities to embrace CSR in their everyday work. Cadbury Schweppes introduced an equal opportunity and diversity policy in 1993. In 2006, we set up a Diversity & Inclusiveness Leadership Team chaired by our Chief Science and Technology Officer and made up of members from across the business including two Regional Presidents.
Community investment
We aim to help create prosperous, educated, sustainable and healthy communities in the countries and cultures in which we operate. Our Growing Community Value Around the World strategy guides our businesses in how they can contribute to and assist local communities. With a focus on education and enterprise, health and welfare and the environment, we develop targeted programmes for local communities, often involving commercial sponsorship, significant employee engagement through direct involvement, and help with facilities, as well as direct financial support. In 2006, the value of Cadbury Schweppes' contribution to non-profit causes totalled £9.6 million, 1.3% of our pre-tax profit, paid in respect of the following charitable purposes: education and enterprise, environment and health and welfare.
We are committed to strengthening and developing partnerships across our business to help address, where we can, global social, economic and environmental concerns linked to the UN Millennium Development Goals. For more information, see our CSR Report 2006 which is available on our corporate website, www.cadburyschweppes.com.
External ratings
Our CSR performance is rated by various external organisations' indices and this helps us assess how we are progressing. Indices include: Dow Jones Sustainability World Index, FTSE4Good, The Carbon Disclosure Project, Climate Leadership Index, and the UK's Business in the Community Corporate Responsibility Index.