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 green washing 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:

» Analyze the CSR strategy adopted by Coca-Cola India.

» Understand the issues and challenges faced by Coca-Cola with regard to its sustainability
initiatives in India.

» Analyze the underlying reasons for the growing criticism against Coca-Cola in India and
explore ways in which the company can address this issue.
» Understand the concept of greenwashing and discuss and debate whether Coca-Cola is serious
about its water sustainability initiatives.

INTRODUCTION

Coke Cola is considered to be the world’s best brand for 11th year in a row by Interbrand.[1] In
2013 Integrated Report ranked it amongst the top three beverage companies and was under top
10 companies with the best reputation amongst US customers[2]. In 2014 Coke has first position
in 100 top Corebrand power ranking and top 10 most respected Corporate brands. It ranks sixth
in the world’s most admired campany by Fortune and third in official Top Consumer super
brands by The Centre for Brand Analysis. [3] The question is does Corporate Social
responsibility play a significant role in improving their goodwill. In this article I want to reflect
taking the example of Coke Cola that CSR is a smart and nimble-witted way to bring a social
impact and on the same hand to increase company’s profitability or its only Political –
Anthropological Concerns. The discourse of CSR that companies adopt and engage with ethics
and social and environmental sustainability in addition to making profit was largely constructed
by the multilaterals, partly in an effort to fend off political ideological attacks and partly to work
around the crisis of legitimation that form a part of the larger derailment of ethics in the public
sphere. Even it also reflects the fact that construction of CSR is the interventions that were due to
the outcomes of the restructuring of global accumulation.

WHAT IS CORPORATE SOCIAL RESPONSIBILITY ALL ABOUT?

Early thoughts of CSR on an academic level can be followed back to the 1960s. In 1991
Carroll’s multi-layered idea of four interrelated viewpoints consisted of: ethical, philanthropic
responsibilities, legal and economic.

Carroll proposed a pyramid that examines the measurement of CSR.

It begins with economic responsibilities; He explains that Business organization’s main goal is to
make profits by providing goods and services. This is the base whereupon the other three
obligations rest.
The second layer comprises of the legal responsibility of an organization. The moral
responsibilities are practices that have not been classified into the law. Societal partners
anticipate that an organization will do the right thing and in a reasonable manner.

Ultimately, at the highest point of the pyramid organizations have philanthropic responsibilities.
Business associations are required to be great corporate nationals, which focus on enhancing the
quality of life.

Around year 2000, distinctive sections of society gradually started to investigate multinationals
and their operations. Thus CSR developed into a complex idea and currently became a key part
of the corporate decision making of various multinationals.

Notwithstanding, this development accompanied a cost that different enterprises needed to pay.
Campaigns, scandals and environmental issues etc. brought undesirable media attention, which
raises the issues that whether reputation damage is a fundamental inspiration behind adoption of
CSR strategies by multinationals.[4]

COCA-COLA’S CONFLICTS

An Indian NGO Centre for Centre for Science and Environment (NSE) in 2003 came up with the
report in which it published several campaigns and demonstration. In the report through dozen of
samples which were sold in India they proved the evidence of the pesticides present in the
product to a level exceeding European standard.[5] With the help of these evidence CSE asked
the government to legally enforce water standards.[6] The report gained so much of media and
public attention that it caused the immediate effect on the company’s revenues.

There were three allegation which the NGO came up with against the Coca Cola company that
were first the product contained unacceptable levels of pesticides second the company extract
large amount of groundwater and third that it has polluted the sources.

Few years back in March 2010 the Kerala state government panel had recommended to fine the
company’s subsidiary about a total of $ 47 million because it has damaged and degraded the
water and soil of Kerala very badly.[7] After this recommendation a special committee was
appointed by the committee members to look into the matter of the community members getting
affected by the water pollution happened by the company.

