CSR AND COCA COLA

  1. INTRODUCTION

The Coca-Cola Company is a beverage company with its presence in more than 200 countries. It’s one of the leading beverage companies of India, serving high quality, healthy, refreshing, and safe beverage to its consumers. The company has over 57 bottling plants across India employing around 25,000 people directly and creating a job opportunity for more than 1.5 lakhs people indirectly in the secondary business of supply, procurement, and distribution [1]. The Coca Cola India has a diverse portfolio manufacturing brands such as Coca-Cola, Limca, Fanta, Thums Up, Sprite, Maaza, Nestea, Kinley, Minute Maid, Georgia coffee and tea.

Post 1991 after the change in economic policy the Company re-entered the Indian market where it was earlier banned due to non-compliance with the Foreign Exchange Regulation Act. In 1993, Coca Cola India Private Limited (CCIPL) and Hindustan Coca Cola Beverages Private Limited (HCCBPL), two wholly owned subsidiary companies were established to the look upon the system of Coca Cola in India. CCIPL was authorized to look upon the manufacturing and selling of the concentrate and beverage bases. The Primary task of HCCBPL was to upon the packaging, preparation, selling and distribution system of all the beverages under the trademarks of the Coca Cola company having its biggest bottling manufacturing unit in Asia at a village in the state of Kerala. In a brief CCIPL sells the bases of the beverage to its authorized bottlers who independently transport it in their local markets making it available for all the supermarkets, restaurants, small retailers, etc.

  1. ISSUES FACED BY THE COMPANY

The two main issues faced by the company which led to decline in the sale of their products and brought a huge amount of criticism were as follows:

Impact on environment

One of the main allegations against the Coca Cola company was regarding the depletion of ground water in the nearby areas where there bottling plants were situated. One of such place was Plachimada in the state of Kerala where according to some experts the ground water of the area surrounding the bottling plant was depleted due to the extensive use of the same by the Coca cola. In result the place was hit by drought which directly impacted the livelihood of the poor farmers who were mainly dependent on the agricultural income. The agricultural production decreased as the all the sources of water soon became unfit as it had high levels of calcium and magnesium in it due to which the issue got the attention of the whole nation rapidly. Another problem was regarding the dumping of hazardous and toxic waste in the agricultural lands near their plants and discharging of toxic sludge in the surrounding water bodies [2]. The company’s plant was creating high level of water, air and land pollution which had a direct and long impact on the residents living nearby.

Impact on health

In the year 2003, an Indian environmental NGO, the Centre for Science and Environment (CSE) based an allegation against the Coca Cola company for their products containing harmful and toxic chemicals which can have severe impact on the health of the consumers [3]. According to their report, the Coca Cola products have some traces of harmful pesticides. They further found out that the amount of the pesticides used in the products was more than 30 times the allowed amount as per the international standards and norms. The CSE also confirmed the name of two pesticides found out in the Coca Cola products were Lindane and DDT which if consumed for a longer duration can cause cancer, disturbance of the immune system, birth defects, damage to the reproductive and nervous system [4].

As a result, the issue got high media coverage after which the government was pressured to set up a Joint Parliamentary Committee (JPC) [5] to look on the veracity of the allegations levied by the CSE and other private laboratories and NGOs. Soon, the products of the Coca Cola were banned by shopkeepers, colleges, retailers, schools which severely decreased the sale of the products causing loss of revenue to the company in the year 2003.

  1. STAKEHOLDER ENGAGEMENT

View of the Government, locals, NGOs and Coca Cola

Government is always the primary stakeholder for the companies as they have the power to impose legal sanctions against it. It is there duty to resolve the legal, social and ethical issues between the company and in the community at large. On the other hand, society is an important stakeholder for the companies too. Society will always prioritise the environment and their own needs which might get affected by the company. However, with the continuous back clashes it becomes impossible for the companies to continue with their course of business. Both the Non-governmental organisations and the locals work hand in hand as the former acts like a continuous support system to the latter. NGOs become the voice of the people which generally handles all the legal issues and helps the community to understand all the scientific issues. The involvement of NGOs also helps to cater funds and volunteers to work for the cause.

