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Is Coca-Cola a Socially Responsible?

Corporate Social Responsibility (CSR) in increasingly becoming a strategic tool in the present-day business landscape. CSR involves the ethical and moral obligations that business entities are expected to uphold. Furthermore, CSR is intended to benefit all of an entity's stakeholders including employees and investors. Above all, CSR legitimises a business and its initiatives serve as competitive advantages in the market in which it operates. The Coca-Cola Company (TCCC) is an apt example of a multinational company that has successfully integrated CSR. This paper explores the dimensions of CSR at Coca-Cola and evaluates the efficacy in order to aid in understanding the motivation and success factors of CSR. A qualitative approach was adopted in the study. Following continuous allegations of over-exploitation and pollution of water sources in India, TCCC committed its efforts to address the problem through community-based initiative, particularly through water stewardship. Other material issues that define TCCC's CSR include well-being, women and community, climate Protection, human & workplace rights and sustainable packaging. The study suggest that the success of TCCC can be attributed to strategic management process, technological capabilities, and financial capabilities.

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There is no precise definition of Corporate Social Responsibility (CSR). All of the existing definitions suggest that the concepts entails the responsibility of companies for their impacts on society (Burchell 2008; Carroll & Shabana 2010; Dahlsrud 2006.). Early notions of Corporate Social Responsibility (CSR) on an academic level can be traced back five decades ago. In the 1990s, the multi-layered concept of CSR consisted of four major interrelated aspects: ethical, legal, economic and philanthropic responsibilities (Carroll 2008). Carroll (2008) proposed a model for analysing the dimensions of CSR. The model begins with economic responsibilities. In this context, enterprises are created to provide products to the public and to generate profit. This serves as the foundation of the other three sets of responsibilities. The second layer represents legal responsibility of an entity. Ethical responsibilities are organizational practices that are not regulated by law. The society expects companies to conduct their operations in a fair and just manner. Lastly, it is conventional for companies to be involved in philanthropic work. Business entities are expected to be exemplary corporate citizens and improve the quality of life in both internal and external environments. For the past decade, multinational companies and their operations have been scrutinised by different segments of society. CSR has evolved into a complex management concept to become an integral part of corporate or strategic decision-making processes of globalised entities that are viewed as front-runners in implementing CSR (Kaur & Aggarwal 2012; Lindgreen & Swaen 2010). Some of the front-runners in integrating CSR include Coca-Cola, Canon, Walmart, Hewlett-Packard,Microsoft, etc.

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CSR and its Main Dimensions

The concept of corporate social responsibility is as old commerce (Dahlsrud 2006.). For instance, laws for the protection of forests in the commercial logging industry can be traced back to the Industrial Revolution Era. During this period, environmental and societal impacts linked to commercial activities assumed a novel direction. Due to criticisms directed towards the factory system as a contributor to an array of social problems such as poverty, crime and child labour, a considerable number of industrialist started allocating a significant fraction of their profits in philanthropic activities (Carroll 2008). Central to the activities was the need to strengthen company-community relationships by engaging in society-based activities such as the construction of treatment centres for employees and donations to orphanages. Despite the fact that such endeavours improve the living conditions of employees and are embraced as contemporary business practices, they were criticised due to a perception of companies controlling employees' lives. Irrespective of the controversies surrounding CSR, the topic gained attention in theory and practice, starting from the 1950s after the increase in social and economic turmoil (Carroll & Shabana 2010), which contributed to the heightening of social responsibility, eventually expanding the scope of the social obligation of enterprises. For these reasons, and likewise recognizing the financial benefits for involvement in CSR, companies and academicians started viewing CSR from different perspectives, which included legal and moral dimensions (Amaeshi, Osuji & Nnodim 2008). In that regard, companies were motivated to implement CSR because it was the right direction to take as opposed to the profitability mindset. The argument stemmed from the observation that companies operated in society as a whole, rather than just the market (Cramer, van der Heijden & Jonker 2006). To that end, companies were expected to operate in a fashion that satisfied the expectations of different stakeholders, including the government, shareholders, employees and regulatory entities.

