Business ethics:

Topic:
Coca-Cola’s Unethical Operation in India

Instructor Name:
Tasaddaque Hussain Warraich

Section: A

Date of Submission: 16-05-2011

Group members:
Asad Ahamd 10000920-001

Dilawar Naksash 09040920-023

Zeeshan Ullah 09040920-026

Babar Rasheed 09040920-032

Mohammad Raheel 09040920-036

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Table of Contents:
Executive Summary...............................................................................................................................................2

Introduction...........................................................................................................................................................3

Literature View.......................................................................................................................................................4

Discussion...............................................................................................................................................................12

Conclusion...............................................................................................................................................................15

Recommendation....................................................................................................................................................15

Refrences................................................................................................................................................................16

Biblography.............................................................................................................................................................17

Executive summary:

This project is about unethical operations of Coca-Cola in India’s village near Jaipur. The Coca-Cola
company has established a bottling plant in Kala Dera. The Kala Dera was declared over-exploited by
goverment in 1998 and also refused to share EIA which according to company they have conducted. The
ground water level reduced by 22.36 meters in last nine years due to which the community of Kala Dera
protested aganist Coca-Cola plant in the area and started campaign against the company. International
institution also supported their campaign and demanded the company to shut down its plants in the area due
to which Coca-Cola paid for the study at its plant which made following recomendations:

1. Transport water from the nearest acquire that may not be stressed
2. Store water from low-stress seasons
3. Re-locate the plant to a water-surplus area
4. Shut down this facility

The Kala Dera people welcomed the recommendations but they still waits the implementations of these
recommendations by the company for which Coca-Cola itself paid.

Coca–Cola states that they have become more water positive as they recharge more water then what they use
and the ground water level has increased over last few years of operations in Kala Dera area.

On the other hand the Indian resource centre IRC after a visit to the company’s rainwater harvesting
structure in Kala Dera have stated that the structured is not functional and not maintained. The TERI study
also visited the rainwater harvesting structure to be in worse condition.

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Introduction:
The coca-cola company is a beverage retailer, manufacturer and marketer of non-alcoholic beverage
concentrates and syrups. The company is best known for its flagship product Coca-Cola invented by
pharmacist John Stith Pemberton in 1886. The coca-cola formula and brand was bought in 1889 by Asa
Candler who incorporated The Coca-Cola Company in 1892. Besides its namesake coca-cola beverage,
coca-cola currently offers more than 500 brands in over 200 countries or territories and serves 1.6 billion
servings each day.

The Coca-Cola Company is headquarted in Atlanta, Georgia. Its Stock is listed NYSE and is part of DJIA,
S&P 500 index and Russell 1000 growth stock index.

The Coca-Cola Company:

Type: Public

Trade as: NYSE:KO

Do Jones Industrial Average

Component

Industry: Beverage

Founded: 1892

Headquarters: Atlanta, Georgia and United States

Area Served: World wide

Key People: Muhtar Kent (Chairman and CEO)

Products: Coca-Cola

Carbonated Soft Drinks

Water

Other non-alcoholic Beverages

Revenue: US$35.119 billion (2010)

Operating Income: US$8.449 billion (2010)

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 Net Income: US$11.809 billion (2010)

Total Assets: US$72.921 billion (2010)

Total Equity: US$31.317 billion (2010)

Employees: 139600

Web: www.coca-cola.com

Litrature view:
From Hans’ C2NN contribution in September 2008:

By Amit Srivastava India resource Centre September 12, 2008

http://www.indiaresource .org/campaigns/coke/2008/kaladeraunethical.html

San Francisco: it is said that those who don’t learn from the mistakes of the past are destined to repeat
them. It seems that the Coca-Cola has not learnt any lesson from Plachimada – a village in the state of
Karela in India where the community-led campaign has shut down its plant since March 2004.

The manner in which the Coca-Cola company has decided to deal with another community-led campaign in
India in the village of Kala Dera in the state of Rajastan – is indicative of arrogance and impunity of the
company that has landed it in trouble before and Coca-Cola in India is in for a rude awakening, again.

Kala Dera – Thirsty from Coca-Cola:

Kala Dera is a large village outside the city of Jaipur where agriculture is the primary source of livelihood.
Coca-Cola started its bottling operation in Kala Dera in 2000, and within a year, the community started to
notice a rapid decline in groundwater levels.

For former, loss of ground water translated directly into loss of income.

