Coca-Cola's corporate social responsibility (CSR) initiatives in India

Abstract:

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:

· 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 green washing and discuss and debate whether Coca-Cola is serious about its water sustainability initiatives.

Keywords:

Corporate social responsibility strategy, Environmental responsibility, Economic responsibility, Sustainability, Water sustainability, Water neutral, Water efficiency, 5 pillar growth strategy, Stakeholder tension, Operations, Green washing

"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 Vice-President, South, The Hindustan Coca-Cola Beverages Pvt. Ltd., in 2007.

"It is in India where the company's abuses of water resources have 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."

- Amit Srivastava, Coordinator of India Resource Center, in 2007.

Introduction

On February 18, 2008, leading beverage company in India, The Hindustan Coca-Cola Beverages Pvt. Ltd (Coca-Cola India), was awarded the Golden Peacock award⁴ for Corporate Social Responsibility (CSR) for the several community initiatives it had taken and its efforts toward conservation of water. The award recognizes companies for their commitment toward business, their employees, local communities, and the society. Atul Singh (Singh), CEO, Coca-Cola India, said, "Coca-Cola India has always placed high value on good citizenship and has undertaken several initiatives for community development and inclusive growth.

We are gratified to receive this global award and are humbled at being recognized for the little contributions that we have been able to make to preserve and protect the environment and toward community development."⁵

Coca-Cola India was established as the Indian subsidiary of the US-based Coca-Cola Company (Coca-Cola) in 1993. As of 2008, Coca-Cola India had 24 bottling operations of its own and 25 bottling operations owned by its franchisees.⁶ 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...

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...

Corporate Social Responsibility Initiatives in India Environmental Responsibility Initiatives

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...

The 5 Pillar Growth Strategy

In August 2007, Coca-Cola India launched a 5 pillar growth strategy to strengthen its relationship with India...

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 India's Response

Coca-Cola opened an exclusive website, www.cokefacts.org, which addressed the allegations related to India and other countries. In another official statement, Coca-Cola rebutted the charges against its bottling plant at Plachimada, Kerala.

The company said the plant was not responsible for the depletion of the underground water table. It quoted a study conducted in October 2002 by Dr. R.N. Athvale, emeritus scientist at the National Geophysical Research Institute (NGRI), which had concluded that there was no field evidence of overexploitation of the groundwater reserves in the area surrounding the plant...

Outlook

As of February 2008, Coca-Cola India had carried out its CSR activities across 45 bottling plants at an annual spend of Rs. 40 to 50 million on activities such as water conservation management, health, and education. By February 2008, the company had installed around 350 rainwater harvesting projects in several states of India...

Exhibits

Exhibit I: Criticisms against Coca-Cola India
Exhibit II: Coca-Cola's Global Water Conversation Goals
Exhibit III: Coca-Cola's Global Community Watershed Program
Exhibit IV: Coca-Cola India's 5 Pillar Growth Strategy
Exhibit V: A Photograph of Mass Demonstration against Coca-Cola at Mehdiganj
on March 30, 2008
Exhibit VI: List of Awards and Recognition Received by Coca-Cola India
Exhibit VII: Print Ad of Coca-Cola India's 'Little Drops of Joy' Communication Campaign