Corporate social responsibility (CSR), refers to enterprises espousing accountability for their movements and taking part in undertakings that convey constructive lasting outcomes to the environment where they work, the clients, employees, societies, and all the stakeholders (Caramela). However, at times the consequences of some activities of an company may additionally be negative. These bad outcomes may also include, water contamination, era of unsafe products to human our bodies and many more.
Coca-Cola Company is an example of agencies whose operations have had both tremendous and negative results in their place of operations and will be used in an analysis of these two faces for a better understanding of this concept.
Based in the United States of America, with its headquarters in Atlanta, Coca Cola was incepted in 1986 as a local manufacturer of soda, indicates Coca Cola, 2010. Since then, the company has continued to grow and in 1920s it began selling its products in the Caribbean and Canadian markets. Further, the corporation has continued to grow internationally and now operates in more than 200 countries across the world according to the Economywatch.com. A Coca cola report, 2010, explains that in 2005 Coca-Cola became the largest manufacturer, distributor and marketer of non-alcoholic drinks in the world.
The coca cola company take part in activities designed to assist the populace of its areas of operation to lead a better and get services in addition to what governments offer. Over time, Coca-Cola has been able to establish Corporate Social Responsibility strategy with the concept of ‘Live Positively’, which has seven core components: the community, water stewardship, beverage benefits, active healthy living, sustainable packaging, the work place, energy and climate.
This CSR, is based on the 1984 established Coca Cola Foundation’s agenda of developing and maintaining vibrant, sustainable communities to make the society a better home for man. Consequently, Coca Cola has gone ahead and subscribed to international CSR guidelines such as, narrates Torres et. al (2012) The foundation has since participated in different areas such as providing clean and enough water to the community, ensuring health standards are observed, as well as supporting children from disadvantaged families complete their school.
According to the Coca Cola CSR, 2010, the company introduced Plant Bottle, which is a “fully recyclable PET bottle made from a blend of petroleum – based materials and up to 30 per cent of plant-based materials. This has also been replicated where the company has achieved 99 and 92 per cent recycling rates in Europe and North America. In India, Coca-Cola became a member of CEO water Mandate and collaborated with World Wildlife Fund (WWF), concerning the water issues of firm and the control measure after the environmental conflict in India,
In 2015, as per the Coca-Cola Company 2015/2016 sustainability report, through the 5by20TM initiative the organization had empowered more than 1.2 million women entrepreneurs across its global value chain. Further the report indicates that roughly 372,000 women participated in 5by20 in 2015, increasing the cumulative number of participants by 43 percent over 2014.
In 2003, a report by Centre for Science and Environment (SCE) in India indicated that samples of Coco Cola products had been found to have amounts of pesticides way above the allowable standards. As Torres et. al (2012), narrates, the pesticides were deemed to contaminate ground water and other sources of water. Burnett and Welford, (2007), also indicate that in 2006, (CSE) published the second test on Coca-Cola products which were also found to contain high level of pesticide.
Conversely, an analysis in the year 2008 by The Energy and Resources Institute (TERI) concluded that the water used in Coca-Cola in India was found to be is free of pesticides. TERI argued that because the final products did not be tested, other ingredients could contain pesticides in process (Torres et.al).
Vedwan, (2007) writes that Coca-Cola has also been accused of causing water shortages and pollution. This not only culminated in lengthy legal battles with the India government, but it also led to the company losing consumer trust in India though it’s damaged trademark image. A point in case as Pirson and Malhotra, 2008 writes is the 40% drop in turnover within two weeks in India after the release of the 2003 CSE report, and the subsequent 15% decrease in annual turnover 2003.
The damaged trademark reputation not only impacted customers in India, but also had a ripple effect on consumer behaviour in US. This, as the New York Times, 2005, resulted in Ten American Universities discontinuing selling Coca-Cola products at campus facilities.
The reason why these lengthy legal battles negatively affected the reputation of Coca-Cola is pegged on the response the company gave to the issue, indicates Pirson and Malhotra (2008). From the onset of the battle, Coca-Cola refused to accept that their products contained pesticides as well as refuted that its production process led to contamination of water sources, both underground and otherwise. However, with time as the Times magazine, (2008) indicates, the company became aware of its mistake on battle and consequently the company vice president of environment and water resources, admitted that the organization had not satisfactorily handled the issues.
Corporate social responsibility is believed to stimulate a vision for the accountability of businesses in a wide range of stakeholders beyond shareholders and investors. This is meant to boost a positive image important for a company’s successful business operations. In the case of Coca Cola India, poor performance was brought to the fore though the media and consumers
A report published in 2007 by Business in the Community, indicated that 86 per cent of consumers, will have a positive image of an establishment if its activities protect the environment and welfare of workers, community and society at large, both today and tomorrow (Pandey). This is something Coca-Cola ignored in the case of India. In order to boost the company image when it had deteriorated in India and the United States, it was imperative to consider how its activities could contribute to sustainable environment to get out of the wrangles it had entered into.