For women, it meant having to walk an additional 5to6 kilometres just to fetch water to meet

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For many children in Kala Dera it meant leaving school to provide a much needed helping handed doing
house hold chores since the women had additional burdens.

Government moves to claim 48 million dollars compensation from coco-cola:

Posted by designation on July 2, 2010/ 10:58pm

Filed under press recent press release

Will set up claims tribunal to process claims from affected parties

New York(July 2, 2010); in a major step towards holding coca cola accountable for damages it has caused
in India, the state government Kerala decided on Wednesday to move forward with the formation of a
tribunal that will hear and award compensation claims against the coca cola company.

The Kerala state cabinet’s decision is based on the report and recommendation of a high power committee
which released report on March 22; 2010 holding coco-cola responsible for causing pollution and water
depletion in the Plachimada in the state of Kerala in south India.

Using the “polluter pays principle”, the High Power Committee had recommended that coco-cola be held
liable for Indian Rupees 216 crore (US $ 48 million) for damages caused as a result of the company’s
bottling operation in Plachimada.

The coco-cola bottling plant in Plachimada has remained shut down since 2004 as a result of the
community-led campaign in Plachimada challenging coco-cola’s abuse of water resources.

The tribunal will consider claim of compensation from coco-cola company relating to “water and air
pollution n loss of agricultural crops and animals, disease affecting humans beings in the surroundings area
due to the excess drawls any pollution of ground water and surface water by the company, ” according to
the report accepted by the state government. The tribunal will also consider claims related to “loss of wages
and loss of educational opportunities.”

The report noted that the suggested figure of $48 million was “indicative in nature” and “should not be
treated as the outer limit of compensation.” the report also stated that the “actual compensation will have to
be calculated by an Authority duly set up for this purpose,”

Local activists engaged in the campaign to shutdown coco-cola’s bottling plant and hold the company
accountable for the damages it has caused welcomed the move by the state government. They also called for
pursuing criminal charges against coco-cola for the various law it had violated a course of action also
supported by the High Power Committee. In spite of overwhelming evidence implicating coca cola in
Plachimada, the company denies any wrong doing in Kerala. coca cola has also questioned the legitimacy
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of the High Power Committee, a body set up by the government of Kerala that is one of the highest possible
empowered committees to be set up in the state.

Three Workers killed in Coca-Cola factory Explosion in India:

Posted by designation on June 27, 2010 – 10:49 pm

Filed under press, recent press released

Police Arrest Three Coca-Cola India Officials

San Francisco (June 27, 2010): three workers were killed and at least five other seriously injured at a Coca-
Cola bottling plant in Khurda in the state of Orissa in India on Friday.

The workers killed were contract worker and not permanent employees of Coca-Cola India.

In the Summer month, when production is at its peak, Coca-Cola India hires nearly three times as many
contract workers as employees.

The contract workers receive the minimum daily wage of the state and minimal benefits. In the state of
Orissa, the minimum wages per day range from Rupees 90 ($1.90) for unskilled labour to Rupee129 ($2.75)
for highly skilled labour.

The Police have arrested three officials from the Coca-Cola bottling plant who were in charge of the
maintenance operation, according to media reports. Company official had requested Police protection after
the explosion, according to local media.

The state government has initiated an investigation into the cause of the explosion and additional Police
have been ordered into the area to protect the factory and its officials.

OPINION: Exporting Junk Food – Good for Business, Bad For Health:

Posted by designation on June 4, 2010 – 10:35 pm

Filed under Articles, Press, Recent Press Releases, Resources

If Junk Food is Bad for Americans, Are they good for Indian and Chinese?

By Amit Srivastava

Indian Resource Centre

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\June 4, 2004: last month, in a bid to pre-empt any binding government action, sixteen food and beverage
companies announced a pledge to reduce 1.5 trillion calories from their production in the US by the end of
2015 – ostensibly to fight obesity in the US.

Indeed, the growing obesity epidemic in the US has caught the attention of the White House, and Mrs.
Michelle Obama in particular.

The announcement by the healthy weight commitment Foundation- comparing some of the largest food and
beverage companies in the US- came just five day after the release of the White House Task Force on
childhood Obesity report to the president, part of Mrs. Obama’s Let’s Move campaign designed to address
the growing Obesity epidemic in the US.

The White House Task Force reports and its recommendations suggestion that unless the industry made
significant changes in the way it markets unhealthy Junk food to children in the US. Government policies
could be introduce to make them do so.