After the setup of the company there were a lot of claims made by the local people on the continuous deteriorating quality of the sources of the water. Soon a private laboratory based in Chennai carried out an analysis of the water present in the wells and confirmed the presence of high levels of hardness due to which it cannot be used for drinking, agricultural, cooking or any other purpose [6]. Haritha Development Association, a local NGO also filed a complaint against the Coca Cola company to the Kerala state pollution control board (KSPCB). The report released by them confirmed the presence of chemicals but at a permitted level. However, they advised the company for the usage of effluent treatment plant (EFT) before discharging the waste [7]. In the year 2002, Anti Coca Cola Peoples’ Struggle Committee was formed mainly comprised of Adivasis, local farmers and agricultural labourers. The objective of the committee was the immediate closure of the bottling plant established at Plachimada, in the state of Kerala. The reason was linked to the excessive use of the ground water and the pollution caused by the company which has a long term detrimental effect on the economic and social well-being of the people [8]. The committee soon started public meetings in the nearby villages to gather more and more people in support leading to a rally outside the Plachimada plant of the Coca cola. By this time both the Central Ground Water Board (CGWB) and the Kerala Ground Water Department (KGWD) also started testing the samples of water. According to the reports released by both of them it was concluded that the quality of ground water does not require any immediate action from the government [9]. However, the KGWD acknowledged that three out of twenty wells had some problem with the quality of water and three wells have been completely dried up. The reason for the same was put on the low rainfall in the region. On the other hand, the CGWB also acknowledged that there was some water related problem present in the area but failed to link it with the company [10].

In 2003, the Perumatty gram panchayat passed a resolution to not renew the license of the Hindustan Coca Cola Beverages Private Limited (HCCBPL). The reason given by them for their decision was the depletion of the ground water, discharge of toxic and hazardous chemicals by the company which affected the surrounding environment. However, the company took the issue to the High Court of Kerala which directed the case to be dealt by an appropriate authority. The local self-governance department of the state government passed an order against the gram panchayat and asked to renew the license of the company. To challenge this a petition was filed before a single bench of the High Court of Kerala by the gram panchayat. This time the court in its decision considered the problem of extensive use of ground water by the company and held that “underground water belongs to the public [11].” A limit on the extraction of the ground water by the Coca cola company was also set by the court. An appeal was filed before the division bench of the High court of Kerala by the company. Meanwhile, corroborating the report made by the District Medical Officer (DMO), District Palakkad the local Government Primary Health Centre took samples of water present in the vicinity of the bottling plant and conducted an analysis at Regional Analytical Laboratory. The reports concluded that the water cannot be used for drinking purposes and the grama panchayat should immediately inform the same to the local people [12].

A radio programme was organized by the BBC wherein it was found out that the waste released by the plant contains carcinogens [13]. This was later even confirmed by the Kerala State Pollution Control Board (KSPCB) which passed an order to the Coca cola company for the safe disposal of their harmful waste and stopped the supply of the same to the farmers as a fertilizer. Meantime a report was also released by the Centre for Science and Environment (CSE), a Delhi based NGO. According to the report, they found traces of harmful pesticides in the products sold by the Coca Cola company. Finally, the central government ordered for a Joint Parliamentary Committee (JPC) which started investigating the matter along with the KSPCB. In the meantime, the division bench of the High Court of Kerala gave the verdict in favor of the company. The Court held that the company has a right to extract water from his property. Therefore, the extraction done by the company cannot be illegal. “The permissible restrictions, in public interest, can only be to compel the company to ensure that by their conduct they do not bring about a drought or any imbalance in the waterlable [14].” The Court while overturning the previous decision allowed the HCCBPL to extract water not exceeding 5 lakh of liters per day.

