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business practices within f oreign companies. In addition, developing countries are where globalization, economic growth, investments and business activities are likely to have both positive and negative social and environmental impacts. T heref ore, developing countries represent a dif f erent set of CSR agenda f or multinational companies to those operating in the developed world. In this research paper the CSR practices of multinational corporations will be examined. T heir CSR commitment as well as irresponsible practices will be highlighted. In the f irst chapter, there will be overview on the previous works in this f ield. As CSR is a new concept, especially in developing countries, the short history of the development of CSR and main contributions will be presented. Literature review will give us the background knowledge about CSR. In chapter two, research methodology and relating this to the subject matter will be discussed. As research will be based on case study, there will be some examples of multinational corporations' experience in developing countries. T he examples of their commitments towards environmental and social sustainability as well as negative impacts caused by their unethical operations will be provided. T he opinions and critics of analysts and experts will provide a clear understanding of companies' CSR practices in the developing world. T he well known multinational companies like Nestle, Nike, KFC, Apple iPod and many others will be examined f or their irresponsible and unethical behaviour in developing countries such as China, Indonesia, India, Southeast Asia and Af rica. For the main research point the Coca-Cola crisis in India has been chosen, as Coca-cola, despite its CSR commitment towards society and environment, has caused damages to both the community and environment where it operates. From the case study, we are able to make some conclusions regarding CSR practices and make suggestions and recommendations f or f uture of Corporate Social Responsibility, as it will undoubtedly increasingly become a major issue and integral part of business practise.
analysis of CSR approaches, CSR in supply chain, CSR in developed countries as well as in developing ones, the link between CSR and globalization and last, but not least the global understanding of CSR.
to this, Barrientos and Smiths questioned the methods used by the business communities in investigating the societal impacts of CSR, doubting the ef f iciency of the tools used to monitor CSR perf ormance. Due to the lack of empirical study and evidence regarding CSR impacts, there are still analytical limitations in the current CSR f ield. For example, some academics (Lantos, 2001) wrote about conceptualization of CSR, however, current f ield of CSR and business scholars f ail to answer vital questions. For example, how can CSR tackle a development challenge like poverty, without an understanding of the negative inf luence caused by multinational companies operating in host communities? Even if there is agreement about societal benef its of CSR initiatives, there is still uncertainty about the way in which CSR should be studied and analyzed. Lockett, Moon and Wisser (2006) argued that CSR knowledge should be best described as a continuing state of emergence. Indeed, many scholars study CSR initiatives without any ref erence to theoretical perspectives. Milton Friedman and other authors highlighted the "agency problem" of CSR f or a long time. For example, Friedman argued that the pursuit of societal and environmental objectives will undoubtedly hurt shareholders by lowering prof its. However, other scholars like Margolis and Walsh (2003) oppose the arguments of Friedman. T hey f ound that, between 1972 and 2002, at least 172 empirical studies investigated the positive relationship between social responsible behaviour of an organization and its f inancial perf ormance.
Levels of CSR
Another main contribution to the development of CSR made by Carroll (1991), considered the economic, legal, ethical and philanthropic levels of CSR. T hese levels represent what is required, expected and desired f or CSR strategies (Crane, Matten, Spence, 2008). According to Crane, Matten and Spence, Carroll's pyramid of CSR is the most widely accepted def inition of CSR. Until the 1980s, environmental corporate responsibility was the part of "social responsibility", which was used as a f rame term that covered a wide f ield of ideas. However, corporations became to understand the importance of environmental responsibility. For this reason, the concept of "corporate environmental responsibility" has started to be used by researchers such as Rondinelli and Berry (2000) in parallel with the development of "corporate social responsibility" by Carroll (1998), Maignan and Ferrel (2000) and Z arkada-Fraser (2004).
As noted previously, the debate about CSR has existed since the 1950s. In the f irst academic papers, a narrow concept of corporate social responsibility was used. Most of the authors like Bragdon and Marlin (1972) and Spicer (1975), tried to approach CSR through the main social and environmental problems such as pollution and contributions to the local community. T he data used f or their analysis was based on inf ormation issued by the Council on Economic Priorities. However they were not able to cover the whole aspects of CSR and their works were not valid f or every industry (Dooley, 2004). Later, a broader valuation and examination was provided by Moskowitz (1972, 1975). In his work he tried to cover almost every aspect of corporate social responsibility such as equal employment opportunities, charitable contributions, f air dealing with customers, product quality and more.
CSR in t he Global Cont ext CSR and mult inat ional corporat ions.