The consequences that Coca Cola had to go through the long legal procedures were lost in
consumer trust and reputation damage both in India and abroad. After the release of the CSE
report in 2003 the overall sales dropped in India was 40%. The impact in annual sales was a
decline of 15% in overall sales in 2003 in comparison to prior annual growth rates of 25-30%[8].

Coca Cola was considered as a corporate villain in India that only cared of profits instead of
public health. The conflict which the company was undergoing with India got highly published
that it caught the attention if the US consumers. The students joined the two activist groups in the
US after the series of demonstration which resulted in the temporarily stoppage on the Coca Cola
product in 10 American universities at their campus facilities.[9]

After the environmental impact report Coca Cola realized that it could have both positive and
negative impact on business. After the Indian NGO has released the report that stated that Coca
Cola beverages has pesticides the company’s stock dropped by 30-40% and the ending what was
a 75% growth trajectory over the prior five years.[10]

REASONS FOR INVESTING IN COCA COLA

Coca- Cola corporate as an example that demonstrates the first theatre of CSR’s priority is
generating environmental and social value it is not definitely something which would create an
economic return for the corporation.

The company always come up with strategic philanthropy through which they get intangible
benefits in the form improved social capital and brand awareness which ultimately translate into
business profits but this is not CSR goals. In fact philanthropic CSR is typically considered to be
cost that necessarily the company needs to spend so that corporate would prove charity as their
priority. Additionally, philanthropic CSR initiatives in the first theatre typically reside under the
purview of corporate and community affairs is that the managers are hardly tied with the
business operations. Example in philanthropic CSR the role that business expenditure is not
expected to generate a tangible financial value. It may, in a sense, be considered the “purest”
form of corporate social responsibility.

The illustration of the philanthropic CSR is only the side of the story where corporation come up
with the voluntarily CSR with the good intentions. However in other cases the company might
engage in charitable or CSR activities due to societal pressures instead of their choice. Most of
the time the journalists, activist and civil social organization cast aspersions on business to work
on improving the environmental or social consequences.

The company may or may not to culpable they launch philanthropy campaign so that they could
fend off their potential reputation damages. There are a lot of time company launch philanthropic
campaigns so that they could repair their reputation and after they are being penalized or
sanctioned for their regulatory infractions or unethical practices. Regardless of being it reactive
or pro active the company is motivated of undertake CSR initiatives as its first step because it is
very loosely connected to the business strategy. In the proactive approach the reason of the CSR
ties more directly to the purpose and value of the people in the business while in reactive
instances the primary motivation is to annul the protesting voices. [11]

INCENTIVES IN SPENDING IN CSR ACTIVITES

The first step taken by the Coke Cola after the lawsuit and loosing consumers and stakeholders
trust was Aqueduct Alliance[12]. Coca-Cola’s involvement in the Aqueduct Alliance was a
showcasing move that was undertaken to strengthen the corporation’s reputation, while at the
same time evading personal liability and furnishing the enterprise against future claims
concerning groundwater.

Coca-Cola’s cooperation in the Aqueduct Alliance was a showcasing move that was undertaken
to strengthen the company’s reputation in regards to

1. i) General society and shareholders

2. ii) Evading any type of personal liability,

iii) Arming the organization against future claims concerning groundwater consumption.
Thus increment in ecological transparency and combining shareholder values into the
organization’s environmental decision-making process would be a profound solution in these
regards.

Coca-Cola’s involvement in the Aqueduct Alliance reflects upon the rising corporate movement,
which focuses upon addressing ecological concerns as a component of taking decisions which
are directly related to marketing practices and resonating with the stakeholders.

Earlier there was an assumption among the corporations that effects of their activities is a
method for complying with legal actions but later on there was a shift among corporates,
diverting there focus towards using environmental alertness as a strategy for booming profits.

