Opening Case Study for Environmental Management SB @ MBA

HEAT ON COLD DRINKS ‘The Coca-Cola company exists to benefit and refresh everyone it touches,” says the home page of the world’s largest soft drink company’s website. But many in India, and in the 199 other countries that Coke is sold in, are finding out the truth the hard way. Coke has been in the news recently for all the wrong reasons; the latest being the 5 August report of the Centre for Science and Environment, New Delhi. A CSE test found 12 soft-drink brands of Coke and its global rival Pepsi contained pesticides and insecticides in excess of the European Economic Commission’s limit. The Parliament’s immediate reaction: ban on the brands on its premises. On 8 August, a West Bengal government report said sludge and liquid effluents from Coke’s plants at Dankuni, Taratala and Jalpaiguri and Pepsi’s at Narendrapur contained toxic metals and the carcinogen cadmium. On 6 August, Kerala State Pollution Control Board had confirmed that Coke’s bottling plant had indeed been polluting the groundwater and agricultural land in and around its Palakkad plant. Six months ago, CSE tests had found pesticides in leading packaged water brands, including those produced by Coke and Pepsi. These bombshells followed media reports in the UK and in India of the scorching and environmentally disastrous impact of Coke’s operations in several regions in India; of allegedly rigging marketing tests in the USA and using slush funds to boost equipment sales; of reportedly hiring Right-wing death squads to eliminate trade union organisers in Columbia and Guatemala; of causing environmental damage in Panama and of neglecting health problems of its employees in Africa. While reports of pesticides’ and insecticides’ presence in Coke and Pepsi may now deter consumers from enjoying the soft-drinks, people living in and around Coke’s bottling plants in India have been feeling the heat in a different way. In Kerala, Uttar Pradesh, Rajasthan, Tamil Nadu and Maharashtra, people have been protesting against Coke’s bottling plants because they’ve depleted groundwater level and damaged the environment. Villagers of Palakkad’s Plachimada village in Kerala had been agitating against Coke’s bottling plant for several months but their plight drew global attention only recently after BBC Radio 4’s Face The Facts expose. Presenter John Waite visited Coke’s Plachimada plant after villagers complained of falling groundwater level in the area after Coke had started drawing it in huge quantities. Waite carried the samples of water and wastes sold by Coke as soil conditioner (but used by local farmers as fertiliser) back to the UK, where laboratory tests showed that they contained dangerous levels of cadmium. Tests at

the little patch of land in the green. Now. cook with or even wash in. confirming the existence of carcinogenic contaminants in the waste. This is actually a David and Goliath battle: some of the world’s poorest people versus a multinational giant.5 million litres of water daily through its deep wells to bottle Coke. Sprite and the drink the locals call. picturesque rolling hills of Palakkad yielded 50 sacks of rice and 1. saying it’s “necessary to… (get) SPCB’s report” confirmed.The disruption in life because of depletion of groundwater and contamination by pollutants have forced villagers to picket the factory for the past 470 odd days. ‘‘Thumbs-Up’’. Though Coke claims to have carried out the mandatory Environment Impact Assessment report before setting up the plant. It provided work for dozens of labourers. Politicians even threatened the agitationists with “dire consequences” if they didn’t stop. But their complaints mounted. But the cruellest twist is that while the plant bottles a mineral water. none so far has seen the report. “We have scientific evidence to prove it is absolutely safe and we have never had any complaints.00.” But Plachimada’s villagers have a different story to tell. brackish water that remains at the bottom of their wells contains too high a level of dissolved salts to drink. the government has postponed the hearing. But Coke’s lawyers got the suspension order revoked by appealing to the local selfgovernment department. His irrigation wells have run dry. with the dried-out farms closing. also their jobs. A reasonable number of crippled labourers would be 10. Few took notice when the villagers first began complaining of the changes in the quantity and quality of well water.University of Exeter too showed the material was useless as a fertiliser and contained a number of toxic metals.000. In his last harvest. Fanta. and it has the support the local authorities.000. Waite’s repeated requests to the company to produce a copy of the report met with failure. On 7 April. of course. In UP. including lead. Three years ago. The turbid. sustained protests against Coke have prompted the Central Pollution Control Board to initiate a probe into the pollution being caused allegedly by Bharat Coca-Cola . denies responsibility for all this. Coke vice-president in India Sunil Gupta told the BBC that the fertiliser didn’t pose any risk. Coke could operate its plant till 6 August – but on that day KPCB made its report public. But the company has been denying any wrongdoing. they argue that the company creates jobs. Then Coke arrived and built a 40-acre bottling plant nearby.500 coconuts a year. the Perumatty panchayat revoked the factory’s licence to alleviate the villagers’ sufferings despite losing almost half of its annual income of Rs 7. without irony. Coke. local people – who can never afford it – are now being forced to walk up to 10 kilometre twice a day for a pot of drinking water. The Centre classifies many of the suffering villagers as primitive tribals or Dalits. could manage only five sacks of rice and just 200 coconuts. thanks to Coke drawing up to 1. Over 300 people have been held for demonstrating against Coke and blackening its hoardings. owner of a small holding. Shahul Hameed. for they not only lost their water but.

