This case is about Coca-Cola's corporate social responsibility (CSR) initiatives in India. It details the activities taken up by Coca-Cola India's management and employees to contribute to the society and community in which the company operates. Coca-Cola India being one of the largest beverage companies in India, realized that CSR had to be an integral part of its corporate agenda. According to the company, it was aware of the environmental, social, and economic impact caused by a business of its scale and therefore it had decided to implement a wide range of initiatives to improve the quality of life of its customers, the workforce, and society at large. However, the company came in for severe criticism from activists and environmental experts who charged it with depleting groundwater resources in the areas in which its bottling plants were located, thereby affecting the livelihood of poor farmers, dumping toxic and hazardous waste materials near its bottling facilities, and discharging waste water into the agricultural lands of farmers. Moreover, its allegedly unethical business practices in developing countries led to its becoming one of the most boycotted companies in the world. Notwithstanding the criticisms, the company continued to champion various initiatives such as rainwater harvesting, restoring groundwater resources, going in for sustainable packaging and recycling, and serving the communities where it operated. Coca-Cola planned to become water neutral in India by 2009 as part of its global strategy of achieving water neutrality. However, criticism against the company refused to die down. Critics felt that Coca-Cola was spending millions of dollars to project a 'green' and 'environment-friendly' image of itself, while failing to make any change in its operations. They said this was an attempt at greenwashing as Coca-Cola's business practices in India had tarnished its brand image not only in India but also globally. The case discusses the likely challenges for Coca-Cola India as it prepares to implement its new CSR strategy in the country.
Issues: » Analyse the CSR strategy adopted by Coca-Cola India. » Understand the issues and challenges challenges faced by Coca -Cola with regard to its sustainability sustainability initiatives in India. » Analyse the underlying reasons for the growing criticism against Coca -Cola in India India and explore ways in which the company can address this issue. » Understand the concept of green washing and discuss and debate whether Coca -Cola is serious about about its water sustainability sustainability initi atives.
Introduction On
February 18, 2008, leading beverage company in India, The Hindustan Coca -Cola 4 Beverages Pvt. Ltd (Coca-Cola India), was awarded the Golden Peacock a ward for Corporate Social Responsibility (CSR) for the several community initiatives it had tak en and its efforts toward conservation of water. The award recognizes companies fo r their commitment toward business, their employees, local communities, and the society. Atul Singh (Singh), CEO, Coca-Cola India, said, "Coca-Cola India has always plac ed high value on good citizenship and has undertaken several initiatives for community development and inclusive growth. "Coca-Cola India undertakes a diverse range of activities for the benefit of the community across the country. As part of our CSR strategy, sustainable water management remains our top priority." -
Deepak Kaul, Regional Vi ce-President, South, The Hindustan Coca -Cola Beverages Pvt. Ltd., in 2007.
"It is in India where the company's abuse of water resources has been challenged vociferously, and communities across India living around Coca -Cola's bottling plants have organized in large numbers to demand an end to the mismanagement of water. In response to the growing Indian campaigns against Coca -Cola, the company has decided to promote rainwater harvesting a traditional Indian practice in and around its bottling plants in India. Touting rainwater harvesting initiatives is now central to Coca -Cola's public relations strategy in India." -
AmitSrivastava, Coordinator of India Resource Center, in 2007
Background Note: The Coca-Cola drink, popularly referred to as 'Coke', is a kind of cola, a sweet carbonated drink containing caramel and other flavoring agents. It was invented by Dr. John Smith Pemberton (Pemberton) on May 8, 1886, at Atlanta, Georgia, in USA. The beverage was named Coca-Cola because at that time it contained extracts of Coca leaves and Kola nuts. Pemberton later sold the business to a group of businessmen, one of whom was Griggs Candler (Candler). By 1888, several cola brands were in the market competing against each other. Candler acquired these businesses from the other businessmen and established Coca-Cola in 1892. Coca-Cola India was established as the Indian subsidiary of the US-based Coca-Cola Company (CocaCola) in 1993. As of 2008, Coca-Cola India had 24 bottling operations of its own and 25 bottling 6
operations owned by its franchisees. In addition to beverage brands like Coke, Fanta, Sprite, etc., Coca-Cola India had a strong local cola brand Thums Up, the Kinley brand of mineral water, energy drinks, and powdered concentrates.
Keeping in mind the fact that it was one of the largest beverage companies in India, Coca-Cola India said it had made CSR an integral part of its corporate agenda. According to the company, it was aware of the environmental, social, and economic impact caused by a business of its scale and therefore it had taken up a wide range of initiatives to improve the quality of life of its customers, the workforce, and society at large. Since the company used large amounts of water and energy in its beverage production and tons of packaging material for its products, it had taken up several initiatives to act as a responsible company and reduce its environmental impact, it said. In addition to water, energy, and sustainable packaging, Coca-Cola India also focused on several community initiatives in India as part of its social responsibility initiatives. Coca-Cola India announced it '5-Pillar' growth strategy to further strengthen its bonds with India. The strategy focuses on People, Planet, Portfolio, Partners and Performance. The Company announced a range of initiatives under each of the 5 pillars and they are being communicated through its integrated communication initiative-"Little Drops of Joy" which aims to reinforce the Company's 'connect' with stakeholders in India using a single platform. Environmental responsibility was a key aspect of Coca-Cola India's CSR initiatives. Since Coca-Cola India was involved in beverage production, its operations affected the environment in many ways such as through excessive levels of water consumption, wastewater discharge, high energy consumption, discharge of effluents, and greenhouse gas (GHG) emissions due to the use of refrigeration, vending machines, air conditioning equipment, etc.