Relatively little is known about management of corporate social responsibility by multinational companies (Gnyawali, 1996). In general, little is known about the management of CSR in multinational companies, either practically or academically. While many areas of research have examined the nature of cultural or business pref erence to social equality (Adler, 1997; George and Jones, 2002; Lantos, 2002), there has previously been no research regarding the role of CSR in the expansion of organizations into new territories or cultures. T he dominant theoretical approach to studying CSR practices among multinational companies, operating in developing countries, is the works of Bartlett and Ghoshal (1989) and Prahalad and Doz (1987), who tried to analyze general multinational companies' management practices in CSR. T his f ramework was then extended by Yip (1992) and Husted and Allen (2006) to cover CSR practices (Geppert et al., 2006). T he studies of these researchers enabled interesting insights such as how CSR is being managed, the potential barriers to successf ul implementation of CSR practices within domestic places into operation
among multinational corporations. However, mainstream research of CSR was concentrated particularly on domestic issues such as labour issues, racial discrimination, the position of women and the environment. To date there has been limited analysis in the developing countries context, in particular regarding f oreign multinational companies. Further detailed analysis is needed of what instrumental, moral and relational motives exist in systems very dif f erent to the western context in which they were developed.
both qualitative and quantitative data. Case studies can provide a solid understanding required f or hypothesis development that then leads to improved theory development. T he main advantage of case based research is that results are considered to be interesting and important and can shif t the f ocus of investigation towards a new area of interest (Scapens, 1990). T he case study is usually considered more accurate, diverse and rich, if it is based on several sources of data (Alasuutari, 2000).
have extensive experience of CSR issues and provide a good overview of the challenges f or CSR by multinational companies in Asia. T he case study based approach showed that multinational corporations such as Gap, Nike, Reebok, operating in Asia, are still continuing to be criticized because they were not 100% perf ect, f ailing in proper implementation of CSR as well as monitoring. Another example of a research case study came f rom Ian Harwood and Stuart Humby f rom the University of Southampton in their research paper " Embedding corporate responsibility into supply: A snapshot of progress". T heir research adopts a case study methodology, with specif ic f ocus on an exploratory cross-case analysis. Along with the revising literature review, methods included nine semi-structured interviews (1.5 hours each), f ollowed by conversations with dif f erent public and private organisations, which concerned CSR issues as well as dialogues with other universities working in the f ield of corporate responsibility both locally and internationally. Some participants asked about anonymity and conf identiality. Consequently, ethical issues were considered during the process of gathering data. Nine companies were large enterprises, operating in multinational markets. T he respondents were senior managers and directors in either procurement or CSR related roles. T he aim of research was to identif y the CSR practices in companies, the processes of implementing CSR in supply chain including the management of risk and perf ormance management. Also, views on the problems f or f uture development of CSR were analyzed. Corporate Social Responsibility became an important issue in the late 20th century. However, there are still several large companies, behaving unethically within society. Many companies have emphasized that they govern their social responsibility and behaviour, but more of ten than not, this is only on paper. T here are countless cases that can be examined f or corporate social responsibility of multinational companies in developing countries. Ten well known companies were chosen, because all of them were criticised f or corporate social irresponsibility and f ailures in f ulf illing their obligations towards society and environment.
Reebok case
"I do not know that anybody has bought a pair of Reebok shoes because of its human rights programme. But we are a global corporation and we have an obligation to give back to the communities in which we live and work." -Doug Cahn, Director of Human Rights Programmes, Reebok international limited
Background
US-based Reebok International Limited (Reebok) is one of the leading f ootwear companies in the world. With over a hundred years of operations in the f ootwear industry, Reebok has operations in over 170 countries across the world, most of which in developing world (Reebok, 2009). Reebok has its own Corporate Social responsibility; however Reebok joined the companies that were accused of human right issues. Reebok instituted a Code of Conduct, also known as Reebok's Human Right Production (appendix 1); to regulate working conditions, especially in developing countries. However, despite measures and regulations taken by the company, the company still have several allegations against them concerning human violations, f or example in Chinese f actories. Analysts f elt that the measures taken by company were not appropriate and that Reebok should regulate this problem in order to enhance its image as a socially responsible company (Aaron, 1999).
CSR of Reebok
Reebok established and become a member of Business f or Social Responsibility; they monitored human right abuse through audit and video camera f acilities. T hey launched a project called Educational Assistance in Pakistan and Workers Communication System in Indonesia in order to avoid working violence and conducted training programs f or f actories in developing countries. All theses initiatives helped the company improve its social image.
production costs. Independent research agencies reported violations occurred in most Chinese f actories. T hey highlighted the inef f ectiveness of Reebok's monitoring system. T hey revealed that wages were not paid according to laws, overtime wages were also violated, women were not treated properly and the absence of any workers unions. It was also f ound that children aged between 13 and 15 were being employed. In addition workers suf f ered not only mentally, but also physically due to the lack of any appropriate conditions at work and unsuitable accommodation (China Labour Watch, 2002). All of these issues deprived workers of their human rights.
