BUSINESS ETHICS AND CORPORATE GOVERNANCE -CORPORATE SOCIAL RESPONSIBILITY CASE OF COCA COLA

SR NO. ENROLLMENT NO NAME

1 128050592001 AMBER THAKUR

2 128050592004 PRIYANKA BACHKANIWALA

3 128050592013 RAKSHIT BHAVSAR

4 128050592024 KOSHA DOSHI

5 128050592051 SONAM LALWANI

6 128050592060 VINAY MODI

ASSIGNMENT ON

BUSINESS ETHICS AND CORPORATE GOVERNANCE

OF“COCA COLA CSR CASE STUDY IN INDIA

 SUBMITTED

TOMRS.DRASHTI MAM

 SUBMITTED BY

CORPORATE SOCIAL RESPONSIBILITY

According to World Business Council for Sustainable Development,

‘Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large’.

DEFINITION OF CORPORATE SOCIAL RESPONSIBILITY

Creating a self supportive business platform Building social investment and goodwill Building trust and transparency in the business Meeting public expectations from the business Engaging in public policy

Other Objectives Understanding the basics and fundamental

principles To appreciate the impact of CSR on businesses To discuss how CSR initiatives can benefit

businesses

OBJECTIVES

CSR MOVEMENT

START OF CSR ACTIVITIES IN INDIA

Corporate social responsibility can be defined as ethical payback of corporate house towards the society‘. Oldest of Indian corporate are still leading CSR activities in Indian society with TATA itself contributing to an extent of 64%.

Indian CSR activities were driven by the ethical beliefs of the founding fathers and their philanthropic ideas in pre-liberalization era. These activities had very less accountability and transparency in them. The level of commitment towards the projects that were conducted was less and so were allocation of resource and planning for the same.

TYPES OF CSR ACTIVITIES IN POST LIBERALIZED INDIAN SCENARIOS

After opening up of Indian economy in 1990, Indian corporate houses were exposed to threat of external competitors for the first time.

Global competitors had deep pockets and were able to pay high so the concern of employee satisfaction and happiness increased among Indian corporate house thus leading to sudden surge of private sector companies who were profit makers pre 1990 into social/employee concern affairs like CSR.

TYPES OF CSR ACTIVITIES

Local community development projects and empowerment programs

Improvement and maintenance of environment Education Healthcare System Safe drinking water Nutrition of mother and child Hygiene and Sanitation Sustainable & Social Development Economic Growth Senior Citizens & Geriatric Care

INDIA AND CSR ACTIVITIES

According to Lord Holme and Richard Watts, “CSR is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large”.

CSR is an idea that refers to a business’ responsibilities towards different groups of the society in which it exists and grows

To rehabilitate the children withdrawn from work, the Government of India is implementing the National Child Labor Project (NCLP) Scheme in 266 districts of the country. This is a major scheme for the rehabilitation of child labor.

The special schools/Rehabilitation Centres provide non-formal education, vocational training, supplementary nutrition, stipend etc. to children withdrawn from employment.

CSR ON CHILD LABOR

Sesa Sterlite under its developmental activities has tried for the development of society at a Large.

This time Company under its corporate social responsibility has aimed to strengthen the women group through tailoring training. Inaugurating the tailoring training center at Paikarani Pinda in Muniguda Block, K.R Kundu Head HR , Sesa Sterlite addressed the community to earn more by your leisure time and this is a initiative of company to strengthen the women groups in the society.

CSR FOR WOMEN

CRY – Child Rights and You and BBH India, CRY’s creative partner have joined hands to spread awareness about the importance of voting for child rights in India as part of CRY’s nationwide campaign ‘Vote for Child Rights’.

‘Vote for Child Rights’ campaign aims to pursue political candidates to ensure due emphasis is given to child rights in their party manifestos. The mission was to make politicians stand up and take notice.

CSR FOR CHILD RIGHTS

INDIAN INDUSTRIES & CSR

CSR ACTIVITIES OF CORPORATE GIANTS

TATA set some 66 percent of profits of Tata Sons go to charity. Tata Consultancy Services (TCS) has set up a fully-equipped computer training laboratory for children from the ‗Society for the Welfare of the Physically Handicapped and Research Centre‘, in Pune for imparting basic computer knowledge.

Aviva, a life insurance firm have launched street school to educate the under privilege students.