000 people gathered in Sivaganga recently to protest against a proposed Coke plant. Atlantabased soft drink giant claims “local communities have welcomed our business as a good corporate neighbour. Result: severe drinking water scarcity. But now the government seems to have given in to the soft drink giant’s pressure. ‘‘The water level has fallen by more than 150 feet in the area…. They allege the plant has been discharging hazardous wastes and heavy consumption of groundwater has depleted the water level. In Maharashtra. land and tax breaks that Coke gets from the state.” But around the world. At places the ground water level is beyond reach resulting in water riots and even killings. was the outcome of lobbying by protesting local residents. US ambassador to India Robert Blackwill wrote to Prime Minister’s principal secretary Brajesh Mishra: “I would like to bring to your attention. The case. filed in April 2001 by the UP government. Protests are also building up against the sale of major Cauvery tributary Bhavani by Tamil Nadu government to Poonam Beverages for bottling Coke’s packaged water. only to leave them more thirsty. Locals have submitted a memorandum to the chief minister. Trouble started in early May when a court found the firm guilty of not paying land revenue worth more than Rs 15 lakh. more than 7. Despite the state facing drought conditions. Kinley. Under the rules of entry into India. After the firm set up a bottling plant. the area’s wells and ponds dried up. a potentially serious investment problem of some significance to both our countries. In Rajasthan. and seek your help in resolving. An equal amount of penalty – under Section 47 (A) of the Indian Stamps Act – has also been imposed on the company. but have no vote whatsoever? Remember Enron! In Coke’s case too. Coke has increasingly become the target of local communities’ ire around because of its disregard for man and his environment. The world’s most well recognised brand name’s Latin American bottler is facing trial for allegedly hiring Right-wing . villagers of Kudus in Thane district now have to travel long distances in search of water because it has dried up. 20 km from Varanasi. demanding the plant be shifted. it’s on the verge of changing its policy to suit Coke’s interest. Villagers have began questioning the subsidised water.Bottling North East Private Ltd – a bottling arm of Coke – in Mehdiganj. from 15 feet to 40 feet. the US government played a significant role. But the unfazed $-20-billion. Coke was to divest 49 per cent of its equity stake within five years. thanks to Coke.’’ said a villager. villagers of Kala Dera near Jaipur have been protesting against the fall in the groundwater level after a Coke plant started drawing water. Will Indian investors own 49 per cent of Coke’s operations in India. one of the largest single foreign investors in India.” But this should not come as a surprise. A man was detained for protesting against Coke’s pipeline. built to carry water from a river to its plant. In Tamil Nadu. the government effected the sale. The case involves Coca-Cola. for Coke is accustomed to having its way with governments.

But both share some uncanny similarities: Enron and Coke top the US foreign direct investment (FDI) list in India.paramilitary forces (death squads) to kill and intimidate trade union organisers. The company that started life in 1886 as the result of a search for a headache remedy may soon join Enron if it fails to stop giving people more headaches than it can cure. that allows corporations to be sued in the USA for crimes committed overseas.000 for polluting Matasnillo river in that country. Holding Coke responsible for the harms it causes is nothing new. Enron’s Indian operations (Dabhol Power Corporation. . especially from SINALTRAINAL. The suit has been brought under the Alien Tort Claims Act. joint venture with Bechtel and General Electric and others) was the largest single FDI in India and became the target of activists across the country because of various irregularities. Enron was forced to shut down its Indian operations long before the financial scandal broke out in the USA and brought the entire company down. In May 2003. CocaCola de Panama was fined US $300. Coke may not got the Enron way – for it is not based on assumptions and speculation. Discuss the environmental impacts.