The re-emergence of the ethical aspect of CSR was triggered by several corporate accidents including Bhopal and Exxon Valdez. As a consequence, scholars argued that companies should be engaged in CSR initiative as an ethical imperative, and not just because of its impact on financial performance. The concept of corporate responsiveness underpins the significance of healthy relations between businesses and the community; hence, alongside the financial and legal responsibilities, corporations are involved in ethical and philanthropic activities (Burchell 2008). As noted by Burchell (2008), healthy business-community relations or effective societal performance can enhance an entity's performance; therefore, companies should operate in a manner that results in less harm and yields more benefits to the society. The 2000s saw the growing significance of corporate citizenship, which is more of a political approach to CSR. The last decade has also experienced an expansion of environmental responsibility and stakeholder theory. Environmental responsibility is perceived as CSR tool that can be used to create and sustain competitive advantage. Likewise, stakeholder theory was extrapolated through the incorporation of ethics. For example, TCCC acknowledges that its stakeholders' expectations have increased significantly over the past decade (The Coca-Cola Company 2015). For that reason, the company has assembled numerous round table discussions with various stakeholders across its markets to improve the understanding of their evolving needs and expectations. The essence of operating in a moral manner towards stakeholders has been stressed in the moral and ethical aspects of CSR due to significant benefits associated with an ethical corporate behaviour (Amaeshi, Osuji & Nnodim 2008; Hart 2010; Jenkins 2009).

As of the writing of this paper, CSR research emphasises practical dimensions of corporate social responsibility. There is a consensus in the literature that current CSR approaches should be refined, especially the assumptions and concepts of CSR. Arguably, the vagueness of CSR research and theory presents two conflicting viewpoints about its capability of influencing the operations of entities (Campbell 2007). The first viewpoint is that CSR is a means of achieving development, which can enhance a company's social and financial performance. The second viewpoint is sceptical regarding CSR's ability to influence business operations due to the fact that CSR is primarily used as a strategic tool for enhancing profitability. These viewpoints are used in this research to evaluate CSR practices of the Coca-Cola Company, which is profitable.

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Case Study: The Coca-Cola Company

The Coca-Cola Company (TCCC), here henceforth referred to as Coca-Cola, TCCC, or the company, is an American multinational company producing and selling beverages. The company manufactures and distributes over 40 of the leading global beverage brands. These include Fanta, Sprite, Diet Coke, Coca-Cola Zero, and Light and Life. In 2014, the company sold over 12 billion cans and bottles through over a million retail stores, generating about $8.2 billion in revenue. Sustainability agenda has shaped Coca Cola's business strategy moving forward due to the pressure that the beverage industry in continuing to face. Similarly to environmental issues, social issues are driving CSR agenda, including the way the company sets its objectives and reports its progress. The increasing number of stakeholder round table meetings directly influences the company's Sustainability Plan commitments. Engaging with stakeholder on CSR issues proves to be driving company performance, causing stronger connections locally and greater employee engagement (Raman 2010; The Coca-Cola Company 2015). According to Coca-Cola Enterprises (2015), corporate responsibility and sustainability are at the core of the company operations, from how it procures its products and packages them, to how it manages its manufacturing, sales and product distribution. Additionally, the company stresses that CSR is ingrained in how it interacts with consumers and customers to bridge the gap in packaging and recycling (Coca-Cola Enterprises 2016). The success of TCCC CSR can be attributed to strategic management process, R&D, PPPs and investment in technology. It is through public-private partnership arrangements that the company has managed to not only improve its damaged image in India and other controversial markets but also improve employee engagement, business performance and relations with locals. The section that follows discusses the company's CSR dimensions.

Coca Cola's CSR Dimensions

TCCC sustainability vision is to "deliver for today, growing a low-carbon, zero-waste business, and inspire and lead change for a more sustainable tomorrow (The Coca-Cola Company 2015)." As noted in the 2014/2015 Sustainability Report, the company implements CSR through six material issues that matter to the company and its stakeholders: women, water, well-being, climate protection, human&workplace rights and sustainable packaging (The Coca-Cola Company 2015). Figure 1 presents the 2014 highlights on the company's key material issues.

