Ethical issues concerning Coca-Cola in India

Situation Analysis:
In 2003, the community near the Coca-Cola bottling plant in Kerala, India protested
against the water scarcity and polluted water that resulted from its bottling
operations. The allegations caused the closure of the bottling plant. Coca-Cola was
banned in the state for these unethical business practices. Soon after the incident,
the Center for Science and Environment (CSE), a Delhi-based environmental NGO,
released a report indicating the presence of pesticides, greatly exceeding European
standards, in a dozen popular beverages sold under the brand names of the CocaCola Company and PepsiCo. This report raised serious protests all over India on the
soft drink industries, especially Coca-Cola and PepsiCo. Together, the companies have
90% of the India's soft drink market.
In response to the allegations, Coca-Cola denies them by saying their products are
safe and questions the lab reports presented by CSE. The University of Michigan
placed the Coca-Cola Company on probation in 2006, and asked for an independent
assessment of its operations in India. The soft drinks were examined by an
independent lab, The Energy and Resources Institute (TERI). According to the
reports the soft drinks were declared safe and pesticide free. However, the CSE
claimed that only the water was tested and not the other ingredients; ingredients
such as artificial flavors and sugar. After the reports from TERI were published the
government declared soft drinks as safe. However, the problems with some bottling
plants still remain, due to the depleting levels of ground water, day by day.
Critical Issues/Problems:
Solid waste and water issue: The communities near the bottling plant in India
complained about the passage of sludge as fertilizer, causing health and
environmental damage. The most important issue concerning these communities is
the depletion of water levels caused by the Coca-Cola bottling operations which have
drastically reduced availability of water for irrigation purposes.
Pesticides in soft drinks: The other issue concerning human health caused by CocaCola is that their bottled water and soft drinks contain pesticides which were tested
by the reputed NGO, CSE.
Dual product standards: Coca-Cola is accused of having dual standards in terms of
their products and safety measures concerning human health with respect to USA,
Europe and India.
Community issue: These allegations affected Coca-Cola largely with its sales and also
caused the closure of one of their bottling plants in Kerala, India. Additionally, CocaColas products are banned in the state of Kerala, India.

Action Taken:
Coca-Cola Company, India thought seriously about its corporate responsibility and
witnessing huge sales losses. In order to gain trust among the local communities
near the bottling plant, they improved their business practices and reduced the water
usage by 34%. Through the practice of rainwater harvesting, Coca-Cola returned
substantial water to the aquifers. They have stopped distributing sludge as
Biosolids(fertilizers) to farmers for agriculture use, and have taken initiatives with
the Indian government to encourage the development of additional solid waste
disposal sites. The water used for making soft drinks is treated with activated carbon
filtration and run through a purification process to ensure that the water is free of
pesticide residue. The ingredients are also closely monitored and undergo various
quality checks. According to the companys factsheet, they strictly follow the product
standards which are the same all over the world.
Coca-Cola has also partnered with the NGOs and the government to provide medical
access to poor people through regular health camps. In addition to their outreach
efforts, the company committed itself to environment responsibility through its
business operations. For example by following the practices of conserving energy and
by adhering to the ban on purchasing CFCs, Coca-Cola exhibited greater corporate
responsibility.
The allegations in other ways helped Coca-Cola Company, India to show their
corporate social responsibility and to maintain good product quality standards. The
initiatives all over India helped them reach villages for a good cause and also
indirectly marketed their products with establishing a trust among the public. After
all these allegations, the CSE is still not convinced of the quality of the product.
Therefore, Coca-Cola must prove that they have upgraded their lab with
sophisticated instrument which is capable of measuring pesticide residue in soft
drinks. As per the recent reports by CSE, they claim that the pesticide residue has
gone up 27 times higher than expected level by the Bureau of Indian Standards
(BIS) (in 2006).