1. Introduction: 3
1.1 What is CSR All about? 3
1.1 Background and objectives: 4
2. Coca-Cola Company: 5
2.1 Company’s Profile: 5
2.2 Coca-Cola’s CSR policies and reporting: 5
2.2.2. Overview of Coca-Cola about Sustainability: 6
3. Coca Cola’s CSR Model: 7
31. People: 7
3.2 Partners: 7
3.3 Portfolio: 7
3.4 Profit: 8
3.5 Planet: 8
3. Conflicts present in the company: 8
3.1 The presence of pesticides 9
3.2 Water pollution and the over-extraction of groundwater: 9
3.3 Consequences associated with the conflicts: 10
3.4 Coca-Cola’s CSR policies post-conflicts 10
4. CSR initiatives after the conflicts: 11
5. Critical Evaluation of Coca Cola’s CSR activities and policies: 12
Work Cited: 15
ROLE OF CORPORATE SOCIAL RESPONSIBILITY WITHIN THE CONTEXT OF PROFIT AS THE PRIMARY OBJECTIVE AND IN THE PRESENCE OF CONFLICTS OF COCA-COLA COMPANY
In the year 1960s CSR known as the corporate social responsibility was introduced on the academic level. Carroll in 1991 (Staff, 2018) summed CSR as the combination of 4 different points. These points were formed of ethical, philanthropic, legal and economic viewpoint. All this information was presented by Carroll in the form of a pyramid.
Figure 1: Carroll’s CSR Pyramid
Cited: (Casalo, Flavian, and Guinaliu, 2010)
All the four stages of development as shown in figure 1 come up with a cost of maintaining the company’s profile. Campaigns held by the company, the scandals company is facing or even the environmental issues rolling in the company gathers the undesirable attention of the media at times. This attention from the media gives hype to the issue that whether reputation damage is a fundamental inspiration behind the adoption of CSR strategies by multinationals? (Rubin, 2016)
Every company needs to evaluate the impacts of its operations on the environment and society around them. In this CSR plays significant role for the working of company. Every company is working to make their position and brand name strong in the local and international market if working globally. Companies working globally often need to keep their corporate social responsibilities active in the form of campaigns and seminars. This is necessary for generating profit for the company. All the companies utilizing CSR activities have the primary purpose of making the things work for profit maximization in terms of ethical and social responsibilities of the company (Herrick, 2009). This research paper mentioned SCR activities of Coca-Cola Company along with the social and ethical responsibilities included in the code of conduct in the company. In this research paper, the role of conflicts in CSR policies of the Coca-Cola Company will be assessed. Besides, this the role of CSR within the context of the profit as the primary objective of the company will be evaluated as well. It is a question of a debate at the present time about the suspicious use of CSR in increasing the brand image and profit of the company. Coca-Cola is the top one to be accused in this case.
Inter-brand has marked Coca-Cola as one of the best brands in the world from the last 11 years this success of consecutive 11 years (Herrick, 2009) has made Coca-Cola well-known in the entire world. According to the year of 2013, integrated report marked Coca-Cola as the companies among the top three high-quality beverage companies. Besides this, Coca-Cola was under the 10 companies having the best reputation among the customers of United States. The number of success for Coca-Cola is not confined to the year of 2013 only. In the year of 2014 (Casalo, Flavian, and Guinaliu, 2010), Coca-Cola stood out among the world top class corporate companies.
In the year 1886, Coca-Cola started its business as the beverage company known throughout the world after some passage of time. This company started as the local company in Atlanta, Georgia. At that time the company was only selling nine sodas per day. By the year 1920 (Werther and Chandler, 2015), the company started to expand its territory internationally as well. The products were first sold in Canada and Caribbean markets, Afterwards, in consecutive decades the company started to sell its products in Asia, Europe, South America and the Soviet Union. This was not the end of the expansion of the company. Now nearly every corner of the world is enjoying itself from the products offered by the company. By 20th century world knew what Coca-Cola is all about. Due to selling non-alcoholic beverages the company became known as one of the largest manufacturer and seller in the year 2005. Now being one of the good distributors as well, the company is listed on the New York stock exchange as well.
2.2.1 Overview of the CSR ‘Live’ Policy:
After the considerable expansion throughout the world, the company embedded a positive sustainability framework in the entire company in 2007 (Torres et al., 2012) at all levels keeping no difference between the low level and the high-level workers. This non-differential attitude was to maintain a positive environment in the company. Seven core ideas have been established in the CSR live policy of the company. The company has established goals and sustainability practices for the employees to achieve. The core area defined by the company is the beverage benefits, healthy living style, community, energy, and climate of the areas, improving business goals and the good sustainability practices (Cedillo Torres et al., 2012). The code of business conduct for the company aims at providing training to their employees as well.