Whether the announcement by the companies – which is the short on the details – is a genuine commitment
to reduce Obesity or a public relation manoeuvre to appease Mrs. Obama and the White House remain to be
seen.

Forced Assessment Validates Community Concerns

The peoples of Kala Dera, also the villages of Plachimada and Mediganj in India that are against the Coca-
Cola bottling plant in their villages, have enjoyed much of the international support and support from
different institution, college and universities students from different parts of the world. They also got
support from some of the largest markets of Coca-Cola like US, UK and Canada.

India resource Centre represented India issue in one of the successful campaign led by students in University
of Michigan in US and placed the Coca-Cola company on experimentation on January 1, 2006. The
University of Michigan also forced the Coca-Cola Company to have an independent assessment of its
operation in India if it wants to operate within the university area.

The Energy and Resource (TERI) conducted assessment paid by Coca-Cola investigated six bottling plants
in India and was released in January 2008.

The assessment showed that the concerns of community protesting against Coca-Cola operations in India
were valid. It stated that Coca-Cola followed “business continuity” perspective and ignored impact on the
people and society.

Stop Using Groundwater in Kala Dera

One of the most disturbing findings of assessment was that Coca-Cola bottling plants operating in Kala Dera
over-exploited the groundwater in that area and the plant if continues will be one of the contributors in the
lowering the water level in that area and will be major problem to the people living around.
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The assessment made recommendations for the bottling plant operating in Kala Dera and also recommends
the company to not to use the over-exploited water of the Kala Dera. It made four recommendations:

1. Transport water from the nearest acquire that may not be stressed
2. Store water from low-stress seasons
3. Re-locate the plant to a water-surplus area
4. Shut down this facility

The Kala Dera people welcomed the recommendations but they still waits the implementations of these
recommendations by the company for which Coca-Cola itself paid.

It is said that if we don’t learn from our mistakes from the past we are likely to repeat them. It looks like
Coca-Cola has not learnt from its mistakes in the village of Plachimada, a state of Kerala in India where its
plant was shut down by the operation of community in March 2006.

The way in which the company has decided to deal with operation by the community of the village of Kala
Dera in Rajasthan describes the ignorance and non-professional management of the Coca-Cola Company
that has landed itself in problem that it has faced in the past and they in India are again in rude awakening.

Kala Dera thirsting from Coca-Cola:

Kala Dera is a large village outside Jaipur with agriculture as the primary source of livelihood in the village.
The Coca-Cola started its working in Kala Dera in 2000 and within a year of its working the people of the
village of Kala Dera started noticing a quick decline in water level of surrounding. As Government of India
declared drought last summer and restricted access to water which are falling quickly leaving the agrarian
society with severe damage.

The government agency confirmed drop of 4.29 meters (14 feet) in the year between August 2008 and
August 2009 in ground water level of Kala Dera, from 30.83 meters below ground level to 35.12 meters.

The previous figures by the government agency was more alarming which indicate big drop in ground water
level that is of 5.83 meters (19 feet) between May 2007 and May 2008 in Kala Dera village.
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The people of Kala Dera faced many problems due to this drop. For farmers it was basically loss of income
they earn. For women they have to walk additional 5 to 6 kilometres just to get water for daily use and needs
of the family. Children’s of Kala-Dera it means they have to leave schools to provide help in household
work because women have to do additional work.

The people of Kala-Dera organized themselves against the Coca-Cola Company in a protest for the
declining rate of the ground water level and demanded the company to close its bottling plant operations in
the Kala Dera. The company as usual denied any unethical operation and blamed the outsiders for the
increasing opposition in the area.

The people of Kala Dera and villages around it have demanded the Coca-Cola Company to be shut down
because the company has destroyed the water resources and the income of people living around it.

In 1998 government declared the Kala Dera a water-stressed area and ground water resources over
exploited.

The study paid by Coca-Cola under international pressure conducted by The Energy and Resources Institute
(TERI) confirmed the Kala Dera allegations in 2008 and concluded that company has over-exploited the
water resources. The study suggested that the Coca-Cola Company should shut down the Kala Dera plant
and should bring piped water from other plants or should shift it in to another area where the water level is
high to meet its production needs.

The groundwater level is still continued to worsen as the company has chosen to ignore the suggestions of
the study conducted.

Due to legal and confidential reasons the Coca-Cola Company has refused to share the Environmental
Impact Assessment (EIA) which according to the company has conducted before the construction of the
plant. However a good EIA should have informed the company that the area was water stressed and the
plant will have negative effect on the ground water level.

