Coca Cola India Case Study Analysis

Categories: Water Scarcity

Corporate Social Responsibility is often a strategy within large organizations; these have already grown their businesses and can now give back to society. Through the model, a company becomes socially accountable to the public, stakeholders and itself. Engaging in CSR thus means that companies operate in ways which enhance the environment and the society, rather than influence them negatively. Conflicts, whether social or environmental, can greatly influence CSR policies, resulting in changes. For instance in the case of Coca Cola crisis over claims of high pesticide residue levels in their beverages and causing water problems.

Coca Cola started as a local soda producer in Atlanta, Georgia in 1886. By the beginning of the 21st century, the company was selling its beverage products in almost all countries of the world. The company, in 2007, launched a sustainability framework named ‘live positively’ at all its system operational levels; production, packaging, and distribution. This CSR policy seeks to improve the company’s sustainability practices in the active healthy living, beverage benefits, energy and climate, the community, water stewardship, the workplace, and sustainable packaging areas.

This policy, while the company man not admits, may have been an influence of two conflicts regarding the company in India.
On 5, August 2003, the Center for Science and the Environment (CSE) released a statement that Coca Cola sold in Delhi and its environs had deadly pesticide residues. According to CSE, some samples of Coca Cola brands contained pesticide residues above global standards including chlorpyrifos, Malathion, lindane, and DDT, by 30-36 times.

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These cause birth defects, cancer, severe disruption and damage to the reproductive, nervous and immune systems. This report had massive media and public attention, and consequently significant effects on the company’s revenues. Two weeks following the allegation, Coca Cola sales dropped by 40 percent; many retailers, restaurants, leading clubs, and campuses stopped selling Coca Cola beverages.
Besides the high pesticide residue levels in beverages, the CSE release further claimed that the company made extractions of large amounts of groundwater and caused significant water pollution. Allegedly, the company was overharvesting groundwater, causing shortages in the Plachimada community in Kerala, Southern India. Furthermore, it was discharging wastewater into rivers and fields surrounding the firm’s plants in the community. As a result, soil and groundwater became polluted. The Indian public health agencies put signs around hand pumps and wells advising community members against consuming the water.
The water issue; over-extraction of groundwater and water pollution had a profound impact on the company’s operation. Consequently, this conflict had a huge influence on the company’s adoption of CSR policy regarding sustainability. According to local people, the community’s problem of water scarcity began when the company started its operations in the area. Proceedings by the state government against Coca-Cola in 2003 saw the High court of Kerala prohibit the company form over-extracting groundwater. In addition, in its attempt to renew its operation license, the company had to suspend production operations.
While the Company regained its operating license after demonstrations and long legal procedures, it suffered great reputational damage and loss of consumer trust. Also, the company was fined $47 Million for the soil and water damage in Kerala. Consumers identify more with companies demonstrating good corporate citizenship. Consumers purchase products from companies that support issues they care about; they refuse to buy products if the company supports contrary beliefs or ideas.
The water conflict came about due to inefficient production technologies and poor management. The company had poor water use and management technologies, resulting in overuse of water thus over-extraction from groundwater sources. Besides, they had poor wastewater disposal methods leading to water and soil pollution in areas surrounding the company’s plants. Reacting to the allegation, the company management released a statement denying these claims of water pollution, over-extraction and deadly levels of pesticide residue. Rather than prove the company’s integrity, this response showed non-concern towards the community wellbeing and failed to regain consumers’ trust.
Adoption of policies that enhances social responsibility alongside financial success is crucial for a company’s overall success. For Coca-Cola especially, it was vital in restoring the company’s reputation including aspects of training, recruiting and maintaining employees, restoring stakeholders\' confidence and trust, increasing sales and protecting the image of the company in case of a future crisis. Rather than make a release defending the company, the management should have made various changes in its production systems. First, is to adopt water efficiency and policies to reduce their global water footprint and adopt effective treatment methods for wastewater.
There is a need for companies to adopt social corporate actions that reduce water footprint, promote rainwater harvesting and recharge schemes and support water efficiency strategies by other users. These include funding agricultural and community efficiency schemes such as rainwater harvesting and drip irrigation systems. Especially in water-stressed areas companies can finance demonstrations fields showing farmers how to use water efficiently and planting plant and crop varieties that are water efficient. While these recharge schemes improve efficiency in agriculture, they do not guarantee a reduction in water demand thus may not be fully efficient.
Furthermore, companies can increase the rate of aquifer recharge, the increasing amount available for all users thus reducing the effects of abstraction. Such interventions include building recharge dams in the locality, these raise groundwater level availing more water to the communities. These methods, however, are dependent on the company. Their function and effectiveness depend on the company’s funding and period of operation in the locality. While they are genuine ways of reducing water stress, they do not have direct economic incentives. Companies gain in the form of public relations; stakeholders see them as more responsible.
Besides, the companies decide on the nature and scale of the initiatives to reduce criticisms, this makes it hard to verify the actual benefits of aquifers and schemes to the local community. Unlike energy footprints, water footprints do not guarantee the global benefit of increasing the supply of water. The amount of water in the world remains the same regardless of companies’ production policies. This is why it hard for governments to put specific levels of water footprint a company should have. Nevertheless, companies should ensure that they respect local communities’ right of access to water by using efficient production methods thus, ensuring minimal harm on the community’s access to water.
Globally, companies such as Coca–Cola Company continue to discharge industrial effluents and untreated sewage into state rivers causing pollution. Treatment of wastewater before discharge is crucial in the world today. Coca Cola should adopt technologies and processes that enhance wastewater treatment within plants before channeling it back to the environment. Firstly, the company should seek to identify components in their wastewater and work with experts to determine the effects of this untreated water to biotic life. Following that, they should review wastewater regulations across the states they operate in to determine the maximum allowable concentrations and create internal treatment standards that work below these concentrations. This way, they will release less harmful water to water bodies causing minimal water and soil pollution.
Therefore, given the water conflict challenge that Coca Cola faces, the most effective solutions are to embrace production technologies that enhance water efficiency; use of minimal use, recycling and reuse of water within the bottling plants, and embrace treatment of wastewater before disposal and proper disposal of solid industrial waste. These strategies enhance effective water use and management and reduce water and soil pollution. Consequently, they reduce the problems of water over-extraction and pollution and enhance a positive company reputation.
Ultimately, commercial use of water may cause conflicts with communities regarding water scarcity. Especially in India, Coca Cola continues to face criticisms over its water over-extraction and pollution claims. Despite the companies’ efforts at corporate social responsibility and enhancing water security, Asian market revenues have an insignificant increase. While the Indian government has made efforts to close plants over-extracting water in water-scarce areas and public demonstrations, water scarcity and pollution continue to be a menace. Companies such as Coca Cola thus, need to embrace CSR policies that include efficient production technologies, which embrace recycling, reuse of resources and proper waste disposal.

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Coca Cola India Case Study Analysis. (2021, Oct 31). Retrieved from

Coca Cola India Case Study Analysis
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