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Coca-Cola in India
Case Study produced by ELS

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Coca-Cola in India The Coca-Cola Company has operated in India since 1993 through its subsidiary, the Hindustan Coca-Cola Beverages Private Limited). Coca-Cola operates around 49 bottling plants in India. The primary source of water for Coca-Cola bottling plants in India is groundwater. India is already facing a water crisis in large parts of the country and as a result of climate change and mismanagement of water resources the crisis is expected to grow. Coca-Cola has located many of its bottling plants in drought prone areas in India, and its bottling operations in these areas have made existing water crises even worse. In the village of Kala Dera in the state of Rajasthan, the Central Ground Water Authority (CGWA) declared the areas groundwater resources as overexploited in 1998. Yet, Coca-Cola built a new bottling plant in Kala Dera in 1999. In the nine years since CocaCola has been operating in Kala Dera, the groundwater levels have dropped 22.36 meters. The rapidly declining groundwater levels have taken a huge toll on the local population mostly farmers. Agricultural yields have declined significantly, women have to walk longer to fetch potable water to meet the basic water needs. The quality of the groundwater has also deteriorated in terms of smell, color and turbidity.1 Since 2003, communities living around the Coca-Cola bottling plant in Kala Dera have organized a campaign to demand the closure of the plant. Massive demonstrations have taken place against Coca-Colas bottling plant.2 Despite the opposition, Coca-Cola has continued to extract groundwater, and that too for almost free, paying a few hundred dollars a year. The CGWA in 2004 also confirmed that the company not only depletes the groundwater but also pollutes it by pumping contaminants.3 Similar to Kaladera is the situation in Mehdiganj. Coca Cola started to operate here in 2000. The community of Mehdiganj started to experience sharp drops in groundwater levels soon after Coca-Cola started bottling operations. The groundwater levels at CocaCola's bottling plant were at 23.75 meters below ground level in 2008. Independent studies have confirmed in 2006 that in the area closest to the factory, contamination by heavy metals was much higher than the rest of the area.4 The company defends itself by any means, and claims the water depletion is caused by agriculture and lack of rain. That is however not enough for protesting organizations and many universities worldwide, that are banning contracts with Coca-Cola because of company's irresponsible attitude towards environment and human rights. The University of Michigan demanded a third party study on Coca-Cola's water management practices in India and Coca-Cola asked TERI, a renowned scientific institute to conduct the study. Findings of the study in many cases confirmed the claims of affected communities. For Kala Dera, TERI suggested that Coca-Cola shut down the plant or relocate it or get water
1 2 3 4 http://www.teriin.org/cocacola_report_toc.php http://www.hindu.com/2004/09/29/stories/2004092902220500.htm http://www.indiaresource.org/news/2004/1020.html Report on environmental quality monitoring in surrounding areas of Hindustan Coca Cola bottling plant at Mehdiganj, Varanasi; Peopless science institute, Dehra doon hazard centre, New Delhi, 2006

from surplus aquifer outside the area.5 Coca-Cola has not complied with any suggestion as of today. Coca-Cola in India has been already criticized for its irresponsible behavior. In 2003, one of Coca-Colas largest bottling plants in India was shut down by the government because of pollution after a sustained campaign by the community. A government committee has just recommended that Coca-Cola pay US$47 million as compensation for the damages caused.6 None of this would happen to the company or the local people if more responsible approach was undertaken. But the situation in India is complicated and possible influence on Indian authorities is not out of question. The official that had granted the license to Coca-Cola in Mehdiganj was caught getting bribed.7 And despite the evidence against Coca-Cola in the case of Plachimada, a US official commented it as unlucky for Indian economic climate.8 Under the pressure of economic progress, business is prior to human rights and environment. Without a complex legal framework of corporate responsibility, results of such approach will lead to losses in terms of environment and human rights abuses, but also to losses on side of the companies such as bad corporate name or high penalties.

The case study above demonstrates why the Rights for People Rules for Business campaign aims to hold companies legally accountable for their operations in and outside the EU. The campaign calls for the EU and its Member States to change European law in order to:

Ensure that companies operating in the EU are legally accountable for any harm they cause to people and the environment in and outside the EU. Many European companies are multinational corporations. Many others are owned by or do business with foreign companies. Multinational corporations operate through many subsidiaries, subcontractors and suppliers. Currently, a corporations headquarters makes profits without having to consider how its companies negatively impact peoples lives and the environment. Examples include profiting from unfair labour conditions, human rights violations and environmental destruction. Ensure that European companies disclose accurate information about their impacts on people and the environment. They should be transparent about what they have done, what they are doing and what they plan to do.

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http://www.teriin.org/cocacola_report_toc.php http://www.reuters.com/article/idUSSGE62M0AV20100323 http://timesofindia.indiatimes.com/Pollution-officer-caught-accepting-bribe/articleshow/4323229.cms http://uk.oneworld.net/article/view/138102/1/5795

Generally, companies are not obliged to report on the social and environmental impacts of their operations and future activities. Since there are not enough reporting rules, the information disclosed is often misleading or incomplete. What are the impacts of a steel mill on neighbouring farmland? How do suppliers of European fashion brands treat their workers? Mandatory disclosure of such information would allow affected and concerned people to hold companies to account. Ensure that non-EU citizens, who are victims of the operations of European companies, have access to justice in the EU. Too often people, whose lives have been affected by companies, face many barriers in taking legal action. For example, it is too expensive, it is very difficult to find legal representation and sometimes impossible to obtain all required evidence. In addition, they can face serious intimidation for taking action. The Rights for People Rules for Business campaign aims to change European law. The campaigns legal proposals have been developed by The European Coalition for Corporate Justice.

The European Coalition for Corporate Justice (ECCJ) promotes corporate accountability (CA) by bringing together national platforms of civil society organizations (CSOs) including NGOs, trade unions, consumer advocacy groups and academic institutions from all over Europe. ECCJ represents over 250 CSOs present in 15 European countries such as FIDH and national chapters of Oxfam, Greenpeace, Amnesty International and Friends of the Earth. ECCJ believes CA and also Corporate Social Responsibility (CSR) mechanisms should be based on international legal frameworks and principles, serving as the foundation for and of corporate justice. Overall, ECCJ aims to increase European co-operation among NGOs working on CA. The coalition seeks to raise public awareness about the role of the European Union (EU) in regulating companies both in and outside the EU. Given the global reach of European companies, it is crucial to ensure that they are held legally accountable for the impacts their operations have on people and the environment. This can be achieved though not exclusively through the endorsement and implementation of European and international standards. Legal standards provide the potential to better ensure global social justice, poverty alleviation and environmental conservation. ECCJ is convinced that turning the EU into a leading actor on CA would, in turn, greatly influence discussions on CA and CSR at the global level. ECCJ is convinced that a regulatory approach towards CA is needed. The EU should establish legal measures to hold EU-based companies accountable for the costs and impacts their operations have on peoples human rights and the environment worldwide.