Water Stewardship

As per the 2014/2015 Sustainability Report, the company was on track to achieve this CSR goal. Coca-Cola considers water as one of the most important material issues for the business and its stakeholders. In conformity with its water stewardship initiative, the company mandates its bottling operations to implement a comprehensive source water protection plan (SWPP). TCCC has also implemented numerous water management initiatives globally, including the Latin America Conservation, World Resource Institute, the United States Water Partnership, Water Action Hub and the Nature Conservancy's Business Council (Holzendorff 2013; Lambooy 2011; The Coca-Cola Company 2015). Additionally, the company has established three water replenishment partnerships in water-scarce areas in France, Belgium and Great Britain. As indicated in Figure 1, the company maintained its water consumption of 1.36, which is a reduction of 17% since 2007. As of 2015, the company has also launched a new water replenishment project in 38 rural villages in India. The project is a community/private/public partnership to promote sustainable water management and effective agricultural practices.

Women and Community

TCCC aspires to have a minimum of 49% women in both leadership and management positions by 2025. Regarding social investment, the company invests 1% of its annual pre-tax profits to support charitable and community-based partners. Through the Coca-Cola Foundation, the company is involved in numerous initiatives designed to strengthen host communities. The Foundation is a charitable entity with the objective of developing business-community relationships, facilitating socioeconomic development of communities and monitoring community issues. For instance, TCCC is involved in creating HIV/AIDS awareness, developing sports talents and enhancing access to basic medications in local dispensaries. Consequentially, the company makes a positive contribution to the communities in which it operates. The 5by20 initiative has empowered over a half a million women in over 44 countries globally. Furthermore, the company has collaborated with the International Finance Corporation (IFC) and the International American Development Bank in projects meant to improve women's welfare. TCCC has also replicated the Sari-Sari Store Training and Access (STAR) from the Philippines to Indonesia, Thailand and Malaysia. Similar initiatives have been introduced in Latin America and Africa.

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Well-Being

Coca-Cola prides itself on being on the front-line of improving the well-being of its customers and consumers of its products, especially on the issue of obesity (The Coca-Cola Company 2015). The engagement stemmed from the criticism that its products contribute to the consumption of fast foods, which are associated with obesity, especially in the United States. The company's engagement is also a demonstration of having acknowledged that the issue of obesity is complex and influenced by numerous factors. In that regard, the company is playing its part by offering an array of drinks, as well as different sizes featuring detailed information about the content of their products. The company ensures that there is clear nutritional labelling on the packaging ofl all its products. The portfolio provided the largest percentage of low-calorie and no-calorie beverages. Since 2010, the company has reduced the calories/litre across its portfolio by 5.4% and engaged more than a million people in Active Lifestyle programs. Consequentially, consumers can make informed choices to suit their health needs and lifestyles. This dimension is also supported through collaborations with various stakeholders to find innovative solutions. TCCC has also reached over 130,000 people though local partnership and the company's education centres and programs. Through responsible marketing, the company is committed not to market any of its products to children under the age of 12 years, as well as not to sell its products in primary schools.

Climate Protection

The Sustainability Plan launched in 2011 has helped the company to gain significant success, especially in the reduction of carbon print (The Coca-Cola Company 2015). In 2011, the company set a target of reducing its greenhouse gas (GHG) emissions by 15%, and by 2015, it had reduced its carbon footprint by 29%. In the same context, the company has managed to reduce its carbon footprint in cold drinks transportation and equipment. As a front-runner in integrating CSR, the company keeps on revising its targets in various areas to improve its environmental responsibility competitive advantage.

Human & Workplace Rights

TCCC attracts, motivates and develops a talented and diverse workforce within a healthy and safe workplace. This is done in recognition of the significance of workplace diversity. TCCC also encourages its employees to participate it its employee wellbeing programs. Further, the company provides a healthy and safe work environment with the aim of achieving zero-accidents and registering an excellent health and safety status.

Sustainable Packaging

Regarding sustainable packaging, Coca-Cola partners with host governments, consumers and industry players to recover and recycle bottles and cans introduced in the market. In the same context, the company supports the development of technology and infrastructure to facilitate recycling of other packaging materials. Recycled material includes glass, steel and aluminium. Some of the related initiatives include the Colevito Recycling Program (Brazil) and the Regional Initiative for Inclusive Recycling. TCCC has reduced its packaging use ratio by 20% against the 2007 benchmark. TCCC plans to reduce by 25% the amount of material used across all packing formats by 2020. Regarding manufacturing, TCCC is committed to sending zero waste from its manufacturing operations to landfills. Most importantly, TCCC increases packaging recovery by using its brands to inspire and educate consumers to recycle more often.