However Coca–Cola states that they have become more water positive as they recharge more water then
what they use and the ground water level has increased over last few years of operations in Kala Dera area.

On the other hand the Indian resource centre IRC after a visit to the company’s rainwater harvesting
structure in Kala Dera have stated that the structured is not functional and not maintained.

The TERI study also visited the rainwater harvesting structure and declared it to be in worse condition.

“Water is life and by denying our water, Coca-Cola is destroying our lives and livelihoods. We urge people
around the world to put pressure on Coca-Cola so that they shut down the bottling plant in Kala Dera,” said
Mahesh Yogi of the Kala Dera Snghardh Samiti, the community group spearheading the campaign.

“Coca-Cola’s operations in Kala Dera are nothing short of criminal. In spite of the growing evidence
including the company’s own studies, that conform its operation is not sustainable, the company chooses to
operate recklessly without regard to the well being of the community. If Coca-Cola were at all serious about
being the water steward they claim to be, it would not suck water in drought area and it would immediately
discontinue its operation in Kala Dera,” said Amit Sarivastva of the India Resource Centre, and international
campaigning organization that work with the community in Kala Dera to oppose the plant.

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Before the Coca-Cola started its operations in the area the average ground water level fell 3 meters in nine
years. However since it started its operations in Kala dera the ground water level have dropped 22.36 meters
in last nine years.

Continued Misery in the face of certainty:

Kala dera lies in an overexploited groundwater area access to water have been difficult. Summers are
particularly intense in the area, and summer is when water shortage is most acute. Ironically, summer month
are also when coco-cola reaches its peak production and it is in the summer months that the coco-cola
bottling plant in kala dera extracts the most water, making already existing water shortage even worse.

At the very least, the coco-cola company could have stopped extraction of water this summer, knowing
farmer in kala dera shows increased electric bill very well the conclusion of assessment from pumping
depleted groundwater with facts , the coco-cola company chosen continue to its operation, knowingly
contributing to the misery of thousand of people.

Criminal Negligence or Straight incompetence?

Prior to locating a bottling plant in kala dera, coco-cola is supposed to have conducted an environmental
impacts assessment that looks a variety at a variety of current condition and potential impacts if the plants is
built and operated.

The coco-cola company has refused to share the environmental impacts assessment it conducted for kala
dera (or another plant in India), citing “legal and strategic confidentially” reason.

However, the Central Ground Water Board of India had already assessed the ground water in and around
kala dera to be “overexploited” in 1998.
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The coco-cola company started operation in 2000 - two years after the Indian government agency had
already found “overexploited”.

If the company knew that the kala dera groundwater area was overexploited, then starting a water intensive
plant border on criminal negligence itself. And how could the company, which describes itself as a
“hydration” company, not know that the central Ground Water Board of India had already assessed the
groundwater as overexploited?

Coco-cola to agree assessment:

The coco-cola company says that it “voluntarily participated” in the assessment even though the University
of Michigan insisted that coco-cola agree to an assessment if it wanted to do business with University of
Michigan.

The company goes on further to state that “our voluntary participation in the TERI assessment reflects our
commitment to transparency and continuous improvement.

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Disscusion: Criticism:

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Water is a basic and important element of life, making this element short in the ground its means you are
killing the daily patterns of normal life by making shortage of water is very shameful

If coco-cola Company were committed to transparency, we would suggest they make a good start by sharing
the environmental impacts assessment that they conducted for kala dera and rest of the bottling plant in
India.

And as for their commitment to “continuous improvement” coco cola should start with implementing one of
the four recommendations made by the assessment in regards to the Coca-cola bottling plant at kala Dera.

Criticism is the judgment of the merits and faults of the work or actions of an individual or group by
another. To criticize does not necessarily imply to find fault, but the word is often taken to mean the simple
expression of an objection against prejudice, or an approval.

Coca-Cola does not meet its own standards:

One of the shocking findings of the assessment was that of the six plants surveyed, in not one did the plant
meet the coca-cola company standards for waste management, known as TCCC standards.

Coca-Cola does not in compliance with Government regulations:

Coca-cola has severely polluted both the ground water and soil around its bottling plants. A Government
study of seven coca-cola plants found that all plants were generating large amount of toxic wastes. In
violation of Indian laws, the waste was not classified and handled as industrial hazardous waste. In some
areas, the company was distributing its toxic waste to farmers as “Fertilizer!”