The competition issues and the most important issue of corruption get overcome when the training is given to the employees. The CSR guidelines are acting globally for the entire company. Protection, respect, and remedy for the issues are main points covered in the CSR policies of the company. The activities of the companies are included in a separate reporting as well. ‘The Coca-Cola’ annual report is published every year covering the major points and workings of the company. The last report published in the year 2016 (Smith, 2013) determined the activities of the companies in the year 2014 and 2015. A small section of the report is dedicated to the CSR section. This section highlights the initiatives taken by the company in different areas of the world. From proving water facility to giving the facility of light, the company has been spreading smiles on the faces of the people from the past year. Since 2001, Coca-Cola also annually publishes a separate report devoted to CSR called ‘The Coca-Cola Company Sustainability Review.’
Sustainability is an important term being used I the marketing strategies. Coca-Cola is attempting in gaining the sustainability so that the company gains manageable position in the market. Health communities gain the right kind of position in the market. Sustainability of the company depends on the health communities that are being handled in the present time. In the year of 2020, it is accepted that the company will be reaching a higher value of sustainability (Herrick, 2009).
Coca Cola Company has decided a single CSR model focusing on sustainability however there are five bases (Hills and Welford, 2005) on which the CSR model of the Coca Cola Company has been based. These five bases are mentioned below:
In this section of CSR model, the company aims on being honest and diligent about the benefits of the people. All the people nationwide are interpreted as the responsibility of the company. Giving fair and dignified treatment is promised by the company. Besides this, 90% of the production in the company is done by the local people in the local production unit. In this way people are giving employment opportunities as well.
Striving with partners that are efficient and beneficial for the stakeholders of the company is one of the basis on which Coca Cola’s CSR model is based. Keeping stake holders happy ultimately leads the company to higher profitability.
Giving a wide range of products which are safe and healthy so that all the consumers are happy with the activities of the company is another point in the CSR model. At present the company is providing more than 2600 beverages starting with Coca Cola, the name on which the company is based.
This is one of the important and significant points in the CSR model of the company. In this point the company aims at providing maximum profit for all the shareowners so that they have keen interest in the future outcomes. Besides this, the company is aiming on handling the overall responsibilities with complete dedication.
Planet indicates that Coca Cola shares the objective of giving the world the leaders who are more concerned about giving basic necessities to the people in the form of water, light and food. Since this model was published after the conflicts faced by the company in India related to water pollution hence here the company mentioned about avoiding the addition of Carbon to the world and giving the people a clean atmosphere to live in.
3. Conflicts present in the company:
In the report issued by the Indian NGO and the center for science and environment in 2003, all the campaigns and the demonstration carried by the company were written in the report. In this report, one of the defaming components for the company was presented. It was written that the amount of pesticides present in the coca cola products has exceeded the standard defined by the European Council. The Coca-Cola beverages present in India carried a large amount. A sample was tested. The amount of the sample was about a dozen of them and they showed 25 pesticides (Hills and Welford, 2005) in the samples. When this evidence came in front of the people, a legal notice was issued by the government to legally apply water standards on all the beverages in the company. After the issuance of this report, the media and public were diverted towards these issues. A lot of attention was given to these issues. The main accusation Coca-Cola had to face after the issuance of the report was the unacceptable level of pesticides, a large amount of groundwater present in it and the polluted water sources. These conflicts have been mentioned in the preceding section of 3.1 and 3.2.
After the allegation of the high amount of pesticides in the Coca-Cola beverages, the Indian government took a step forwards and involved the company in a high amount of investigations. These investigations were done with the help of a committee formed by the Indian Government. The committee issued the same kind of results as they were issued in the report published before. However, another result was mention by the committee as well (Hills and Welford, 2005). The committee mentioned that the amount of the pesticide was normal and safe under the local conditions. Hence it was proved that no local laws were violated by the company.
The second accusation on the company was related to the water pollution and the water shortages in the other areas of the country. Water pollution was caused by the discharge of the contaminated water into the fields by the company. This discharge made health issues to arise in the backward areas of the Indian Community. When the operations were begun by the company in 2000, local people of Plachimada (Company et al., 2018) claimed that they are facing the issues of water scarcity in the area. By 2004 the company suspended its operation and started looking into ways for making a decrease in the water pollution as well.
Coca-Cola had to go through a long trial after the conflicts were aroused by the Indian NGO. After the consecutive trials, the company’s reputation was affected badly. Customers started to lose their trust in the name of the company. Reputation was damaged both in India and the abroad as well since the company had gained the attention of the media after the conflicts. After the release of the CSE report in 2003, overall sales of the company were also affected. The sales were dropped nearly to 40% of the total sales (Barkay, 2011). Annual sales also suffered as a result. 15% decline was observed in the annual sales as well.