Evaluation of the Efficacy of Coca-Cola's CSR Practices

This section evaluates the efficacy of Coca Cola's CSR practices, especially regarding the restructuring of its CSR strategies due to the CSR challenges faced in the last decade.

Strategic Response to CSR Criticisms

The Coca-Cola Company has implemented the Global Reporting Initiative (GRI) Guideline and maintained sustainability in order to affirm the company's integrity and improve its corporate image. That being the case, the multinational company has managed to address various CSR-related conflicts across its markets. As noted earlier, India's case regarding the use of water and environmental pollution was addressed using an integrated communication strategy following the disastrous effect of the controversy on the company. Initially, the company denied the allegations that it was using a high amount of pesticides (Burnett & Welford 2007). Additionally, the company denied that it was over-exploiting and polluting water resources. By publicly denying the allegations and using communication platforms to affirm its integrity instead of demonstrating concern for the environmental issue, TCCC lost consumer trust. The company was perceived to be profit oriented rather than concerned by societal benefits, including public health and environmental sustainability.

CSR Reporting

Coca-Cola is an apt example of a multinational company that extensively reports their CSR activities in accordance with sustainability guidelines (The Coca-Cola Company 2015). As in the case of the 2014/2015 Sustainability Report, TCCC published a separate sustainability report, while simultaneously disseminating information regarding environmental responsibility and supplier responsibility on the company's corporate website. As highlighted in its annual sustainability reports, the company has committed its resources to achieving various quantifiable goals that are tracked annually. The goals are categorised regarding women, water, well-being, sustainable packaging, human&workplace rights, and climate protection (The Coca-Cola Company 2015). Regarding climate protection, the company is expanding its operations while reducing greenhouse gas emissions. In terms of t human and workplace rights, TCCC is working to ensure that all employees are treated with respect and dignity. Additionally, TCCC utilises GRI G3.1 guidelines in its reports, which are verified by independent third parties (Holzendorff 2013).

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To recap, TCCC is an apt example of a multinational company that has successfully integrated CSR. As illustrated above, the success is largely attributed to the management's commitment to ensuring that CSR creates competitive advantages by yielding more benefits to the host communities. The other success factor is the investment in R&D, which develops technology and infrastructure that is used in reducing carbon footprint, improving the rate of recycling and addressing the issue of obesity. TCCC has competitive tangible and intangible assets, as well as novel technologies that enable it to compete along the CSR line.

Conclusion

The renewed interest in corporate social responsibility has expanded the significance of the topic in management research. The integration of CSR in multinational companies such as Coca-Cola, Canon, HP, Microsoft and Walmart is evident by the fact that these companies have dedicated executives to handle matters associated with CSR practices. The case study above has shown that business entities tend to change their CSR strategies and policies after facing CSR issues. Following the CSR issue in India, Coca-Cola established specific CSR objectives to be achieved by CSR strategies. Since then, the company has allocated significant resources to address the impact of its operations on the environment and society, especially on water. The success of the company's CSR integration is mainly attributed to strategic management process, integrated communication strategy, financial capabilities, and technological capabilities. This case study has significant implications for CSR research. Firstly, the study suggests that the approach used by a company to respond to CSR criticism is vital. Coca-Cola has repeatedly repaired its tainted reputation by affirming its integrity. The company has also adopted a transparent approach grounded on social media, public statements and corporate website to assert its integrity. Additionally, effective CSR entails taking a proactive approach and remedying a situation as it unfolds. As indicated in the discussion above, the Coca-Cola Company has effectively responded to CSR issues across the globe. The company has moved beyond denying the allegations directed against the company in emerging economies such as Brazil and India and focused on remedying the issues. In the same context, the company has strategically reinforced its corporate image linked to integrity, as well as regaining consumer trust by addressing water conflict in India. It is arguable that effective approach to CSR should focus on offering remedies, rather than correcting damaged reputation through statements. In conclusion, forward-thinking companies will be able to translate environmental and societal challenges into opportunities.

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