According to Coke Cola Company the world is interconnected the work of America’s business
and humanitarian organization helps children and families in the developing world improve their
lives it is not only the right thing to do but the smart thing as it helps to increase company’s
profit as well as strengthen national security and economic prosperity. The company believes
that it is very important to do strategic investment in development and diplomatic programmes as
it provide tremendous returns not only for national interest but also brings values to the
company. The American business like Coca-Cola cannot expand overseas business alone.
Working to alleviate poverty, illiteracy and poor health is an essential building block for stable
societies and families and the support of the from the individual donors, corporate partner like
Coca Cola and its partner from U.S. foreign assistance allows Save the Children to carry out its
significant work. It is considered that in a stable society there are likely to have less chance to
succumb to terrorism and extremism.

To be successful Coca-Cola requires clean water, electricity and roads. It helps Coca Cola when
the company employees largest employer in Africa and is the top leader providing people with
opportunities overseas to earn better living, as well as benefitting in the developing
countries.[13]

Recently Coca Cola has come with a new dialogue on the role of the business in the society
“Combing profit and purpose”. The company strongly believes that the upcoming leaders of next
generation will have different idea in the context of social purpose returns and benefits. The
social purpose is viewed as a key return to the future survival. It is important for the company to
build trust and reputation with the stakeholders as the current and future or up coming leaders
considered return on their investment in creating social purpose. The company gives importance
to the future generation for business survival and so that they could create closer relationship
with the customers and this can be achieved by engaging in social purpose strategy as they cite
increased innovation, increased trust and engaged employees in business as major returns.

According to this dialogue 86% of the both current and future leaders feels the company will
have competitive advantage now and in future if the business have a focus on both societal,
environmental and economic value.

HOW COCA COLA SEE SUSTAINABILITY?

The company firmly believes that businesses and brands are increasingly beholden to healthy
communities and constituents for their bottom line growth. The company intent on growing the
business by making a difference whenever our business touches the world and the world touches
there` business. The sustainability of Coke’s business depends on the health of the communities
they serve. The company considers to reach 2020 Vision of doubling the business is not possible
without embedding sustainability into their business to drive efficiency and effectiveness.[14]

(a) What is the “ 2020 vision of Coca Cola” ?

The company feels that world is filled with the opportunities that range from doubling their
business revenue by 2020 by developing new beverages products that meet consumers evolving
preference and need, by creating social value and by making positive difference in the
communities throughout the world. 2020 vision provides the business goal of converting long
term aspiration into reality what the company can accomplish together with the customers, global
bottling partners and along with consumers sustainability is achieved with measurable
growth.[15]

2020 vision it can be clear example that the strategy which companies makes for the social
impact and welfare makes in such as manner that through which the company could increase
their profit and goodwill in the eyes of stakeholder and consumers of the company.
The goal of 2020 vision in reference to the profit to have more than double system revenue while
increasing systems margins. To maximize company and bottler long term cash flow the system
priorities three key features that is first to boost system investment in sales and market execution.
Secondly operate the lowest cost manufacturing and logistics in every market, while maintain the
products quality standards and third to use the size and expertise to create economies of scale.
Company’s matric is total shareholder return, economic profit growth and systematic cash flow.

In regard to “productivity” the goal of the company is to manage time, money and human
resources for greatest effectiveness. To achieve these goals the company has designed and
implemented the most effective and effective and efficient business system by prioritizing four
keys things. That is first redirect resources to drive profitable growth. Second create a
competitive cost advantage across the entire supply chain.third building continuous improvement
and cost management culture and fourth by minimizing company’s energy use.[16]

(b) 2020 Sustainability Commitments

“Me, We, World” is the latest framework of sustainability that the company has come up through
which is share the vision of working together so that they could create socail value and make
positive difference for consumer, shareholder and communities they served.

“Me” stands for enhancing personal well being. The company has come up with few non-
alcoholic beverages with very fewer calories under this commitment as obesity has become one
of the major issues. By 2015 Coca Cola has aimed to reduce 1.5 calories from the grocery by
introducing more than 100 no- and low calories product. According to the manufacturer the
company has exceeded its goal by 400% that translate to 78% fewer calories per person per day
in the United States.

