Introduction
Social responsibility is a contemporary management challenge that all companies have to consider throughout their operations. From the perspective of the European Commission, social responsibility involves the accountability of enterprises to the society for the impacts of their operations. Notably, the members of any society have expectations that the company or companies in their localities will be fair and do what is right. Moreover, organizations are expected to instigate an improvement in the lives of people in all aspects. At present, social responsibility is a fundamental constituent of the decision-making process for most corporate bodies. Nevertheless, the current efforts at social responsibility were realized after various corporations were involved in matters stretching from environmental pollution to human rights ( Cedillo et al., 2012 ). The resulting reputation damage is considered as a main motivation for corporations to adopt policies regarding social conduct and the environment as well as human rights. In this paper, the social responsibility of interest regards the Coca-Cola Company’s dispute in India.
The challenge faced by the Coca-Cola Company
The coca cola company faced a challenge in India involving the overuse of underground water. The challenge was widespread in various states of India including Rajasthan, Kerala and Plachimada. After establishment of these factories in various states of India, the impact on the water resources was evident after a short period of operation. As Raders, 2009 reports, “within six months of the plant’s operation, villagers and farmers began to notice their wells going dry, and the pumps used by landowners near the factory began to siphon a much lower quantity of water”. In some of these states, several campaigns were initiated as well as massive demonstrations by the people of India in bid to stop the Coca-Cola factories from depleting their water resources. Since the report focused on the welfare of the people, it attracted abundant media and public attention which had an effect on the revenues of the Coca-Cola Company almost immediately. The core accusations were the excessive extraction of groundwater to the hurt of Indian citizens and the pollution of water and soil.
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Notably, the people of India held that the Coca-Cola Company was responsible for the water shortages evidenced in some sections of India. Moreover, this accusation went hand in hand with allegations of polluting the waters of India through releasing wastewater into the rivers and the fields adjacent to the manufacturing plants of the Coca-Cola Company, thus affecting the community. As Cedillo et al., 2012 reports, the public health authorities in India took a step of placing signs near hand pumps and wells indicating to the community that the water posed a health hazard and hence unfit for drinking or any other form of human consumption. As a matter of fact, the pollution extended to the soil and reached ground water, affecting its quality and taste to the residents.
The company went to the extent of distributing sludge to farmers in certain states such as Plachimada under the guise of a fertilizer donation. Analysis of this sludge showed that it contained toxic levels of Cadmium and lead. Moreover, it had no agricultural value to farmers but only made the soil toxic and put their lives at risk of poisoning . When the vice president of coca cola was questioned regarding this activity, he claimed that it was a measure to help the poor farmers (Srivastava, 2006).
As Stecklow 2005 notes, T he India Resource Center served as the link among the various villages that were experiencing similar conflicts with the coca cola company and thus allowed for information exchange and strategizing. Moreover, The India Resource Center took the initiative of publishing various reports on the lack of social responsibility by the coca cola company. Through its website, the various allegations against the coca cola company were articulated and reached the population of Indian students studying in Europe and the United States. With this information, the students took action and successfully organized for over forty campuses to cancel their contracts with the Coca-Cola Company (Stecklow 2005).
The response of the management to the challenge
Given the grave nature of the concerns, the state government instigated proceedings against the plant. Soon enough, the High Court barred the Coca-Cola Company from excessive extraction of groundwater ( Cedillo et al., 2012 ). Subsequently, the Coca-Cola Company had to suspend its production and sought to have a renewal of its license of operation. On its part, the Coca-Cola Company maintained that trends of diminishing rainfall had caused the scarcity of water in that particular area. They sought to distance themselves from the claims of having excessively used the underground water resource.
However, after numerous efforts, the Coca-Cola Company had to submit to the State Pollution Control Board and agreed to have directly channeled contaminated water into the ground. The submission resulted in the cancellation of license and the factory operations were halted. Nevertheless, as Raders, 2009 reports, the company continued arguing its case and after a long period of judicial processes, the ruling was made in its favor, giving it a renewal of license and the resumption of production. The ruling indicated that since the company relied on water for its activities, it had the right to use up to half a million liters of water per day.