Crit icisms
Since such problems were identif ied, Reebok tried to take measures immediately. T hrough these measures Reebok attempted to solve the problems including f orced labour, low wages, child labour, physical and other types of abuse. However, many reports continued to be published showing human violence in f actories. For example, China Labour Watch argued that in order to prevent human abuse, the actions were not suf f icient and violations were still occurring (China Labour Watch, 2002).
Background
By 2004, KFC emerged as one of the world's most popular chicken restaurant chains. With more than 11,000 restaurants in nearly 80 countries, KFC served nearly eight million customers worldwide every day (KFC, 2009).
KFC in India
KFC is one of the multinational companies entering the Indian market. However, a lot of economists and nutritionists opposed and criticised KFC f or many reasons. T hey argued that f irst; it was threat to domestic business and a cultural invasion Secondly it would cause a high rate of obesity, heart disease and cancer due to the sodium and cholesterol contained in f ast f ood. For example, the Municipal Food Inspector f ound out that some of KFC's chicken contained three times more monosodium glutamate than regular chicken (Ray, 1995). For the f irst time, KFC was accused processing "Junk f ood" in a poor country like India, where malnutrition problems are severe. PETA (People f or Ethical Treatment of Animals) accused KFC of cruelty to chickens and not providing care f or the birds in its f actories despite the f act that KFC has published standards to guarantee humane treatment f or its birds. PETA also said that because of such cruel attitudes towards animals, KFC must not enter India (Ecologist, 1995). As Pankaj Batra, director of Indian sub -continent pointed out that KFC was obligated to require its suppliers to f ollow the welf are guidelines f or proper animal treatment (T haiindian press, 2003). However, some opponents like the Indian Government tried to justif y KFC by saying that multinational companies like KFC would create more employment and improve inf rastructure. T hough, in reality as Nanjundaswamy argued, f ast-f ood companies brought jobs only f or a handf ul of educated people and the poorest people are lef t without job opportunities. Apart f rom the threat to local agriculture, there is another threat as mentioned by Nanjundaswamy. T his is that the company gives chemicals and antibiotics to the chickens in order to f atten them quickly. He called the chicken "chemically poisoned" (Newindpress, 2003). Ecologists also participated in the activities against KFC. T hey claimed that opening new f ast f ood outlets meant more trash like paper cups, bags and plastics on the streets.
Wal-Mart case
"As one of the largest companies in the world, with an expanding global presence, environmental
problems are our problems". -H. Lee Scott, President & CEO, Wal-Mart Stores, Inc. "We don't know whether Wal-Mart's environmental changes are real or a Machiavellian attempt to greenwash a declining public image. But its long record of irresponsible behaviour f orces one to be sceptical" Chris Kof inis, Communications Director, wakeupwalmart.com
Background
Wal-Mart, the world's large retailer, operates in many developed countries as well as developing ones like China, Costa-Rica, Honduras and others. Its ultimate aim is being a f ully environmentally sustainable business. T he company planned to use more renewable sources of energy, recycle waste, and sell more organic f ood in its store. However, analysts highlighted that Wal-Mart's international operations had mixed results. T here are a lot of criticisms f rom environmentalist, traders and even politicians. Wal-Mart was accused of violating environmental laws, indulging anti-trade union policies, paying low wages, sourcing cheaper products f rom outside US and indulging in sex discrimination (Butler, 2006).
Nest le case
"As a responsible f ood company, I don't like to have an image that I am behaving unethically?" Peter Braberk, CEO of Nestle, 2003
Background
Nestle is one of the largest multinationals, with over 200 f actories worldwide. Nestle had been accused several times of selling genetically modif ied products without appropriate labelling, f or supporting the use of child labour in some f actories and f or other reasons. Most of the controversies that Nestle was embodied have involved developing countries. Nestle in its corporate social standards, committed itself as a responsible, sustainable business entity, promising good working conditions, health, nutrition, and support f or the community. However, as reality shows, Nestle carried out socially irresponsible practices in most developing countries.
developing countries. Also, Nestle f ailed in providing good working conditions, as it had promised previously as well as child labour was employed on plantations (Megan, 2001). For example, UNICEF studies revealed that over 200,000 children worked on the plantations during the harvesting of cocoa and cof f ee beans (Unicef , 2008). One of the more disturbing revelations was that most of the workers had been traf f icked i.e. bought and sold, making them practically slave labour. Nestle purchased cocoa f rom these f arms despite its awareness of the conditions of the labourers. Nestle was also accused of reselling products rejected in Europe to developing Asian countries (Sinha, 2000).
Background
Kimberly-Clark Corporation (K-C), the paper-based consumer packaged goods giant, take a top position in the Dow Jones Sustainability World Index (Faircompanies, 2008). K-C has a good history of CSR and takes a leadership position in corporate sustainability. However, it has f aced a lot of criticisms f rom its stakeholders and in particular f rom environmental protection groups such as Greenpeace who alleged that the company used virgin f ibre f rom f orests instead of using recycled f ibres (Baue, 2005).