Unilever is using micro enterprises to strategically augment the penetration of consumer products in rural markets.

The Coca-Cola drink, popularly referred to as ‘Coke’, is a kind of cola, a sweet carbonated drink containing caramel and other flavouring 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).

In 1894, a fountain seller named Joseph A. Biedenharn introduced the concept of selling the prepared drink in bottles. He thus became the first bottler for Coca-Cola.

The period 1940 to 1970 was one of rapid international growth and Coca-Cola became a symbol of friendliness and refreshment across the world.

COCA-COLA INDIA

Coca-Cola entered India during the 1970s. Rather than dilute its stake, Coca-Cola India opted to close down its operations in India and exited the market in 1977.

In 1993, as part of India’s liberalization policy, the market was opened up to foreign companies to establish their operations in India. The same year, Coca-Cola India staged a re-entry into the country through a strategic alliance with Parle Exports (Parle). The alliance gave Coca-Cola India ownership of five of Parle’s popular brands (Thums Up, Limca, Maaza, Citra, and Gold Spot) with a market share of around 60 percent, and a well established network of 56 bottlers.

In 2006, E. Neville Isdell (Isdell), Chairman and Chief Executive Officer, Coca-Cola, said, “As we create value for our shareowners and other stakeholders by running a successful business, we must also be a force for positive global change — one community at a time. We must help create economic and social value, protect the environment, and contribute to the long-term sustainability of every community we serve.”

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.

A report released by the Center for Science and Environment7 (CSE) in 2003 revealed that 12 soft drink brands sold by Coca-Cola and PepsiCo. Inc.8 (Pepsi) in India had pesticide levels far higher (almost 36 times more) than what was permitted by the European Economic Commission (EEC). It was believed that the use of groundwater which had high pesticide residues and which had not been properly treated by the companies was the main reason for such high pesticide levels.The same study stated that no such residues were found in the same brands sold in the US.

The company was vehement in its denial of all the criticism and described the charges as completely false. In addition to increasing the amount to be spent on CSR initiatives and initiating several projects like rainwater harvesting, watershed protection (globally) for restoring the groundwater it had utilized for beverage production, and other community development initiatives, Coca-Cola India made an endeavour to communicate to the public that it was a socially responsible company.

And by overcome of all these problems company still able to manage additional investment of US$ 25 to 30 million to install water conservation projects that included checking and cleaning of dams and rainwater harvesting.

Coke has extensive bottling operations in Latin America.

The Colombia page states only that Coke has “bottler agreements with independent companies that own and operate bottling plants that manufacture and distribute Coca-Cola products”, while the other country sites disclose the number and names of the bottling companies used by Coke to manufacture their products.

July 30,

1990

•First Coke bottling-plant worker in Colombia killed, with a shot to the head, during a strike for better working conditions in Narino, in the southwest. The victim was on the local union board of directors.

1994-95

•Three more coke workers killed, all of whom were employed at the Carepa plant in northwestern Colombia.

Dec.5,1996

•Right-wing paramilitaries storm the Carepa plant, killing a worker, then kidnap a union leader from his home and torch the union’s offices. They return to the plant the next day, demanding that workers sign a statement resigning from the union-or else-and order top union leaders to leave town “if you want to live beyond today”.

July 20,2001

•The united Steelworkers and the International Labor Rights Fund file suit in Miami on behalf of the SINALTRAINAL union in Colombia, naming Coca-Cola and two of its Colombian bottlers as defendants. A judge later dropped coke from the suit, leaving the bottlers as defendants.

Apr.16,2003

•Labor activity Ray Rogers launches his “Killer Coke” campaign at Coca-Cola’s annual meeting in Houston. Months later, Bard College in New York becomes the first U.S. school to not renew its beverage contract with coke because of the controversy.

Apr.13,2005

•Coca-Cola releases a study it commissioned by consultant Cal Safety Compliance that found no instances of anti-union violence or intimidation at Coke bottling plants in Colombia.

• New York University and the University Michigan become the latest colleges in the U.S. and abroad to ban Coke products from their campuses.Dec,2005

Acknowledge Underlying Facts.

Public Statements Denouncing Anti-Union Violence.

Human Rights Committee.

Investigation and Training.

Address Anti-Union Impact of Violence.

Cessation of Criminal Charges.

What are workers in Colombia demanding?

