Living Sustainability: Guillermo Garza Martínez, Arca Continental
The food and beverage sector operates under a relentless spotlight. How does a multinational player design and embed a robust - and authentic - sustainability strategy? Amrop unpacks the leadership and talent implications with Guillermo Garza Martínez, Chief Public Affairs, Communications and Sustainability Officer of Arca Continental. When it comes to shared value creation, he has a clear message: “If you’re not helping solve the root causes in the community or in society, your work is not complete.”
Arca Continental produces, distributes and markets beverages under The Coca-Cola Company brand, as well as snacks under the Bokados brand in Mexico, Inalecsa in Ecuador and Wise and Deep River in the United States. It has over 66,000 employees and serves 128 million consumers across its operating markets. The company operates a sustainable business model. Its mission is to generate more shared value for its stakeholders, and its vision specifies that it should do so profitably and sustainably.
The tool is not the toolbox
Mr. Garza has a multinational mandate covering sustainability, public affairs and communications. “I report to the CEO, and we have specific teams reporting directly to me in each of Arca Continental’s five countries.” The sustainability teams also report functionally to their respective country leaders. Why the extra reporting line? It’s a question of operating freedom, he explains. Dual reporting liberates teams from corporate oversight and local compromise. “Maybe it is not the right formula for some, but for us it is very effective.”
Mr. Garza’s background is as eclectic as his role. “It’s part of my therapy to say out loud that I was a journalist for many years. I also have my bachelor’s degree in communications and my master’s in science, with the emphasis on policy and communications. I also have certifications in corporate relations, sustainability and risk management. But I think in this community, you have to complement yourself with very specific on-the-field knowledge that comes more from experience than from an academic background.”
ESG is often used as a shortcut for sustainability. What definitions guide Arca Continental today? Mr. Garza views ESG as a useful tool to quantify achievements that would be otherwise difficult to demonstrate. “For us sustainability is a broader concept — the capacity of the organization to succeed in the long run. So it is not about meeting a specific metric, but to have a sustainable business model for the viability of the company. This is how the whole company thinks about its way of doing things.” In short, sustainability is “a comprehensive, holistic way of doing business.”
A tour of Arca Continental’s 2022 Integrated Annual Report presents a large array of interconnected (and quantified) sustainability actions. How would Mr. Garza summarize the strategy? “It’s not easy. You always have the temptation to focus on the short term and specific metrics (mainly environmental).” But Arca Continental is resisting superficiality. “We want this to be a very strong pillar that goes from the board of directors, with a specific committee that oversees progress, to all business areas.”
So, sustainability is a way of acting, embedded in every department and process. “We don’t want a specific area to say: ‘this is my profile or mandate, and I do a few things on sustainability’. No. What we want is for specific areas to say: ‘the way I do business takes into account all the concepts of sustainability — what I’m doing on a daily basis.’ I’m trying to convey that sustainability is not a team or a group initiative. It’s the way we run the entire organization… not tempted to cut costs, or in times of crisis, to say ‘we’re not doing sustainability anymore’. We want the people who interact with us to see that we’re creating and sharing value with the community, in everything we do.”
A winning formula
Goals + Management = Human Infrastructure
“We understand momentum as combining two aspects of sustainability,” says Mr. Garza: “the specific sustainability goals and the way you manage sustainability internally. Those have to go together.” Not always the case, he observes, as companies tend to define sustainability goals but fail to consider how to address them. “And that’s the human infrastructure. So for us, they’re equally important.”
He returns to Arca Continental’s board-level committee that oversees and guides the sustainability vision. “That’s the first step: showing the organization and establishing in our governance the utmost commitment of the board of directors as a public company.” Country level committees are also established to translate senior management initiatives into local operations and decisions.
But these sustainability committees are not echo chambers of sustainability evangelists. They are front line business forums. “You have the human resources expert, the operations expert, the legal expert, and so on. And each one of these leaders has the specific task to meet the standards established. The different standards that we use are integrated in a sustainability scorecard.” Each area has a dedicated gap analysis that examines the company’s performance, targets and timescales against the requirements of the standard.
Read the full article for Arca Continental’s model for engineering sustainability.
Four lenses, a single focus
How does the group decide on the critical wins? Mr. Garza considers the materiality assessment to be a vital first step. It addresses four aspects, business objectives, risks, stakeholder expectations (based on a large-scale engagement analysis every two years), and the social and political agenda at country and community-level. “The combination of those four will define, from the stakeholder perspective, the focus of the company. We combine the standards and certifications of the Dow Jones Sustainability Index, the FTSE4Good, Morgan Stanley, MSCI, et cetera, to define the path of the organization.”