Crit icisms
Despite many environmental initiatives, K-C had been accused of destroying ancient f orests f or manuf acturing, using only 19% recycled material instead of 60% used by other companies (Greanpeace, 2008). For such attacks K-C def ended itself by arguing that they used virgin f ibre only f or producing f acial tissues. T here are some anomalies between that claim made by the company in its environmental reports and its actual record. It appeared that in reality, they used wood f ibres f rom ecologically signif icant established areas, though the company previously considered it as protecting such environmentally signif icant areas (Ethical Consumer, 2007).
Nike case
"Nike is being hypocritical in its support of children's programs in public schools while exploiting child labour in its f actories" -T he Canadian Catholic Organization f or Development and Peace
Background
Nike is the one of the biggest sports shoe manuf acturers, having suppliers around the world, mostly in developing countries. Nike repeatedly claimed that it was not going to tolerate worker maltreatment in its Asian f actories. It had its own Code of Conduct and required its suppliers to obey on issues like wages and working conditions, written into the company's corporate standards. However, Nike did not show any real interest in addressing those issues. It was accused of unethical treatment of workers by supervisors, of payment that is below the legal minimum wage and sexual abuse of several f emale workers at Nike' shoe f actories. In addition, Nike did not take adequate health and saf ety measures and turned a blind eye to child labour. Nike violated overtime wages, night shif t wages and weekend and holiday wages. Nike had been accused by Calif ornia's consumer law agency that it had mislead the public about working conditions f or its Vietnamese, Chinese and Indonesian workers. For example, f emale
workers in Vietnam were abused physically, verbally and sexually by f actory managers (Vietnam Labour Watch Report, 1997).
Nike' response
Nike, as a f amous, well known, multinational corporation, denied that it employed unf air labour practices. In order to def end itself , Nike tried to convince the public that they operated in socially responsible manner. Nike showed videos of working practices in Indonesia, T hailand, China and Vietnam f actories. As Nike's manager said, they are a very open company and do not have anything to hide f rom the public and community in which Nike operates (www.nike.com). But in spite its initiatives, Nike was not ef f ective in monitoring and regulating.
In realit y
Despite Nike's claims about sustainability, Nike workers were still paid wages that were below that legal minimum. As Leila Salazar, Global Exchange's corporate accountability director said, Nike still abuses workers right like harassment, violence, long overtime hours and others (Richman, 2001). Analysts said that in spite of its good image in the USA, Nike was a very dif f erent company in Asian countries (Herbert, 1997). According to Patrick Coughlin, one of the lawyers, f ighting against Nike, argued that Nike has to either disclose its attitudes towards workers or change working conditions (Josh, 2001)
Background
Apple is the worlds leading multinational enterprise, producing and selling electronic products such as computers, sof tware and other electronic equipment. As any large corporation, Apple has its own manuf acturers in China and as practice shows, Apple has received a lot of criticisms f rom civil society organizations regarding workplace standards.
Apple's response
As any well known brand corporation, Apple tried to def end itself in f ront of the public. It had posted its own f indings in the media and online. Several points were worth noting. Apple claimed that audits f ound some violations to its Code of Conduct as well as other areas f or improvement and that Apple was working with suppliers in developing countries to address these issues. However, some analysts argued that Apple must ensure in providing good working conditions bef ore such incidents took place (Kahney, 2006). As mentioned in their Code of Conduct, Apple iPod committed itself as a socially and environmentally responsible company, ensuring that the people around the world work under saf e, f air
and legal conditions. However, in reality Apple could not protect workers' rights.
Gap case
"It is easier f or the Gap to cancel its orders and move someplace where there are no unions than to say they will make sure that the rights of their workers are protected" -Deisy, ex-Gap worker who lost her job f or being a union organizer in El Salvador
Background
Gap Inc is a leading international retailer, operating through 3070 stores across the world with suppliers and f actories in many developing countries in Asia as well as in Af rica. Gap took several initiatives in order to support communities in which it operates. It has its own Code of Conduct. However, there were some serious questions raised about the working conditions in developing countries, which operated in behalf of Gap. Several human rights groups accused Gap f or maintaining f actories where workers were treated badly and where there was no hint of social responsibility. T hey f ound that low wages, various restrictions (contracts that f orbade workers to quit, marry or organize and join labour unions), unhealthy and unsaf e working conditions were commonly in practise (Engler, 2004). Such issues happened in most developing countries such as Indonesia, El Salvador, etc where Gap has its f actories.
Background
Child labour, child traf f icking and slavery became prevalent and held within the cocoa industry in West Af rica. T he increased campaigns raised its awareness of child labour abuse. T his is crucial question and issue and in order to raise public awareness of child labour abuse, most consumers boycott of chocolate f abrics products.