Over exploitation and pollution of water sources in India

The company originally began selling its products during the 1950s but was eventually kicked out of the country in 1977 for violating investment laws.

In 1993, in a new political and economic climate of liberalized trade and investment policy, Coke was allowed back into the country where they promptly purchased the leading domestic soft drink brand. Since then, Coke has invested more than $1 billion in India.

Since 2002, Coke has come face to face with strong resistance to their ongoing water takings, their environmental pollution and the discovery of high levels of pesticides in their products.

Coke opened its plant in Plachimada in 1998, digging 65 wells with the capacity to extract 1.5 million litres of water each day from the aquifer.

The company received 15% cash back on its investment in the Plachimada factory by the government of Kerala.

Since Coke set up shop in Plachimada and began extracting vast amounts of water and adding polluting sludge to farm fields, local farmers have seen their wells dry up and crop yields shrink forcing many to abandon their farms.

Plachimada, Kerala – Coke meets its match

The study also found that between May 2003 and May 2004 ground level dropped in 11 of the 16 wells.

Despite the region’s extended droughts, Coke continued to extract water from their boreholes, while 2000 families in the area were being adversely affected by the lack of water.

  When the suffering of the people in Plachimada reached a limit,

farmers and community members began to organize resistance in order to regain control of their rights to the water and soil which was being used extensively by Coke.

On December 16, 2003, the Court historically declared that the local self-government body has the right to control the water exploitation by Coke’s Plachimada plant. The judgment rejected Coke’s claims and forced the company to stop exploitation of water reserves and find alternative water resources within one month.

The water table has declined between 25-40 feet in the last four years, and Coca-Cola has been discharging its waste water into the surrounding fields, and now into a canal that feeds into the river Ganges, a holy river for millions of Indian.

The movement to shut down the Coca-Cola plant has been growing rapidly for the last year.

So far, not only have the authorities not cooperated at all, they have consistently refused to make good on their promises of inquiries and investigations to look into Coca-Cola's practices that are depleting the groundwater and polluting the water and soil.

Mehdiganj, Uttar Pradesh

In addition, the authorities have trumped up criminal charges against some of the key leaders of the struggle, and issued orders to these leaders preventing them from "shouting slogans or making inflammatory speeches … within 300 meters of the plant".

The communities are determined to close down the factory in Mehdiganj, and the local organizers have been extremely successful in garnering local support in the area.

Kala Dera is a large village outside the city of Jaipur.

Agriculture is the primary source of livelihood.

Coca-Cola started its bottling operations in Kala Dera in 2004, and within a year, the community started to notice a rapid decline in groundwater levels.

The Central Ground Water Board, a government agency, not only confirmed the declining water table as a result of Coca-Cola's indiscriminate mining of the water, it also faulted Coca-Cola for creating "ecological imbalances" in the area.

Kala Dera Case

The groundwater levels had dropped in the firsts even years of the company’s operations, from 1999 to 2006.

Even in 2008, the company continued to face mass demonstrations from local communities who demanded that the company shut down its bottling operations.

There were also allegations that the company had seized land from farmers and that it had discharged hazardous material.

A few critics came down heavily on Coca-Cola’s much acclaimed TCCC standards for waste management.

Other Obstacles

In January 2004 the Indian parliament banned the sale of Coke as well as Pepsi products in its cafeteria after tests found high concentrations of pesticides and insecticides, including lindane , DDT, malathion and chlorpyrifos, in the colas, making them unfit for consumption. Some test samples showed toxin levels 30 times the standard allowed by the European Union.

They must permanently shut down the bottling facilities in Mehdiganj, Kala Dera and Plachimada.

They must compensate the affected community members.

They must recharge the depleted groundwater.

They must clean up the contaminated water and soil.

What are communities in India demanding?

They must ensure that workers laid off as a result of Coca-Cola's negligence are retrained and relocated in a more sustainable industry.

They must admit liability for the long term consequences of exposure to toxic waste and pesticide laden drinks in India.

Racial discrimination in the workplace: Class

action lawsuits and multimillion-Dollar

settlements

List of racially discriminatory workplace practices

Discrimination in evaluations: The lawsuit stated that “because of the undue discretion of managers, African-Americans receive lower evaluation scores than Caucasians and fewer high scores”.

Discrimination in compensation: Differences between salaries paid by Coke to African Americans and White employees.In 1995 the average African- American employee in the corporate headquarters received $19,000 less than the average white employee, while in 1998 the disparity had risen to $27,000.

