Case Study Coke in India

Adapted by Lesley Fleischman from: Hills, Jonathan and Welford, Richard. Corporate Social Responsibility and Environmental Management. 12, 168177 (2005)

August 2003

Coke has 44 wholly owned and franchise owned bottling plants in India Indian NGO finds that Coke and Pepsi products bottled in India contain pesticides. Immediate impact on Coke stock price. Coke threatened legal action over allegations. Indian government tests confirm findings.

October 2003 December 2003

etc.

Coke hires PR firm, develops strategy to deflect media attention away Escalating community protests at bottling plants, demonstrations, hunger strikes, Ordered by Indian court to stop drawing groundwater for its bottling plant in Plachimada, Kerala Judge ruled that no power to allow a private party to extract such a huge quantity of groundwater Protesters claim that Coke water use was reducing agricultural yields Coke cited lack of rainfall, not their operations, as cause of crop declines Parliamentary committee finds high amounts of pesticide residue in Coke and Pepsi products bottled in India Not illegal, Indian safety standards weak Coke application for new bottling plant in Plachimada denied by local authorities because of groundwater use and wastewater Pepsi had operations in same region, no similar denial Coke works with local and national authorities to reassess its waste treatment Denied that its operations in Plachimada using too much groundwater, but committed to using advanced rainfall harvesting technology to help replenish the groundwater after a 60% decrease in rainfall over the previous 2 years Indian environmental groups launch campaign against Coke and Pepsi Increasing local opposition at bottling plants Protests against Coke in U.S. Protests end in violence at Coke plant in Mehdiganj a hedge fund had been launched with an investment strategy of shorting shares of companies with which it took issue. The London-based funds first target was Coke. Campaigns to cancel contracts with Coke at U.S. universities UK trade union, Unison, joins protest against Coke High Court of Kerala ruled that Coke can extract up to 500000 litres of water per day from common groundwater resources at its Plachimada facility in southern India Coke cited rainwater, and claimed that a nearby Indian brewery, which they said used more water than Cokes Plachimada plant, had been left alone by activists Protests at Coke annual meeting Opposition by NGOs, local communities, and environmentalists to Coke franchisee bottling plant proposal to set up a soft-drinks unit in the Gangaikondan village of Tirunelveli district in southern Tamil, claimed plant would deplete and contaminate groundwater, and draw from the Tamiraparani River

February 2004 March 2004 June 2004

September 2004 October 2004

February 2005 April 2005

May 2005

June 2005

Local council reluctantly renewed the license for Cokes bottling facility at Plachimada for three months with 13 conditions. Coke rejected the three-month conditional license, describing it as a violation of a High Court order. On 9 June around 700 community members and supporters marched to the Coke factory in Plachimada, Kerala, to demand plant be permanently shut down. Protesters were met by a large cordon of police officers, and close to 500 people were arrested. NGOs reiterated that the community in Plachimada had experienced severe water shortages since Coke started operations in the area, and the remaining groundwater as well as soil had been polluted as a result of Cokes bottling operations. The Wall Street Journal (7 June) ran a front page article on Coke in India and noted that while NGOs have flagged some serious issues, such as Cokes onetime practice of giving away waste material to local farmers that some studies later showed contained toxic materials, they had made some dubious claims as well, with Amit Srivastava of the IRC recently comparing Cokes environmental practices to the industrial accident at Bhopal, which killed thousands. Significantly, the Wall Street Journal report claimed water allegations remained unproven. It said Keralas highest court had rejected water abuse claims in April of that year, noting that wells there continued to dry up the previous summer, months after the local Coke plant stopped operating. Moreover, a scientific study previously requested by the court found that while the plant had aggravated the water scarcity situation, the most significant factor was a lack of rainfall. The NGOs responded that Coke should not be locating bottling plants in drought-stricken areas. Cokes Asia Director of Communications told the Wall Street Journal that activists such as IRC are making false environmental allegations against us to further an antiglobalization agenda. Cox accused Sunita Narain, who heads the CSE, whose report on pesticide content in 2003 first put Coke India in the spotlight, of brandjacking and using Cokes brand name to draw attention to campaign against pesticides. To further publicize the pesticide issue, some NGOs last year began publishing stories online and to the news media relating to Indian farmers spraying Coke on their crops as a pesticide. However, the IRC now admits the stories were merely a publicity stunt by local activists and farmers. The Wall Street Journal article also claimed a Boston-based NGO called Corporate Accountability International posted on its website a Coke fact sheet suggesting that as a result of Cokes extraction of water in Kerala water riots and water-related murders are now an everyday occurrence as water becomes scarcer. Asked to back up the claim, the group admitted it could not and later removed the statement. Interestingly, NGOs such as the IRC refuse to even sit down with Coke officials, despite repeated invitations. Theres no space for dialogue right now, says Srivastava.