Since such events have come to light the international civil society organizations, governments and the cocoa industry acknowledged that it is necessary to address the child labour issue and implement some initiatives.
Crit icisms
Despite all above mentioned, analysts pointed out that the cocoa industry's promises were still unf ulf illed. T here were no signs of progress even af ter three years since the f irst steps were made. Analysts claimed that it was a public relation tool, not an attempt to tackle problem of child labour and multinational companies also did not show their willingness to participate in solving and destroying child labour problems (Peel, 2004). As social scientists emphasised, even if consumers continue to boycott the goods made by child labour, such measures are unlikely to eliminate the problem at all. Economists and researches like Pham Hoang Van and Kaushik Basu pointed out that total elimination of child labour might cause much worse consequences such as acute hunger or starvation, or even worse "occupations" like "prostitution" (Basu, 1999). Without doubt, such controversial issues need to be solved or at least to be changed.
Background
Philip Morris is the world's largest tobacco company, owing the world's largest-selling cigarette brand since 1972. As any tobacco company, Philip Morris singed the agreement f or not targeting young people. However, as it was observed, Philip Morris continued to target the younger population. For example, the company sponsored concerts where an auditorium was attended f ully by young people, or it advertised cigarettes being of f ered to young girls and boys. T his is considered to be irresponsible; such advertisements can have impacts on young immature minds. Many critics argued that even Philip Morris tried to take measures; however it was only made in order to create positive publicity rather than actually reduce youth smoking. For example, Kathryn Kahler Vose, the communications director of Campaign f or Tobacco- f ree Kids, pointed out that Philip Morris tried to buy respectability, though in reality it was a Public Relations exercise (Tobaccof reekids, 2003). All of attacks came f rom the media despite the f act that the company previously acknowledged itself as socially responsible and promised to sponsor independent research on public health.
Crit icisms
Philip Morris as a harmf ul tobacco company is the centre of public, media and government attentions. "T he Wall Street Journal" in an article, accused the company of being the major cause of people's deaths. As a survey showed, a 50% share of the market belongs to Philip Morris Company (Alsop, 2001). Critics claimed that the multinational tobacco companies were using large marketing budget to attract
customers, especially young people. T he government emphasized that the company was misleading the public about the risks of passive smoking and so called "light cigarettes" (Economist, 2004). T hey charged that the company lied to customers about the hazards of smoking and tried to hide scientif ic evidence about it. T hey charged that they intentionally made people addicted to nicotine and sold cigarettes to smokers who were below the permitted age as well as causing many diseases like cancer, heart disease and so on (Economist, 2004).
Background
Coca-Cola established its f irst plant in India in 1950 and remained on market till 1970s. Because of the Indian Government's request to share the "secret f ormula" of coke, Coca-Cola lef t the Indian market. Af ter an absence of about 16 years, Coca-Cola re-entered the Indian market in the early 1990s, when economic liberalisation took place in India (CokeFacts, 2009). Nowadays, Coca-Cola is the largest multinational corporation operating in India and is considered to be a one of the top international investors to the Indian economy. T hrough the acquisitions of domestic beverage companies, Coca-cola expanded its capacity and heavy investments made by the company helped to increase prof itability and it occupied a strong position in the Indian market. As any internationally operating multinational enterprise, Coca-Cola has f aced a series of allegations against its bottling plants. Despite the company's attempts to implement social and environmental initiatives, Coca-Cola is still criticized not only by the Indian community, but also by the world public. Coca-Cola claims itself to be a very responsible company towards both society and environment. Like any well-known brands worldwide, Coca-Cola said that Corporate Social Responsibility is the integral part of its business objective especially in India, where environmental and social issues are crucial. Coca-Cola India explained it by the f act that it was aware about environmental, social and economic impacts caused by its operation. T he company has tried launch programmes and initiatives to support and improve the lives of customers, employees and society at large
made also by Michigan University students, requiring its campus to stop selling coke. Nevertheless, such examples emphasize that multinational companies' irresponsible behaviour will be the f ocus of worldwide public attention.
Wat er
As water is a main source of Coca-Cola's production and with water shortage being so severe in India (and with its related problems), the company started actively educating communities and personnel on the preserving of watersheds, including access to saf e water and sanitation as well as water f or productive use. T he evidence f or their claims is the reducing company's water consumption by 35 per cent between 1999 and 2006(T he Coca-Cola Company, 2008). In addition, several initiatives like rural water resource inf rastructure were undertaken.
Energy
Since the company is producing beverages, its operation is closely linked with ref rigeration equipment, coolers and vending machines that resulted in the emission of GHGs. For these reasons, the company was trying to eliminate such hazardous outcomes. Owing to the Energy Management System (EMS), the company was able to curb its harmf ul emission. T he f igures showed that as a result of initiatives, the total reduction was 300,000 metrics tons of GHGs (T he Coca-Cola Company, 2007).