Discrimination in promotions: African-Americans are denied the opportunity to advance to the same level and at the same rate as equally qualified Caucasian employees.

List of racially discriminatory workplace practices ( Contd.)

List of racially discriminatory workplace practices ( Contd.)

Glass ceiling: While African-American employees make up 15.7 percent of the employees at corporate headquarters, they are underrepresented at top pay-grade levels.

Glass walls: African-Americans in senior positions are concentrated in less powerful and non-revenue generating areas.

Terminations: According to the lawsuit, African-American employees at Coke are involuntarily terminated at a much higher rate than white employees. 

Other Discriminatory cases

Case of a White Vice President

Coke’s marketing strategy succumbs to racial stereotyping

Case of a musician L.L.Cool J featuring a coke commercial

One of the plaintiffs received a low evaluation after making comments about racial discrimination, even though she had always received positive evaluations.

Coke initially responded to the lawsuit saying that actions toward the four African-American plaintiffs "were in no way motivated by race...but instead were based solely on legitimate, nondiscriminatory business reasons."

The CEO at the time, Douglas Ivester, sent an email to all Coke employees a week after the suit was filed saying that the suit had “significant errors of fact” and that the company does not systematically discriminate against African-Americans.

 In December 1999 when a Coke spokesperson, commenting on the ongoing lawsuit said that the company "will demonstrate that Coca-Cola has not, does not and will not tolerate discrimination of any kind."232 In July of the same year, the company said that “we're confident it will be determined that Coca-Cola does not discriminate.“

In June 2000, a settlement was reached out to pay out a record $192.5 million, the largest settlement in a US race discrimination lawsuit.

Coke agreed to pay $113 million in direct compensation and another $43.5 million towards the elimination of pay disparities.

Coke’s new CEO Doug Daft sent a contrite e-mail to all of Coke’s employees worldwide .

In 2002, two years after the settlement was reached, the court appointed panel in charge of monitoring Coke’s human resources practices

In December 2003 , a report said that the company failed to make recommended changes to its interview process or to develop a diverse candidature for executive positions.

Safety and health problems in U.S. plants

On June 19, 2001, Eric Meissner, a 30- year employee at the Auburndale, Florida plant that produces Coke’s Minute Maid and Hi-C products, was fired.

Since 1996, when Coke brought in Cutrale Citrus Juices USA, a subsidiary of a Brazilian company, to produce juice products in Florida.

Inspectors from the OSHA found 15 violations, including 13 that were considered “serious,” in 1999 and 2000.

There were two major chemical leaks.

Coke’s overall record on safety, as monitored by OSHA, is both less than admirable and worse than many of its competitors (such as Pepsi).

“OSHA Cites Coke for 222 Violations,”

In 2002 “The Coca-Cola Co. and its network of bottlers were cited for 222 violations of federal OSHA standards and fined $156,831.

In 2001, OSHA cited Coke and its bottlers for 212 violations and fined them a total of $170,091.

Over the past decade, the companies have been cited for 2,264 violations.”

In February 2003, OSHA identified 14,200 U.S. facilities that had accident and illness rates at twice the national average of about 3 illnesses or injuries for every 100 workers. 96 of these workplaces were owned by Coke bottlers.

COCA COLA, India

CORPORATE SOCIAL RESPONSIBILITY STRATEGY

The Coca-Cola Company’s endeavor for the last 126 years has been to make a positive and lasting difference where our business touches communities. In a world of many challenges and increased pressure on resources, businesses need to play a part in ensuring sustainability of resources and livelihoods.

As the world’s largest beverage system has a presence in thousands of communities, across more than 200 countries. This provides us a rare opportunity to make a real and lasting difference to these communities.

In India also, we are working with communities and stakeholders, to make a difference to the lives of people. We call this the “Golden Triangle” approach – the coming together of government, business and civil society to attend to the larger issues of our Planet.

Cont. Golden Triangle approach Indian School of Business, Hyderabad 5by20 initiative Coca-Cola Cup Under -16cricket and Coca-Cola

Under - 16 football. Millennium Development Goals

Cont.

Project SANTUSHTI - A Drinking Water Project in Sambhar Lake, Rajasthan

The Foundation for Rural Recovery & Development, (FORRAD) in collaboration with MANTHAN