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Pesticides in drinks:

In 2003 and again in 2006 studies found that Coca-Cola products in India contain dangerously high level of
pesticides, including DDT, Lindane. On an average, the pesticides residues were 24 times higher than
European Union (EU) standards. 7 states in India imposed partial or full bans on the sale of Coca-Cola
products.

Corporate Social Responsibility:

While there have been no genuine initiative on the part of Coca-Cola to correct its mistakes in Kala Dera,
TCCC has stepped up its social responsibility spending to announce to the world that it is a green and
socially responsible company. Such an effort, however, rings hollow when it comes in India. Over twenty
colleges and Universities in the US and UK has been stopped doing business with Coca-Cola company,
because TCCC has been removed the major fact and that is the fact of “Social Responsibility”.

Water Scarcity:

Communities living around Coca-Cola’s bottling plants in India are experiencing severe water shortage –
directly as a result of Coca-Cola’s over extraction of ground water. A government study in the desert state of
Rajasthan found that ground water levels had dropped 10 meters in just five years since Coca-Cola started
operation. In 2004, Coca-Cola used 283 billion liters of water world wide – enough water to meet the

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world’s drinking needs for 10 days. Coca-Cola’s largest bottling plant is in India, in Plachimada has been
shut down since March 2004 due to community opposition.

Conclusion:
Access to clean drinking water is a fundamental right. However, 1.2 billion people about 20% of the world –
do not enjoy this right. Providing access to portable water remains one of the greatest challenges facing
today. India already faces declining per capita availability of water. Over - exploitation of ground water
resources are rapidly lowering ground water tables.

In addition to water scarcity and pollution, there is huge public health cost associated with increased
consumption of Coca-Cola - Diabetes, Obesity and entail problems.

Recommendations:
After the discussion and conclusion above, the recommendations to Coca-Cola Company to become more
ethical are as follow:

The Coca-Cola should follow one suggestions of the study conducted by the TERI for which it paid and says
proudly that “our voluntary participation in the TERI assessment reflects our commitment to transparency
and continuous improvement” which are as follow:

 The company can transport water from nearest area where groundwater level is not over-exploited.
 They can store water when demand is low like in winter.
 They can re-locate the plant to area where groundwater level is normal.
 If they can’t follow any of these suggestions they have to shut down the plant.

The Coca-Cola Company can also improve their rain harvesting structure so that they can save water and
also contribute for increasing the level of groundwater and this will also help them to improve the image
which is badly damaged after the above incidents in India.

They should improve the management level and their policy in India as one of the shocking findings of the
assessment was that of the six plants surveyed, neither one of the plant meet the coca-cola company
standards for waste management, known as TCCC standards.

They should follow the government law as government study of seven coca-cola plants found that all plants
were generating large amount of toxic wastes. In violation of Indian laws, the waste was not classified and
handled as industrial hazardous waste. In some areas, the company was distributing its toxic waste to
farmers as “Fertilizer!”

They should be socially more responsible as over twenty colleges and Universities in the US and UK has
been stopped doing business with Coca-Cola Company, because TCCC has been removed the major fact and
that is the fact of “Social Responsibility”.

They should also make sure the drinks the produce are safe and does not have pesticides in it as found in
2003 and 2006 studies.

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References:

www.coca-cola.com

www.google.com

www.wikipedia.com

www.indiaresource.org

www.killercoke.org

http://www.coca-colaindia.com/

http://en.wikipedia.org/wiki/The_Coca-Cola_Company

http://www.google.com.pk/search?q=history+of+coca-
cola+in+india&hl=en&sa=X&biw=986&bih=558&prmd=ivns&tbs=tl:1&tbo=u&ei=ZizSTdrmK8y58gOFq
qXjCg&oi=timeline_result&ct=title&resnum=11&ved=0CGgQ5wIwCg

http://www.scribd.com/doc/50637949/11/COCA-COLA-HISTORY-IN-INDIA

http://www.care2.com/c2c/share/detail/975982

http://www.independent.co.uk/news/education/education-news/cocacola-is-banned-from-students-union-
over-unethical-practices-412455.html

http://current.com/news/89301229_coca-cola-continues-unethical-and-dishonest-practices-in-india.htm

International Campaign to Hold Coca-Cola Accountable.

E: mail: info@India Resources.org

Web: www.cokejustice.org

Campaign:

By: Nityanand Jayarman

India Resource Centre

May 24, 2005

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http://www.coca-cola.com/en/index.html

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http://www.thecoca-colacompany.com/brands/index.html

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