Healt h
Health-related topics are regarded to be as important as preserving the environment f or instance. Such health education measures were aimed to raise awareness among poor people in slums about key
aspects such as sanitation, hygiene, HIV/AIDS, communicable diseases, reproductive and child health.
Crit icisms
Despite a wide range of ef f orts made by the company, it still continues to be under criticism f rom several quarters. First of all, the company was censured f or depleting ground water, theref ore cutting the primary source of income of almost all local f armers. A vast majority of people f rom close communities opposed the company's activities insisting on shutting down Coca-Cola's bottling operations. Besides, there are some allegations that the company seized land f rom local f armers and continued to pollute surrounding areas with hazardous material and sludge (Shef ali, 1998). As the Director of Indian resource Centre, Amit Srivastava said, Coca-Cola announced itself as environmentally sustainable company, having partnerships with many non-governmental organizations and environmental groups in order to show its positive image in f ront of worldwide public. However in reality, the company's corporate social responsibility has gone wrong and the company continued to litter with toxic waste and completely disregarded and destroy the lives of many people in India (Srivastava, 2007). Many critics argue that the company's claim about conserving water is the simple tool to silence the growing criticisms against it. Coca-Cola initiated some rainwater harvesting attempts f or preserving water and announced it to the world public as a genius idea f or sustainable development. Nevertheless, critics pointed out that such harvesting initiative has already been implemented by Indian citizens and such practise is common among local people (Cares, 2008). Also, many critics f igure that an investment of US$ 20 million f or water conservation projects was just 1 percent of Coca-Cola's annual advertising budget (de Srivastava, 2008). T he company spent a huge sum of money on advertising their initiatives more than on water resource management. So the Indian resource Centre claimed it as the company's "Greenwashing" tactics. As it was previously mentioned, the campaigns against Coca-Cola India occurred not only in India alone, but also such criticism took place in the USA. T his def initely proves that the company's unethical business practices can not be restricted to India, as such violations cannot be disregarded by the world public as well. T he boycotts at the University of Michigan lead to the requirement of testing Coke's beverages in India. As a result, on January 14, 2008, T he Energy and Resource Institute (T ERI) released a report on Coca-Cola's environmental practices. To many people's surprise, T ERI f ound no pesticides in the water, as it was previously stated by critics. Coca-Cola claimed that it absolutely f ollowed all its own standards; nevertheless there are some areas which can be improved and where the company is able to do better (SamayLive, 2008). Despite the T ERI report, the company continues to receive negative publicity. Also a f ew critics pointed out that the Golden Peacock award received by Coca-Cola India, in reality is the privilege made by World Environment Foundation (WEF), who issued this reward. T he truth is that Coca-Cola was the only sponsor f or the WEF (Polaris institute, 2007). Many critics are conf ident, that all sustainable initiatives towards environment and society are just attempts to improve brand image. T hey considered it as part of a Public Relation (PR) exercise. As Richard Girard, researcher, Polaris Institute, said, Coca-Cola has succeeded in "greenwashing", ensuring people about its green and good responsibilities, but not in totally changing its operation practices. T heref ore, hazardous consequences are expected to be continued (Polaris institute, 2007). Critics also contended that the sustainable report f or 2007-2008 was aimed at painting a green image of itself rather than disclosing the challenges the
company f aced in India. Analysts f elt that Coca-Cola's problems in India had impact not only on the company's image in India, but also globally (Tootoonews, 2008). Coca-Cola recognized that the main tool to communicate with various stakeholders is marketing communication campaigns such as "Little Drops of Joy". So that critics claimed that Coca-Cola's promise to become water neutral is Public Relation exercise. As the concept of becoming totally water neutral is impossible, as individuals, communities and businesses will always have a residual water f ootprint (Srivastava, 2008). As Jolly highlighted, nowadays a range of stakeholder groups evaluate company's perf ormance based not only on f inancial results, but also how those corporations operate in community and what they do f or people's benef its (Business standard, 2008). All ef f orts made by the company were aimed to change Coca-Cola India's image f rom strong multinational enterprise to that of a modest and approachable company. Also, Coca-Cola claimed that they put back f ive times as much as they used f rom ground water. However, they said that they do not have special measurable devices. T he question would def initely appear to be how they can claim f ive times recharge the amount of water in the absence of devices to measure the recharge (Srivastava, 2008). T hese are some of the key f indings of criticisms on company's operation.At f irst, even knowing that in some areas the water resources were overexploited, the company continued to worsen the water situation. Secondly, the company saw its bottling plants only f rom "business perspective", only f or making a lot of prof it in the country, where corporate social responsibility issues are not acute and not strictly regulated by government like in Europe or USA. T he Coca-Cola Company did not include the wider context (environmental, social issues) in that perspective. In addition, Coca-Cola did not respect the rights of f armers and did not consider the groundwater conditions, and how it might inf luence on the livelihoods of community. Also, the company did not meet its own standards f or sustainability. Everything, described in the sustainable report looked like a public relations tool and a way to improve the company's social image. T he company f ailed in implementing corporate social responsible standards in its plants such as standards on waste management. Despite many awards, received by the company f or its CSR initiatives, Coca-Cola f ailed to meet all requirements f or being an entirely socially responsible enterprise. It seems like CSR initiatives were only a green washing ef f ort. Because, the company had concentrated only on "af ter prof it initiatives" instead of "bef ore prof it initiatives" T he initiatives look like more reactionary rather than pro-active initiatives in implementing CSR. Also, as the company realised that the success of business depends on the health of the community in which it operates, the initiatives taken by the company are not suitable, appropriate and did not meet expectations of the community in which it operates. T he evidences f or these are f ollowing: f irstly, the company's harvesting program had limited success. Secondly, the Coca-Cola Company spent more on advertisements, while it could give that large sum of money to the society's needs. Coke continued to have f ailures in addressing the environmental issues it created across the globe, including India. As it can be seen f rom dif f erent sources: media, websites, newspapers and non governmental reports, the Coca-Cola Company did not meet requirements in areas relating to marketing to children, overseas worker's rights across the globe, including environmental issues in India.