After which the Coca Cola asked for a renewal of their license for the following 5 years which the panchayat rejected again stating that the answers received from the company were not satisfactory enough to grant them a license. The Kerala High Court passed directions to the Grama Panchayat to again renew the license. Meanwhile, a Supreme Court Monitoring Committee on Hazardous wastes (SCMC) was established. Accordingly, the Coca Cola company was charged for ‘the unauthorized disposal of sludge’ without prior permission from the appropriate authority [15]. As the issue got attention at an international level, under the Kerala Ground Water Act, 2002 the area where the plant was situated was declared overexploited which directly put restrictions on the usage of water present in the area. In the year 2005, the Plachimada plant was shut down.

  1. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

One of the main CSR initiatives undertook by the Coca Cola was related to taking responsibility towards the environment. After all the problems the company faced in different parts of the country which goes from closing of the bottling plant to banning the products of the company, the profits decreased rapidly. The Coca Cola was also linked to activities which caused severe degradation to the environment. Soon, they realized to introduce sustainable projects in the community through which the impact on the market can be minimized. In the year 2008, the Coca Cola India Foundation, a ‘not for profit’ wholly owned subsidiary was set up [16]. The objective of the Foundation was to establish some environmentally sustainable projects. They worked mainly on areas including purification of riverine systems, watershed management protection, rejuvenation of old water sources, providing electricity in the rural area through solar energy and other similar activities [17].

Water Conservation

The Coca Cola company launched several sustainable projects like Rain water harvesting programme, Protection of watershed and other similar development projects in the severely stressed parts of country in order to conserve water. These programme were generally established with the aid of government, NGOs and locals from the community. Several educational lectures were also introduced by the company for both the employees and the community to create awareness on the importance of conservation of the watershed, access to potable water and to meet the India’s water replenishment requirements.

Some of the Coca Cola’s Water Conservation Initiatives

  • In the year 2006, Coca Cola initiated a rainwater recharge projects near its Kaladera bottling at Rajasthan. The project was completed when the rainwater collected was passed to the ground with the help of a reverse filter system. This project helped the community by restoring the groundwater [18].
  • A rainwater harvesting project was initiated by the Coca Cola at Varanasi, Uttar Pradesh with an expectation to collect more than 4,900 cubic meters of water which will be later used to recharge the groundwater of the area [19].
  • On the World Water Day, 2007 the company initiated a rainwater harvesting project at New Delhi. The project was expected to recharge more than 4 million liters of groundwater [20].
  • In association with Rotary organisation, the company set up 10 rainwater harvesting projects in schools at Jamshedpur [21]. Similar, safe drinking water projects for the society were also started in the state of Gujarat.
  • The company initiated various water conservation projects in the villages of the Rajasthan, Maharashtra and Madhya Pradesh with an aid of various NGOs, private centers and government departments to benefit thousands of people [22].

Coca Cola in partnership with World Wildlife Fund (WWF) announced an international water conservation campaign. Mr. Neville Isdell, Chief Executive Officer of the Coca Cola pledged to “return every drop of water they have consumed back to the environment at a level that supports aquatic life and agriculture [23].”

Recycling and Packaging of the products

Coca Cola uses Polyethylene terephthalate (PET) bottles, aluminum cans and glass bottles for the packaging of their beverages. However, all these packaging materials have detrimental effect on the environment as they had one time use after which it was added in the waste. Focusing on the same, the company tried to bring change in their packaging material and awareness on the recycling of the same.

In the year 2005, a PET recycling project was initiated by the company in partnership with the Municipal Corporation of Mumbai. The project was aimed to have two fold benefits. Firstly, by recycling the PET bottles, it will help to reduce the waste present in the community [24]. Secondly, it will provide job opportunities to the crusaders and help them economically. Following the same, various campaigns were also initiated in the locality to teach people on the importance of recycling the waste. One of them included creating a film on PET recycling with the help of Government of Delhi and All Indian Plastics Manufactures Association (AIPMA).

The company also initiated several projects on waste management system. ‘Alag Karo–Har Din Teen Bin’, a 3-year project was started with 9000 households, 50 schools and 50 commercial institutions [25]. The main focus was to achieve an efficient waste segregation, management and recycling system. Reverse vending machines were also set up at public places to encourage people on getting the used bottles recycled [26]. Several other waste management drives were conducted by the company in all over the country. By the end of the year 2006, the company was able to collect and recycle 80% of the waste generated from the PET bottles at 100 PET recycling plants established in different cities.