Coca-Cola took some steps after the conflicts they have to face in the trial of 2003. Two years before the conflict in the country of India, Coca-Cola was following certain guidelines. These guidelines did not cover the code of conduct for the future and the implications associated with the company. Afterward, the company not only decided guidelines for the company but made a way through which the working of the company can also be managed. Guidelines for making the future conditions work were also included in the guidelines decided further. The loss in the trust of the company was managed accordingly. Better resources were figured out for the company. Water pollution issues were controlled in the guidelines as well. Also, the company also focused on making the company socially responsible and active as well (Idemudia, 2011). The company has denied many of the allegations lying on it however the report cannot be denied. Looking into the issues and without accepting the allegations, the company looked into all the issues. Damage control measures are implemented in all sections of the company to overcome the reputation dropdown issue in the company.
After facing the conflicts faced by the company in India and the loss of reputation in other countries as well, some CSR initiatives were taken by the company for getting the long lost repute back.
In this perspective the very first initiative taken by the company was present in the giving water facilities in the areas lacking this facility. Water reservoirs were made for the people so that they can take full advantage of them at the hour of need (Fan, 2015). Other than this water shedding projects were designed which saved the rain water and used the stored for cultivation. The rural people were happy after this progress. Portable water concept was introduced by the company by taking an initiative in Gujarat initially where the people were made aware about the importance of drinking sufficient water every day.
Since the CSR model of the company aimed on providing basic necessities of life hence the other initiative taken was in the form of energy (Lambooy, 2011). The emission of CFC’s from the refrigerators and all such appliances was a big step taken by the company. Besides, the people were made aware how energy consumption can be made minimum.
Packaging and recycling:
One of the initiatives that the company took in its domain is giving the people of recycling and packaging. One of the common example was done by telling people how the Coca Cola bottles can be used as bulb holders in the in the rural areas. Many countries in the Asia took advantage of this project. PET recycling project in Mumbai gained higher attention among the people. Collecting Bottle cans and all similar products and then recycling them was another task done in the PET campaign.
The health CSR initiative of Coca- Cola Company became famous among the people. People started to divert to this company in comparison to other beverage companies. In this initiative, health checkups, medicines and basic knowledge was given to the people of Andheri, Maumbai.
Aqueduct Alliance was one of the steps taken by the Coca-Cola after the company went through the lawsuit and losing the consumers trust as well (Vilanova, Lozano, and Arenas, 2013). This move was taken to make the position of the company strong. Besides this, this move made by the company was another way of making the personal liability a separate thing n the future concerns for the groundwater. Aqueduct Alliance move was taken by the company for achieving the following purposes by the company.
- General society and the shareholders
- Evading any type of the personal liability involved.
- Making the organization strong against all kind of future allegations related to the groundwater consumption.
Enhancement in the ecological transparency and the shareholder value of the organization environment was becoming profound as a result of the move made by the company in the form of Aqueduct Alliance. Coca Cola’s involvement in the Aqueduct Alliance was a source of raising the reputation of the company in different ways. Addressing the ecological issues made the company resonate with the expectation of the stakeholders involved. In the past years, it was observed that the activities of the corporations make the legal actions associated with it to be affected as well. Later on, companies started using environmental concerns for coming back with a boom in the market competitiveness.
Looking into the CSR model of the company critically, it can be analyzed from the initiatives taken that the company is focusing more on the ethical side of the CSR activities. Ethical activities make the company to have lower transaction costs. After the conflicts observed by the company a down market condition observed in the working of the company. However as soon as company started providing basic necessities of life, the issues were resolved easily. The health sector medical checkups made the company to remain in the highlights of the media. By t=remaining among the news channels and gaining the social media attention, the company was able o stand back with the same repute. However this was the analysis of the gain observed in reputation of the company. The actual analysis to be made is about the profit changes after the CSR initiatives and with the CSR model the company is following. As the ethical behavior earned by the company by giving electricity, Water and energy sources, the company was able to gain lower transaction costs. The lower transaction costs helped the company to have stable manufacturing procedure as well. As soon as the stability in the manufacturing process increased, company showed higher profitability (Anthon, 2018).
Collaboration with one of the well-known NGO ‘Save the children’ gain the company well-known reputation which is not hidden from any person of the world. Hence, after the critical evaluation of CSR of Coca Cola Company it would be not wrong to say that the company took excellent initiatives which were good enough to make the CSR of the company a huge success. One of the researches by Anthon (2018), which declared Coca Cola earning brand reputation through CSR, is not entirely true. Coca Cola is bringing new initiatives and welfare for the betterment of the many people in our society.
To conclude, this research has highlighted that CSR is not the only way of reaching of high profitability for the company. In case of Coca Cola after the company was done with the conflicts CSR initiatives were a good way of getting good reputation and high profitability back. Fame makes the position strong and makes the company an important part of the CSR activities. Besides, health sectors are important for gaining sustainability in the companies. These major points were considered while deciding the CSR initiatives of the company. When the health sectors will be satisfied the company will gain a good position in the market. The company is having a good approach to the CSR. Their approach is giving the company to increase profitability by gaining reputation. For this performance evaluation is strictly done. CSR approach of Coca-Cola is having a good functional strategy for stakeholders as well. There is a good social impact on the people as well.
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