For instance, according to the Coca-Cola India report (2012), the company adopted projects which could ensure the firm does not use groundwater by 2009. These projects mainly considered environment area, such as water shortage, underground pollution and irrational water use.
Subsequently, in the 2012 Water Stewardship and Replenish Report, the company pointed out that its operation had achieved full balance between groundwater used in drink production and that restocked to nature and communities. The experiences of controversy in India, it motivated the firm to grow and take corporation social responsibility policy on a global that focuses on water management.
At the time when Coca-Cola’s positive image got damaged in India and United States of America, the company experienced retrogressive development in two spheres, economic development and public image. The company had to be cognizant that cultivating its reputation and handling public and environmental glitches were important for the success of the organization. For this to be successful, Coca Cola had to make Corporate Social Responsibility part of its long-term strategies.
To bring this strategy into fruition, the company has carried out a number of measures. After 2001, Coca-Cola put CSR a major part of the company development strategy. The challenges the company experienced in India and United States of America was a wakeup call and henceforth has been determined to protect its public image. In the same spirit, in the year 2007 entered into a partnership with WWF.
Its primary objectives as Lambooy, (2011) narrates are increasing understanding on watersheds and water cycles to improve Coca-Cola’s water usage, working with local communities in various places in the world, and developing a common framework to preserve water which could then be offset against the manufacture costs in a long time period.
From the time when Coca-Cola implemented the above processes in the business operation, its CSR is becoming greater and this has led to boosting its brand. Subsequently, the company has preferred to invest in comprehensive and long term methods to reflect the company corporation social responsibility. This will eventually stimulate the growth of company and society.
According to Raynard and Forstater (2002), corporation social responsibility cab be categorized into three: Value creation, Compliance, Harm minimization. Value creation is meant to raise the positive image and create worth of company, for example, invention, investment. A point in case is when Coca-Cola made a partnership in World Wide Fund for Nature. Compliance category involves some enactment of industry principles and legal responsibilities, such as, environmental regulations, the rights of workers, consumer rights.
The third category entails reduction of the negative impacts of establishments on society. According to the company sustainable report of 2007, Coca-Cola tried to minimizing the negative effect on environmental pollution issues in India, to take full advantage of the benefit for its brand. The company is still committed to improve its brand public image by other corporation social responsibility measures,
Coca Cola was based on the 6 pillars of business ethics i.e. creation and preservation of jobs, protection of the natural environment contribution to economic growth, contribution to training, contribution to the fight against social rejection and contribution to the development of the region. So as to realize these goals, Coca Cola should involve all stakeholders i.e. consumers, employees, shareholders, NGOs and local administrative organs, in the following ways:
For consumers, the company should pay attention to different ethos of various people and races in the world. Moreover, it should pay special attention to the moral and sustainable consumption by producing environment-friendly produces. This should also involve having in place recycling plans for their products as well as educate its clientele to recycle its products.
On the part of its employees, Coca Cola should create safe and a fit working conditions, void of discrimination race, nationality and gender. It should also entail offering reasonable compensation to employees. The company should also encourage innovation through encouraging employees to come forward with ideas about how to improve the organization’s corporate social responsibility. By including their ideas and inspiring their active participation, the organization ensures that social responsibility is a major input in the organization operations and not just a public relations exercise.
Coca Cola should also come up with long term program which should adhere to the CSR theory. Among others, the strategy should involve engaging stakeholders, taking care of the environment where it runs its activities. On the part of local authorities, Coca Cola should pay taxes. Finally, the organization should support the local communities in its area of operation by offering them jobs and directly supporting the local communities’ businesses.
In order for Coca Cola to achieve sustainable development, it employ strategies such as
social accounting, where it will disclosure its non-financial data on the company operations in environmental, social and ethical issues. The social accounting information can be gotten through annual audits carried out by external stakeholders. This information can be shared through the annual Corporate Social Responsibility & Sustainability Report.
Burnett, M. and Welford, R. (2007). Case study: Coca-Cola and water in India: episode 2. Corporate Social Responsibility and Environmental Management,
Centre for Science and Environment, (2003). Analysis of Pesticide Residues in Soft Drinks, August 5, 2003.
Cedillo Torres, C.A. et al., (2012). Four Case Studies on Corporate Social Responsibility: Do Conflicts Affect a Company’s Corporate Social Responsibility Policy?
Raynard, P., & Forstater, M. (2002). Corporate social responsibility: Implications for small and medium enterprises in developing countries.
Caramela, Sammi. What is Corporate Social Responsibility? 27 June 2016. Online. 24 March 2017.
Pandey, Ritesh. CSR Activities Coca Cola India . 9 December 2012. online. 24 March 2017.
The Coca-Cola Company, ‘CEO Water Mandate’ retrieved from http://www.thecoca colacompany.com/citizenship/water_mandate.html