Corporate Environmental Responsibilities and Issues: The Coca Cola Company

These past few decades, environmental protection has been of great interest to the general public. With the aid of the Internet, news and social media and the revolution of information, this shines light to the business practices across the globe. Organisations are now often adjudicated on the basis of their environmental campaigns. Stakeholders now demand transparency from companies and Corporate Social Responsibility is no longer a frill but a requisite (Das 2006). The Coca Cola Company is one of the most popular companies known across the world and is the leading manufacturer, distributor and marketer of non-alcoholic beverage concentrates and syrups and has been around for 126 years since 1886. The enterprise has a remarkable portfolio of 16 billion dollar brands and consumers in more than 200 countries and a product range of 3500(The Coca Cola Company 2013). This paper will scrutinise how Coca Cola has acted in regards to the environment and their deportment in addressing the issues arising from the production of products and its impacts on the environment and society.

The Case For Coca Cola

Coca Cola has been one of the pioneers in pushing environmental campaigns in the past recent years. The organisation has various programs that address to different issues in the environment; one example would be their move to tackle water stewardship. The company has required each one of their bottling plants to conduct a vulnerability assessment for local sources. These assessments take account the possible risks that local water sources face in providing the company’s facilities and the neighbouring communities. The main ingredient for the beverages is water and the amount produced is approximately 1.8 billion products a day. With this huge amount of product produced the usage of water is bound to be colossal and this will certainly lead to water source depletion. Coca Cola has proven that they are efficient in using water by reducing the ratio of usage by 20% on 2012 compared to the 2004 baseline (Coca Cola 2012). In 2011, they have achieved a balance between the use of ground water in production and the replenished amount to the biota and communes in India. Coca Cola has mounted 600 rainwater-harvesting structures that gather rainwater for aquifer storage. They have also installed drip irrigation in Kaladera, Rajasthan helping 300 farmers use a water-efficient system for agriculture. In Columbia and Nicaragua, Coca Cola has worked with the national governments of both countries and the FEMSA Foundation to establish community water treatment systems that will provide clean and safe water. They have also partnered up with both national and provincial government bodies in China to build a new wastewater treatment plant and promote the recycling of compost into organic fertiliser in solution to the husbandry of animals and agriculture in which only 20% of manure from these industries were properly disposed resulting to great accumulation of manure on street sides which were causing odour and water pollution (Coca Cola 2013).

In June 2007, Coca Cola has formed a partnership with the World Wildlife Fund (WWF) in mission to preserve all seven of the world’s most important freshwater basins and by 2011 this partnership has met their conservation goals for all the basins, this includes the restoration of habitats, new reserves of fresh water and enhancement of water quality. Also, the Replenish Africa Initiative (RAIN) was established in 2009 by the Coca Cola Africa Foundation which is a USD $30M program that aims to provide safe water by 2015 to 2 million people in Africa (Business Wire 2012). Coca Cola believes that by sustaining the water resources for communities it helps them stay resilient thus making their brand stronger and sustainable (Coca Cola 2013). It is not an onus of Coca Cola to see the necessities for water stewardship^[1] but the company has recognised the deleterious effects of the production to the environment and they have indeed done amply to mitigate these effects and contribute back to the society. Although companies participate in Environmental Management for the obvious purpose of the benefit, the Opportunity Cost [2] of investing in this field may be too high compared to the remunerations that they will receive back (Lesourd and Schilizzi 2001, 16) thus the benefit of the doubt should be given to Coca Cola for abetting Water Stewardship.

The Case Against Coca Cola

Even with all the projects that Coca Cola reciprocates back to society, negative news still seems to plague the business. The 1908 Slogan of Coca Cola “Good Till the Last Drop” seems to have been a taken a little to literal. In 2000, with the invitation of the State Government of Kerala to industrialise the state, Coca Cola opened a bottling plant in the Plachimada community in India. Soon after the establishment of the plant, complaints were heard from the villagers saying that the water from the wells is polluted. The company has been accused of distributing waste sludge with the Cadmium[3] carcinogen and Lead[4] as a free fertiliser to the aborigines living near the plant (“Coca Cola’s ‘toxic’ India fertiliser” 2003). According to David Santillo (2003), the contamination level was above those set by the World Health Organisation (WHO) and has spread to the water supply. The village of Panchayat has suspended Coca Cola’s license, in April 2003, to operate but has continued and the case went to court. In August 2003, the plant was ordered to discontinue the sludge distribution to farmers but the official K.V. Indulal who carried out investigations has found that the contamination levels were tolerable, this has resulted Coca Cola to be accused of bribery and corruption by the Anti-Corruption Bureau of the State of Kerala, but Coca Cola has rejected all allegations. The Kerala High Court sided with the Plachimada villagers in December 2003 and has given the company an order to stop water mining in wells but allowed to excavate water in amounts normally used for agriculture (Rejeev 2005).

Coca Cola then filed an appeal and was allowed to mine 500,000 litres for water per day in April 2005; this decision has garnered a negative response and disappointment from the local people and activists. The Kerala State Pollution Control Board (KSPCB) shut down the plant in 2005. G. Ramjohan, Chairman of KSPCB, stated that the closure was done because the plant does not have ample waste and toxic treatment systems (Rajeev 2005). Plachimada was declared as impoverished water zone caused by a severe drought in Kerala in 2004 and these resulted to a struggle for water and irrigation rights throughout the country that led to protests against Coca Cola (Aiyer 2008). It was later found out by the Centre for Science and Environment (CSE) that almost all colas and mineral water produced in plant contained large doses of pesticide. Coca Cola then reciprocated by releasing the results of tests done by Central Science Laboratories stating that their products meet the criteria for stringent purity for pesticides in bottled water, which was set by the European Union (“Coca Cola Pesticide Free” 2006).

These negative news and publicity has dealt a huge deal to Coca Cola’s image and risks are stakeholders are being affected. Social and environmental ratings or the lack thereof can be detrimental to the image and performance of the company.  Coca Cola was dropped by KLD Research and Analytics Inc. from the Broad Market Social Index and as a result TIAA-CREF sold 50 million stocks of Coca Cola (“Coke dropped from BMSI” 2006). The company’s stock market performance is the main concern for shareholders as poor rankings means financial losses and also this will represent the business’ image to the public.

Conclusion

Although Coca Cola’s commitment to Corporate Environmental Responsibility may seem ostentatious, there is little reservation given the company’s reputation where their movements are often meticulously scrutinized. But the efforts that they displayed in the recent years, it shows that Coca Cola if heading to the right course in proving to its stakeholders that it is an ethical and socially responsible business. Attesting to be one of the pioneers in environmental management projects is to be of mention, unlike in the past several years where the company had no cognizance of their products to the environment. It seems that now, the Coca Cola Company is ardent in improving their water stewardship and environmental footprint as well as proving to critiques wrong by being a leader.