Connecting these yardsticks enables the right targets and milestones to be set and reached. “We have specific goals in water, in recycling, in climate…” He stresses the importance of combining company and stakeholder perspectives. “So we can clearly identify the material topics that are the most important for the organization and be sure that we are doing what the communities need.” Ultimately: “if you’re not helping solve the root causes in the community or in society, your work is not complete.”
Pushed and pulled from all directions, including different spheres of public policy from state to city-level, it takes a special kind of leadership to move from ambiguity to impact. What attributes help his teams (and indeed the whole organization) to stay on track? “You have to be very clear that sustainability success is going to be the success of the company, not of the CSO or sustainability team.” This approach also enables the CSO and team to avoid the inertia that can stem from a combination of naval gazing and a lack of organizational momentum. There are precedents for the sustainability movement, he says. For example, continuous improvement and quality assurance evolved from being unfamiliar concepts to becoming part of organizational life. “I think sustainability has to seek that same path.”
From realism, methodology and relevance, maturity will come
How has the sustainability agenda has evolved since he joined the organization in 2008? “We are the result of many mergers and many different ideas and approaches about sustainability. But I think we evolved from doing good with the value created within the company, to sharing value through a sustainable business model. Having the philanthropic approach of our founder families as a very solid legacy, we have complemented this with a sustainability management approach taking the same terms, metrics and key performance indicators as any area of the organization.” It’s not a question of business on the one hand and a handful of philanthropic or volunteering programmes on the other, he emphasizes.
What advice would he share with the C-suite of other organizations, including the CSO? “I’m not in a position to give advice because I think that every sustainability effort, every company, is very positive.” He does, however, counsel objectivity and focus - a methodical approach to defining specific impact areas and how they will be achieved and measured. “I think that definition is one of the main steps.”
It begins with a tough self-assessment. “How mature are you in terms of managing sustainability in the organization? You have to understand what the actual capabilities are and the evolution you want.” For example, if your materiality analysis yields a specific area of intervention, “you have to define the structure, the specific capabilities, the kind of management that you need generally in the organization to accomplish that.”
Relevance is also critical and there are no instant recipes. “Find what is specific to your organization. Not every organization is built equally, the mission, the ambition is different… You need to have something that makes sense to the organization in terms of what you want to accomplish as business objectives.”
This also means defining how sustainability will become a competitive advantage for the organization to sustain growth in the long run. “We always say that Arca Continental cannot be a successful company in a failed community. So you need to be aware of what happens outside the organization. I think it is very important to include those aspects in the organizational strategy. So define your focus, your maturity, define the external variables and your path as a competitive advantage.”
Legitimacy through shared value
Zooming in to what counts
He returns to the value of external measurement, checks and balances in keeping the organization on track, but admits that this is difficult: “there are so many standards, specific certifications and intersecting success factors in sustainability.” One solution is the company’s sustainability scorecard for operations, highlighting zones of improvement. “Sustainability as a way to have a better specific x or y area. We don’t just want the areas to check the boxes. No. We want every department to be better; to analyze the way the company and the area in charge approach, for example, diversity or equal pay or human rights. That will make the specific area a better area.” It’s worth noting that an 87% employee commitment level was recorded in the group’s climate survey (cited in its 2022 Integrated Annual Report).
Ultimately, sustainability is about excellence via shared value. “You have to be a part of the community, beyond what it is established in the norms of law or your moral perspective. You want the community to be a successful community because that’s what will create shared value for everyone. So if you rely only on regulatory certifications or legal requirements, you will only end up as part of the followers, not leading the company.
“I will share a specific example: Arca Continental has one of the top water efficiencies in the industry. We have specific metrics in the way we use water, we are self-sourcing water. In the old way of thinking about sustainability, that would have been enough.”
It is no longer enough. In 2022, in coordination with the authorities and social organizations, Arca Continental led and collaborated in initiatives focusing on access to water through 78 "Rain Schools" in Mexico that provided more than 12 million liters of water to over 21 thousand people. Overall, it provided more than 2 billion liters of water to communities – equating to more than 85,000 Olympic swimming pools.
Problems are shared, and resources need to be shared as well. If the company has access to water, (albeit almost entirely self-sourced and not from a municipal network), but the community is deprived: “we have the same problem because we are from the same society. So we are now approaching water in a holistic, 360-degree way. It’s not enough to be efficient, you have to get involved in ensuring that the community has safe water to drink.
“So thinking ‘no barriers’ in terms of the success of the company and the success of society, I think has to be the right approach for any company.”