Through this commitment company’s sells has increased along with reputation and goodwill
therefore company has profited with this commitment.[17]

“We” stands for “building Stronger Communities”. The company has started 5by20 strategy
under this commitment in which the company helped 5 million women to empower their women
entrepreneur. In 2010 5by20 commitment was started in India, South Africa and Philippines now
this initiatives is in 12 countries and since then 3,00,000 women have participated in it. The
companies aims to expand 5by20 in 20 to 30 countries reaching 1.5 million women and by 2020
5 million women in 100 countries.

The company in its strategic social investment has come up with five different stage of the value
chain, identifying key success for sustainability and increase in the sale of the product for the
duration of the program and beyond.

 Producers

In Kenya and Uganda the company initiated Project Nurture in which it aimed to bring 50,000
smallholder mango and passion fruit framer into the value chain. This was a clear business
techniques as the producers are one step removed from the Company and its bottling partner in
the value chain. This initiates is consists of the procurement cost and security supply of a
regional juice business with ambiguous growth target. The company is expecting to recoup
several times more than its investment in next 3-5 years from Project Nurture as Minute Maid
Mango is very profitable.

(2) Distributors

In Tanzania Coca-Cola came up with Kwanza Micro Center Model in which they build the
capacity of 170 independent small scale distributor which helped the company to distribute their
product in the congested urban environment to the small scale outlets. In the business model of
Coca Cola these Micro distributor center are the integral part to the bottler’s business model
which accounts 95% of its sale volume. Through this Coca Cola’s sales growth increases as
small scale retailer outlets constitutes majority of the consumers.

(3) Retailers

In Philippines Coca Cola have initiated the STAR programme which empowers 1000 women
which are into small scale retailer to grow their business through that their incomes also
increases. The case study done by Coca-Cola Philippines and its bottling partner Coca-Cola
FEMSA Philippines they observed through helping women grow economically the company
have increased sales through development of long term relationship wit both existing and new
seller of Coca Cola products.

(4) Recyclers

In Brazil Coletivo recycling is the cooperatives of 500 waste pickers Coca Cola helped to them
to diversify their markets and sources of supply which help them to increase their sales and
incomes with their self esteem. With the help of the member’s income increased from $250
month/ month in its initial stage of development to $1000 per month. The past experience has
shown that as compare to the earliest stage development the highest- performing cooperation can
generate approximately three times as per income per member. The benefits that Coca got was
that it was capable of collecting and sorting larger volumes of water and selling directly to
recycling plants instead of the broken for the higher cost. Coca Cola profited in the medium to
long term it helped the company to reduce cost and increased security of supply of recycled PET
for the production of recycled bottles.

(5) Articans

Cola Cola in Coletive Artes helped to build self esteem of 100 cooperatives of artisans through
enchasing the attractiveness of their design eventually increasing their sales and incomes. This
helps Coca Cola to enhance its goodwill, reduces environmental impact and helps to generate the
supply of unique Coca Cola themed products for corporate promotional uses. The overall
benefits which company is getting through strategic social investment for CSR increases sales,
reduces cost of production, supply security, lessen environment impact and strengthen
stakeholder relationship and reputation.[18]

CONCLUSION

Through this article I would like to conclude that companies like Coke Cola does a smart work
and make good social strategies at the name of CSR so that it could increase increases its profit
and reputation or goodwill in such a manner that it could bring social impact through the world.
Moreover the strategic social investment that they come up is with the mindset that it could
benefit the society at large and the environment also. Through this the company makes the
consumers, stakeholder, employers, NGOs and government happy and contented so that no one
would raise their voice against them. As the company does so much for the society and
environment that it becomes difficult for any country to reject or cancel their license. All the
countries where Coca Cola has its market they have increased employment and help to raise the
standard of living which has help to strength national economy. In this paper I have tried to
prove that Coca Cola has smart approach towards CSR in which they increase their profitability
and brand image so that their shareholders are satisfied with the performance of the company and
on one hand and is bringing social impact on the other hand.