However particular state governments took action and formed panels that recommended fining of the company for the effects of pollution implicated on water and soil. Moreover, special committees were formed to look into the claims made by the community members regarding water scarcity and pollution. The results were a long legal procedure where the Indians accused Coca-Cola of the aforementioned allegations ( Halbert, 2006) . As a result, the Coca-Cola brand underwent a pronounced damage of its image and a significant loss of trust by the consumers both in India and internationally. For instance, through the efforts of the Indian resource website, the company experienced a 40 percent drop in sales in India within two weeks only ( Cedillo et al., 2012) . Similarly, the conflict came to the attention of customers in the US and caused demonstrations by students and other groups of activists. The result was the temporal stoppage of the sale of Coca-Cola products in over forty campuses, resulting in an overall reduction of sales by 15 percent in the entire year ( Cedillo et al., 2012) .
Although the company had previously experienced challenges pertaining to social responsibility in other sections of the world, the effects had not been as far reaching as in the case of India. In fact, none of the previous instances had implicated a damage of consumer trust in the company as well as its beverages. By going to court, the Coca-Cola Company made a mistake in responding to the problem. Moreover, the company denied all the allegations that the people of India put forward such as over-using the water resources and polluting underground water and soil. The mistake was in nullifying the claims and seeking to prove the company’s integrity rather than showing concern for the plight of the community. The actions of the company made the Indian population to perceive the Coca-Cola Company in bad light as being bent on reaping profits without concern for the health of the public ( Cedillo et al., 2012) . In previous cases, the company had involved the stakeholders in solving the problem as a demonstration of goodwill.
After a couple of years, the company realized its mistake in handling the social responsibility issue in India that caused a loss of consumer trust. In fact, the Coca-Cola’s vice president Jeff Seabright who is in charge of water resources the environment acknowledged that the company failed to sufficiently handle the issue ( Cedillo et al., 2012) . He expressed his realization that the perception of the community where the operations are held is important for upholding the company’s image. It is therefore paramount that the company acts in the goodwill of the local community and show concern. Despite having denied the allegations, the company had to put up measures of restoring the lost consumer trust as well as the brand image.
Notably, the company set up a website where the company’s position in social responsibility and water resources stood pertaining the situation in India. However, this step of affirming its integrity resulted in dismal gains and hence a change of strategy was warranted. The company increasingly transformed its approach to consist of measures of controlling damage particularly addressing the grievances held by the Indian people. By the year 2008, the company had managed to publish a report on its environmental performance and operations within India ( Cedillo et al., 2012) . Moreover, the company formed a foundation in India to work with the local people and other non-governmental organizations to look into the water problems. Nevertheless, the most exceptional adjustment of plans in India by the Coca-Cola Company entailed the setting up of different community water projects. A good example was the project for harvesting rainwater that the Coca-Cola Company instigated with partnership from a host of partners and the local communities.
How I would have responded to the challenge
Social responsibility is a crucial aspect for every company that seeks to have a positive image. In this case, I would have used the strategy of partnering with the stakeholders in the community to obtain a solution to the water problem. Instead of going to court, I would have called for a meeting with the water authorities of India with the aim of exploring a sustainable solution to the water problem. I would adopt measures to realize a reduction in water used by the company’s production activities. For instance, the use of plastic bottles rather than the glass bottles that require water for sanitization after being returned to the factory.
Another important measure would be to ensure the treatment of waste water before releasing it to the environment. Such efforts would ensure a reduction in pollution of underground water, thus keeping it safe for human consumption. Towards ensuring a return of water used in the company’s production, I would start water projects that would ensure that rain water is harvested to reduce over-reliance on the groundwater. Moreover, I would instigate programmes of water stewardship to reduce the amounts of water used in the company’s operation, maybe scaling down the operations in line with the water situation. I would also ensure that there are publications of the efforts geared towards realizing water sustainability on an annual basis.
References
Cedillo Torres, C. A., Garcia-French, M., Hordijk, R., Nguyen, K., & Olup, L. (2012). Four Case Studies on Corporate Social Responsibility: Do Conflicts Affect a Company's Corporate Social Responsibility Policy?
Halbert, T. (2006). Coke in Kerala. Journal of Business Ethics Education , 3 , 119-141.
Raders, G. (2009). Combating the Privatization of Life in a Neo-Liberal Regime: The Fight for Water Democracies in India. Berkeley Undergraduate Journal , 22 (1).
Srivastava, A. (2006). Coca-Cola: Poisoning Water, Land and People. India Resource Center, March , 14 .
Stecklow, S. (2005). How a global web of activists gives Coke problems in India. Wall Street Journal , 7 (June), 1.