irresponsibility. Government should take measures to monitor hazardous waste, caused by the company's operations. Government has to ensure that Coca-Cola is not negatively af f ecting the consumers, employees, environment and community in which it operates. From the Coca-Cola case study, it is obvious that the only way to reach sustainable development is when the environment is preserved protected and community is supported. Since the company started to f ace allegations and social problems, it realized that it would be much better to f ocus more on the community and environment development initiatives in India. It might also be explained by the f act that Coca-Cola's sales dropped by 30%-40% in just two weeks, while it had taken approximately f ive years to have 25%-30% growth per year (Aaron, 2007). Coke India was alleged to have had various unf air practices such as extracting enormous quantities of water, thus f orcing local people to suf f er and destroying the conditions f or survival. Coke also damaged crops by supplying f armers with poisonous waste and much more problems, caused by the company's irresponsibility. As a result, the sales in India dropped by 14% and Coca-Cola's brands have being banned in some places. In addition, the stock value of the company dipped by the f ive dollars on the New York Stock Exchange f rom $55 to $50 (Basu, 2002). And as it was expected, there is a huge damage to the company's reputation and brand image. T he main reason f or Coca-Cola's or any other multinational company's unethical behaviour is that national legislation in developing countries is of ten weak and cannot adequately protect environmental and human rights. However, such irresponsibility never happens in developed countries due to strong regulations. In addition it is very dif f icult to apply UK laws to UK-based multinational company f or allegations, committed outside the country's boundaries. In order to solve this problem, the multinational companies' activities should be regulated by international standards making companies accountable and providing communities with protection where national legislation is unable or unwilling to do so. T he tragedy at the heart of this story is not only that community still continues to be destroyed and damaged by the actions of multinational companies. It is also that each time Coca-Cola f ails to f ollow its own Code of Conduct or comply with existing regulations; it means that a major opportunity f or development is missed. As the Coca-Cola crisis in India shows us, the power of multinational companies in the developing world need to be monitored, as they can allow themselves to behave negatively, af f ecting the environment, society and community in which they operate. T he f inal issue arising f rom the case study is the nature of "Corporate Social Responsibility". Even Coca-Cola's "af ter-prof it" initiatives in some occasions benef it people and poor community, yet there is still great dissatisf action regarding the company's "bef ore-prof it" activities.
