A. Introduction
Conflicts between companies and the public do affect the companies’ Corporate Social Responsibility policies (CSR). Companies need to address the impact of their operations on the environment or society. Their operations may affect society in a variety of ways. A product with elevated levels of a poisonous chemical, for instance, may bring about health complications. A plant that pollutes the soil and water sources may render the water unsafe for human consumption. CSR policies are beneficial for both the company and the public. A company depends on the public to be able to sell its products, and the public requires these products for various purposes. If a company is found to violate laws regarding its operations and impact on the community, it may face grave challenges that may affect its operations and success. Failure to implement proper CSR policies may lead to negligence on the part of the company, which may also create conflicts between the company and the public.
The Coca-Cola Company, one of the oldest and largest companies in the world, faced quite a conflict in India, which lasted for many years. The company initially handled the situation poorly by failing to admit its faults and failing to come up with proactive CSR policies in due time. The conflict, however, led to the company changing its CSR policies and coming up with better ways of addressing its impacts on the Indian society. Coca-Cola is among the most popular companies in the world, and it has to maintain its reputation through the implementation of appropriate CSR policies ( Gopinath& Prasad, 2013) .
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B. Description of the organization’s original corporate social responsibility (CSR) policies and reporting
Coca-Cola first launched its CSR policy in 2007, which was embedded at all the levels of its supply chain, including production, packaging, and distribution ( Torres et al., 2012) . This CSR policy, ‘ Live Positively,’ established seven core areas that allowed the company to set measurable objectives for improving its sustainability practices. The seven core areas include active healthy leaving, beverage benefits, energy and climate, sustainable packaging, the community, the workplace, and water stewardship. In addition, the Coca-Cola Company later adopted international CSR guidelines in an attempt to enrich its sustainability framework. The international CSR guidelines (Ruggie’s Framework, Global Compact, and Ruggie’s Protect), however, have not been adequately integrated into the company’s Code of Business Conduct. They are otherwise embedded in company activities and policies. For instance, Ruggie’s Framework is partly adopted in its Human Rights Statement. ‘The Coca-Cola Company Annual Report,’ a director’s report, is published every year and contains all the activities of the company during the previous year. In the CSR section of the report, a description of the policies carried out in areas such as community development and water preservation is included. Regarding CSR, the company also publishes a separate report, ‘The Coca-Cola Company Sustainability Review,’ every two years. This report is verified by FIRA Sustainability Ltd to ensure the reliability of the information in the reports. Additionally, the company also reports on an annual basis, the development in the water stewardship program, which is one of its targets.
C. Description of the conflicts
The Coca-Cola Company’s main CSR conflicts occurred in India, resulting in a major decrease in revenues. Following a report issued by the Indian NGO, ‘Center for Science and Environment,’ a lot of campaigns and demonstrations erupted in the year 2003 in India ( Torres et al., 2012) . The NGO’s report provided evidence of the presence of pesticides of an exceeding level in Coca-Cola beverage products sold in India. In addition to the claim of the elevated pesticide level, other allegations included extraction f large amounts of groundwater and pollution of water sources.
The release of the report by the NGO alone results in an immediate drop in sales by forty percent. After the NGO took the matter to the Indian government and alerted the public, the government carried out investigations through a Joint Committee. The test carried out by the government also proved that the levels of pesticides in the beverages surpassed the European standards. However, under local standards, the levels were still considered safe. According to the Indian government, therefore, the company had not violated any national laws. Nevertheless, there was a need for the company to adopt proper standards for beverages. The company, however, did not make any efforts to reduce pesticide levels. The NGO conducted yet another study, three years later, and found that the levels of pesticides still surpassed the European standards. Later in 2008, the Energy and Resources Institute conducted another research and rendered the water used by Coca-Cola in India, free of pesticides. Perhaps the launching of the company’s CSR policy, Live positively’ made it take the initiative to reduce the levels of pesticides in its beverages.
The Plachimada, in the Southern part of India, was on the receiving end of the Coca-Cola Company’s depletive activities. The company discharged its wastewater into the rivers and fields of the community. This action led to the pollution of groundwater and the soil. The Indian government had to come in and stop the people from using the water from wells as it was unfit for consumption. In addition to this, the locals had also complained of water scarcity as soon as the company began its production operations in Plachimada, back in 2000. This led to the suspension of the company’s operations in the area in 2004. The company was again back to operations two years later, but again, faced the allegations of pesticide levels. In 2010, the company was fined over forty million US Dollars by the state government of Kerala, where the plant was situated, for the damage caused to the area’s soil and water. In addition to these allegations, the company also suffered significant losses in revenue due to damage of reputation and loss of consumer trust. The conflict in India also created demonstrations in other places such as the United States. The conflict in India continued for many years, subjecting the company to significant losses in the country and other places around the world. While the company had previously experienced CSR conflicts in other countries, none of those were as consequential as the conflict India. The poor handling of the situation by the company, by denying all claims, only made the problem worse, and the controversy ended quite badly for the Coca-Cola Company.
D. Description of resultant changes in the CSR policies and reporting
Coca-Cola came to realize o its mistake, years after the controversies first broke out in the country. Its vice president of environment and water resources, Jeff Seabright, in 2008, acknowledged that the perceptions of the local communities on the company’s operations mattered ( Torres et al., 2012) . The company had to come up with measures to avoid similar problems in other parts of the world and its future. The company was forced to publish reports on its environmental performance in India from 2004 to 2007, in an attempt to address and control the situation. It also founded Anandana, which worked with the communities and NGOs to look into the problems relating to the local water. Also, the company launched community water projects in various parts of India in an attempt to address the issue of water scarcity. The company, for instance, focused on harvesting and storing clean rainwater to be used by the community. This would then create a balance between the groundwater used by the company and rainwater harvested and used by the community.
The conflict in India was a vast learning experience for the Coca-Cola Company. It had to adopt new and proper measures that would ensure a similar situation does not arise in the future ( Carroll, 2013) . The consumers in India had completely lost trust in the products. They saw the company merely as a corporate villain that did care about the health or living conditions of its consumers. Proactive CSR policies were required, going forward. The company adopted three measures with a focus on water management. These included reducing water use by improving water efficiency, recycling water through wastewater treatment, and replenishing water.
The company publishes annual water reports in addition to its sustainability reports. The reports describe the assessments and progress made by the company regarding its water programs and initiatives. The assessments are not only conducted by Coca-Cola. An American NGO, the Global Environment & Technology Foundation, assists in making the assessment which re then published in the report.
E. Conclusion
In conclusion, it is clear that CSR conflicts can transform a company’s policies and force a company to deeply consider addressing its operational impacts on the public and the environment. The case of Coca-Cola shows just how much a company may lose if it does not put in place proper CSR policies to address its operational impacts on society. The company had to change its policies and come up with new society-focused initiatives to settle the conflict to bed.
References
Carroll, A. (2013). Have a Coke and a Smile: Is the Aqueduct Alliance Coca-Cola’s Solution to Escape Future Liability for Groundwater Depletion. Pac. McGeorge Global Bus. & Dev. LJ , 26 , 475.
Gopinath, C., & Prasad, A. (2013). Toward a critical framework for understanding MNE operations: Revisiting Coca-Cola’s exit from India. Organization , 20 (2), 212-232.
Torres, C. A. C., Garcia-French, M., Hordijk, R., & Nguyen, K. (2012). Four Case Studies on Corporate Social Responsibility: Do Conflict Affect a Company’s Corporate Social Responsibility Policy. Utrecht L. Rev. , 8 , 51.