The company not only focused on recycling the waste created by them but also tried to bring changes in the sustainable changes in the packaging strategies. The company launched an initiative called E3 which focused on improving efficiency, eco-friendly innovation and long term effectiveness. Under this initiative, the design of the bottle was changed to reduce the impact on the environment, saving approximately 52,000 metric tons of glass [27]. The company also developed a system to collect their disposed packaging material which can be recycled and later reused.

Community

 As a part of Coca Cola’s CSR initiative focus was on the development of the under privileged part of the community. In the year 2003, learning centers were established to provide education to approximately 1800 children living near its Pune bottling plant [28]. Various health checkup camps in partnership with the Indian Red Cross Society were organized in the slum areas to create awareness on sanitation, AIDS, hygiene, child health etc. Several initiatives were introduced to provide safe access to drinking water and sanitation services to the underprivileged people in the state of Madhya Pradesh and West Bengal [29]. The company also set up more than 2000 schools near its bottling plants to provide free education to the children residing in the villages.

The company also launched Project VEER which focused on the lives of the disabled people [30]. The initiative aimed to give due recognition and opportunity by providing employment and vocational skills training. Under Project Parivartan the company also recognized the women retailers and gave them an opportunity to enhance their business skills by conducting seminars on customer handling, finance management [31].

  • CONCLUSION

The case study of Coca Cola is a significant evidence while showing how a company can suffer by not adopting CSR Strategies and on the other hand how the same company saw a turning point in its profits, goodwill and sale of the products by building a trust among the consumers living in the community through effective implementation of the CSR objectives. The company soon recognized both the environmental and social issues which they were facing in their bottling plant spread across all over the country. With increasingly adoption of CSR initiatives, the company focused on the government, media, customers who are the main drivers towards creating a brand reputation. The company understood the long term importance of Corporate social responsibility in the current society. It set an example for other multinational companies on how through adoption of sustainable projects, a company can build up its brand reputation again in the same market.

References List

[1] “Coca-Cola Worldwide and in India.” The Coca-Cola Company, www.coca-colaindia.com/about-us/coca-cola-worldwide-and-in-india.

[2] Berglund, Henrik, and Sofia Helander. “The Popular Struggle against Coca-Cola in Plachimada, Kerala.” Journal of Developing Societies, vol. 31, no. 2, June 2015, pp. 281–303, doi:10.1177/0169796X15577020.

[3] Ramesh, Randeep. “Soft-Drink Giants Accused over Pesticides.” The Guardian, Guardian News and Media, 5 Feb. 2004, www.theguardian.com/world/2004/feb/05/india.randeepramesh.

[4] Iype, George. “Coke Accused of Supplying Toxic Fertiliser to Farm.” Rediff, Rediff.com, 28 July 2003, www.rediff.com/money/report/coke/20030728.htm.

[5] “Pesticide Cocktail in Coke, Pepsi Brands: CSE Study.” Https://Www.outlookindia.com/, Outlookindia.com, 2 Aug. 2006, www.outlookindia.com/newswire/story/pesticide-cocktail-in-coke-pepsi-brands-cse-study/403559.

[6] Bijoy, C.R. (2006) “Kerala’s Plachimada Struggle: A Narrative on Water and Governance Rights” 41/41 Economic and Political Weekly, 14 October, 4332-9. https://www.epw.in/journal/2006/41/insight/keralas-plachimada-struggle.html?destination=node/119443

[7] The Special Volume of Keraleeyam on Plachimada issue, Vol. 90, January 2005.

[8] K., Rajesh. “The Anti-Coca-Cola Movement in Plachimada, Kerala.” Journal of Developing Societies, vol. 35, no. 4, Dec. 2019, pp. 437–457, doi:10.1177/0169796X19873208.

[9] Kerala Ground Water Department, Report on the Monitoring of Wells in and Around the Coca Cola Factory in Plachimada, Kannimari, Palakkad district (Kerala Ground Water Department, September 2003).

