Coca-Cola with a market share of 43.1% in 2004 is the soft drink industry leader in the world. Each day the company sells over 25 million plastic soda bottles (coded #1 PET, or polyethylene terephthalate) in the U.S. Every year, 10 billion plastic Coke bottles containing over 800 million pounds of virgin plastic are discarded, according to the Grass Roots Recycling Network. While certain industries incorporate used soda bottle plastic into a host of products, nearly 70 percent of all used soda bottles become waste or litter - in large part because Coke and other beverage companies refuse to "close the loop" by taking them back and using them again.

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

In 2006, As You Sow has filed shareholder proposals 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.

As a result of the resolution and our dialogues, Coca-Cola pledged to increase recycled content in plastic beverage containers in its North America operations from zero to 10% by the end of 2005. We congratulate the company on the progress it has made on increasing recycled content. We are pleased by this progress but believe still higher levels are achievable.

The company has made less progress on the issue of container recovery. A multi-stakeholder effort between activists and Coke to agree on the economics of beverage container recycling collapsed in 2002. A more recent effort to address container recovery is the Beverage Packaging Environmental Council (BPEC), a private colloquy of alcoholic and non-alcoholic beverage companies to address recycling falling container recycling rates. Members include Coke, Pepsi, Nestle North America, Anheuser-Busch, Miller Brewing, Coors Brewing, and Heineken North America. BPEC has held two years of closed-door meetings, with Kate Krebs, executive director of the National Recycling Coalition, acting as facilitator. Kate told members of the recycling community this secrecy was necessary to build trust among competitors who had not previously worked together to address recycling. After two years of private talks the council issued consultants' data on consumption patterns but there has been no public evidence that the companies are seriously considering container recovery goals or measures.

PepsiCo.

The Number Two soft drink maker has done less than Coke on recycled content and container recovery matters. The company has balked at serious discussions with shareholder proponents. Our dialogue partners Walden Asset Management are leading an initiative at Pepsi similar to the one we jointly lead at Coke.

While we continue to talk with the beverage industry leaders, we have initiated a survey of a broader swatch of beverage makers to determine if other companies are taking proactive steps on recycled content and container recovery.