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 Coca-Cola 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
Coca-Cola 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, Coca-Cola’s 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 company’s factsheet, they strictly
follow the product standards which are the same all over the world.
Coca-Cola has also partnered with the NGO’s 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).