[10] Central Ground Water Board (CGWB), A Report on the Groundwater Conditions in and Around Coca Cola Beverages Private Limited Company, Plachimada Village, Palakkad District, Kerala (Thiruvananthapuram: CGWB, 2003).

[11] Perumatty Grama Panchayat vs. State of Kerala and Ors., 2004 (1) KLJ 414.

[12] Sujith Koonan, “Legal Implications of Plachimada a Case Study” (Int‟l Envtl. Law Research Ctr., Working Paper No. 2007-05, 2007), available at http://www.ielrc.org/content/w0705.pdf

[13] Iype, George.”Sludge at Coke Factory Is Deadly.”Rediff, Rediff.com, 3 Aug. 2003, www.rediff.com/money/2003/aug/05spec2.htm.

[14] Hindustan Coca-Cola Beverages (P) Ltd. vs. Perumatty Grama Panchayat, 2005 (2) KLT 554.

[15] Koonan, Sujith. “Ground Water – Legal Aspects of the Plachimada Dispute.” Water Governance in Motion, pp. 159–198., doi:10.1017/upo9788175968578.008.

[16] “CSR Activity – Coca-Cola India.” The Coca-Cola Company, https://www.coca-colaindia.com/stories/csr-activity.

[17] Ibid.

[18] Jolly, Deepak. “’Flawed And Biased’.” Https://Www.outlookindia.com/, Outlookindia.com, 13 Sept. 2006, www.outlookindia.com/website/story/flawed-and-biased/232501.

[19] Ibid.

[20] “Coke Launches 8 Rain Water Harvesting Structures.” Https://Www.oneindia.com, 17 Feb. 2007, www.oneindia.com/2007/02/17/coca-cola-india-launches-8-rain-water-harvesting-structures-1171719209.html.

[21] “Students to Harvest Rain.” Telegraph India, Telegraph India, 9 July 2010, www.telegraphindia.com/states/jharkhand/students-to-harvest-rain/cid/500940.

[22] Sinha, Ashutosh. “Water Conservation Take Up Villagers.” The Coca-Cola Company, 28 Aug. 2017, www.coca-colaindia.com/stories/sustainability/water-stewardship/villagers-take-up-water-conservation–find-support-from-coca-col.

[23] “The Coca-Cola Company Pledges to Replace the Water It Uses in Its Beverages and Their Production.” WWF, World Wildlife Fund, 5 June 2007, www.worldwildlife.org/press-releases/the-coca-cola-company-pledges-to-replace-the-water-it-uses-in-its-beverages-and-their-production.

[24] “World Without Waste: Sustainability Report.” The Coca-Cola Company, 2019, www.coca-colaindia.com/sustainability-report/world-without-waste.

[25] Ibid.

[26] Supra at 16.

[27] “Coca-Cola Bottle Evolution: Contour Bottle History.” The Coca-Cola Company, 28 Feb. 2015, www.coca-colaindia.com/stories/contour-bottle-history.

[28] Aparna Mahajan and Kate Ives, “Enhancing Business-Community Relations,” http://www.worldvolunteerweb.org, October 2003.

[29] Sanger, Vasundhara. “Coca Cola to Help Provide Safe Water: India News – Times of India.” The Times of India, 19 Apr. 2007, timesofindia.indiatimes.com/india/Coca-Cola-to-help-provide-safe-water/articleshow/1924829.cms.

[30] “THUMS UP and Being Human Campaign ‘VEER’ for Empowering the Differently Abled Reaches a New Milestone – Coca-Cola India.” The Coca-Cola Company, 24 Mar. 2014, www.coca-colaindia.com/newsroom/thums-human-campaign-veer-empowering-differently-abled-reaches-new-milestone.

[31] Mukherjee, Arpita. “One Trick at a Time, Learning the Retail Game.” The Coca-Cola Company, 4 Dec. 2017, www.coca-colaindia.com/stories/community/skill-building/learning-the-retail-game-one-trick-at-a-time.