Criticisms Though Coca-Cola India claimed that it had taken several such efforts, it continued to attract criticism from several quarters. The company was censured for depleting groundwater tables, leaving the local communities with no access to drinking water and water for farming which was their primary source of income. Coca-Cola Indias commitment to after-profit investment in local communities cannot be denied. The company has worked alongside many government and non-governmental organisations in funding various education, healthcare and water conservation init iatives that target poor communities and those most in need of help. However, criticisms of the companys before-profit practice in India have increased over the course of the last year. There have been reports of sit-ins and other protests directed at the Coca-Cola plant in Kerala, Southern India. Much of this relates to water conservation. It has been claimed that; The Kerala plant has drained in excess of one million litres of water per day reducing local supplies leaving many families and farmers with dry wells.
This in turn has created unemployment as coconut groves and vegetable crops have dried up. The industrial waste (or sludge) that Coca-Cola sells or gives to local farmers as fertiliser due to its high phosphate content has been alleged to be of no chemical use to agricultural land. It is also alleged that the sludge is dumped in dry riverbedwhich has led to concern over the safety of local drinking water supplies. One report, having analysed water from around the plant, claims that it contains high levels of cadmium and lead both of which pose serious health risks to flora and fauna and can affect the growth of childrens nervous systems, and cause cancer, kidney and liver damage in any age group.
Coco Cola CSR Activities: The Company provides direct and indirect employment to more than 2500 people in its five bottling plants in Andhra Pradesh situated in Am eenpur, Moula Ali (near Hyderabad), Vizag, Vijayawada, and Nellore. The Company has been recognized for Best HR practices like K O Role Model -Deferred Rewa rds program, reinforce performance and behavior, K O Key Contributor - Cash reward for superlative performance (CE & Solid Citizens) with citation & a gold pin, K O Vacations - A program to include the associate's family in celebrating his professional success by sending them on a vaca tion, motivational programs like Surge Beyond 100% to recognize team performance.
In addition to the professional growth of the employees, the Company also focuses on personal and social growth by inv olving employees in various corporate social responsibility projects undertaken in Andhra Pradesh. These include blood donation camps, health camps for local communities around the bottling plant, education support to local community, etc in association with NG Os like Red Cross and Hyderabad Round Table. In addition to the above, the Andhra Pradesh team came forward to donate generously to Chief Minister's Relief Fund during the tsunami tragedy besides working on location to help the victims. Coca -Colas Concern for The Disabled The Company employs 88 people with hearing and speaking disability, who work as Special Inspectors at its Nemam plant near Chennai. They have been trained by the Company to observe the bottles and check for any foreign particles du ring quality The "Abhyaasa Project" (Systematic on-the-job training) in particular, undertaken with the objective of enhancing technical skills of casual workers and as well as consistent harmonious industrial relations displayed by the workers as w ell as the management also helped the company The Coca-Cola plant in Kerala has been providing commercial waste to local farm ers as fertiliser which has proved to be contaminated with toxic substances.
The programme said it had discovered dangerous levels of cadmium and lead in the sludge produced by the plant which was lying on the fields of local farmers. It was alleged that the substance was actually useless as a fertiliser. BBC reporters also said they had seen waste leaving the factory to be dumped directly i nto a local river. The Vice-President of Coca-Cola in India, Sunil Gupta, said that the fertiliser was absolutely safe. However, Professor John Henry, consultant at St Mary's Hospital in London, said that the levels of toxins found in water samples taken near to the plant would cause serious problems of pollution that could have "devastating consequences".
On
January 20, 2009 SOS Childrens Villages of India, The Coca -Cola Foundation and Coca Cola India announced a partnership to implement water conser vation projects for a better life for children. This partnership will collaborate to ensure sustainable water resources by undertaking rainwater harvesting (RWH) projects at 39 S OS locations spread across the country. The partnership will also support crea ting or improving the awareness on Water conservation and artificial recharge.
In the beginning of 2008, a pilot project was initiated in S OS Childrens Village, Bawana, to collect rain water to replenish ground water by using funds from S OS-India budget. CocaCola India stepped in to fund this project and helped S OS save funds from its budget for other use. The success of the project in terms of professional implementation and impact on quality of life of S OS children prompted The Coca-Cola Foundation and Coca-Cola India to join hands with S OS for undertaking RWH projects in the remaining 39 SOS locations. Further, The Coca-Cola Company in India has been recognized for its community programs and environmental practices by prominent global organizati ons such as the Red Cross and has won prestigious Indian environmental awards for environmental practices. The rainwater harvesting technology it has established at many locations (including the plants at Plachimada in Kerala, Kaledera in Rajasthan and Var anassi in Uttar Pradesh). State Government figures have confirmed that since a Coca-Cola plant has been built, in some areas (including Kaladera in Rajasthan) groundwater levels have shown lower levels of depletion than other areas and in some areas (incl uding Varanassi in UP) water levels have actually risen since the plants were built. We believe this is due, in part, to the rainwater harvesting technology employed at these plants In Kerala, where ground water levels have certainly decreased, the rainfall has been well below average for several years. The Kerala State Ground Water Department has s aid that any depletion in ground water was due to poor rainfall and could not be attributed to the plant. The Central Ground Water Authorities have also confirm ed there were no abnormal changes in groundwater levels around the plant that can be attributed to the Coca -Cola
operation. Most recently the interim report of the Centre for Water Resources Development & Management (CWRDM) groundwater depletion and the Co ca-Cola plant in Kerala.
Coca-Cola is one of the few companies in India to have made any contribution to recharging groundwater in India and uses less water, more efficiently, than many other industries in India and yet a small number of politically motiv ated groups have still chosen to target just The Coca-Cola Company, using the Coca -Cola brand name for the furtherance of their own anti-multi-national agendas.