India f aced problems f rom ot her mult inat ional corporat ions
T he problems f aced by Coca-Cola in India is not only problem of Coca-Cola itself , but also the problem of other huge multinational companies operating in developing countries as they f ace the same issues or even worse including child labour, sexual harassment, slavery and other violations. Since the 1970s, most multinational enterprises started to f ace environmental and social issues, which f rom small regional problems have turned into major globally troubles, if the companies f ail to make any attempts to f ind a solution. By ignoring the situation, they are at risk of f acing allegations f rom not only environmental groups and non governmental organizations, but also f rom their consumers (Gugler, 2009). T he Coca Cola Company is not the only corporation, which was charged with many allegations in India, other well known corporations have irresponsible practices in this country also. Well known scandals such as the industrial disaster of 1984, Nestl's unethical behaviour, Pepsi's unethical advertising practice and so on. In the 1980s, as CSR became a much more signif icant global issue, more ethical groups seamed to be active and more critical in f orcing serious implications on the companies f or not changing their unsaf e environmental practices. In December 1984, an industrial disaster occurred in Bhopal, India, when methyl isocyanate was released f rom a plant of Union Carbide India Limited (UCIL). It killed 2,000 people and af f ected a f urther 200,000 people. Indian governments accused UCIL f or collapsing environmental saf ety measures. T he Bhopal disaster was deadly and af f ected the lives of the Indian population, as people still continue to suf f er f rom the hazardous consequences. T he Union Carbide did not admit to this disaster or even support suf f erers so f ar (Bhopal Inf ormation Centre, 2008). Another example comes f rom CocaCola's competitor, well known brand "Pepsi", which also showed irresponsibility towards the ecosystem in India. Several Indian newspapers such as Indian newspaper, Indian Express accused Pepsi Company of
destroying the ecological balance of the Himalayan state of Himachal Pradesh (HP) (Indian Express, 2002). Pepsi as well as Coca-Cola def aced rocks that were over 45 million years old along the ManaliRohtang road in the state. T hese companies painted their advertisements on the rock, causing damage to the ecosystem and disf iguring the beauty of the mountains. Environmentalists pointed out that such damage cannot be repaired, as Prof essor Ashok Sahni of Punjab University argued that the repairing the original surf ace was absolutely impossible (Indian Express, 2002). T he companies were charged f or violating the Forest Conservation Act 1980 (Financial Express, 2002). It was vandalism to an extensive ecosystem that had developed over millions of years. Much research was conducted on the surf ace of the rocks; however such damage destroyed this geological evidence and thus severely af f ected research in the area (Islam online, 2002). With such vandalism was object to by not only the Indian population, but also by tourists. However, as analysts pointed out, the government authorities did not take any measures to prevent or punish the violators. As it had been expected, the companies tried to deny responsibility f or such activities, blaming their f ranchisees (Indian Express, 2002).
point the f ollowing question will be raised: What would a socially responsible company look like? In order to be socially responsible, the company would have to: Address climate change, not sell products that are intrinsically harmf ul, stop manipulating the public, pay taxes in f ull, stop lobbying against the public interest, democratise the workplace and much more.
Chapt er 5 Conclusions and Recommendat ions Suggest ions f or proper implement ing of CSR in business
Despite the dif f erences in size, culture, industry and commitment in leadership, there are some common approaches in properly implementing Corporate Social Responsibility into business operation to make it as an integral part of business entity. Usually, CSR can be best implemented if it is stated in company's Mission, Vision and Objectives in order that all shareholders and stakeholders can be f amiliar with it. A company should have good corporate policies and develop a CSR culture within the organization itself . People must f eel that the CSR concept is not only f ormally written statements on paper, but also an important part of any company. Without good CSR practice, no company can f lourish and benef it itself as well as the community in which it operates. CSR must be implemented at every stage of a company's operation such as; quality maintenance in supply chain, providing job opportunities to local people, producing environmentallyf riendly goods and having a good analysis in measuring the impact on the environment. T his will help in reducing the impacts of business on the environment and avoid public and non governmental organization scrutiny against the company's potentially irresponsible practices.
companies build ongoing relationship with dif f erent groups of stakeholders. A good relationship will help the company to reduce risk, to be a source of market research and to build a good brand image and reputation. Stakeholder engagement should be implemented in the decision making process. Improved listening to stakeholders and taking more responsibility on global issues must be an integral part of new management. 2. A new view on business model Every business should take into account its impact on the community and environment. As practice shows, most multinational companies' operations negatively af f ect the community and environment. Companies should start with a through review of existing policy, values f rameworks and develop vision f or the f uture, in which CSR will become the central to business strategy and an integral to long-term development. T he f ocus must be on having long term prof itability f rom sustainable business practise rather than making short term prof it, but harming almost everything. Taking care of communities and environment must be requirements f or proper business operation. 3. Capacity building Increased training of employees in understanding and proper implementation of CSR will help the corporations towards sustainable development. Sustainable development education should be implemented into supply chains, as most businesses operating with the multinational corporations f ail in understating or even more, f ollowing CSR standards. If it can be achieved, the problems such as poor working conditions, unf air treatment and harm to the environment, will not take place. Companies should support wider prof essional development initiatives. T he notion of a CSR manager should be implemented and developed. T he on-going evaluation of staf f should be held in order to make them contribute towards social and environmental activities. 4. Supply Chain Management Companies should pay more attention to the supply chains, as these are areas where human rights are of ten abused. Companies need to develop a comprehensive Code of Conduct and regularly monitor the suppliers' activities towards society and environment through regular audits. Multinational corporations should check the working conditions, whether workers are provided with everything they need, health care, support, the working hours, f air payment and relationship between workers and managers. Practice shows that many supervisors abuse their power and issues such as discrimination and sexual harassment are still common in developing countries. 5. Partnerships T he importance of community investments will be benef itted both by community and business enterprise itself . But the most benef icial and advantages will be f rom partnerships with non governmental organizations and local community groups. T his will show that the company targets both local and global challenges and it will be the part of business activity that works towards sustainability. Working with local communities, the company can better understand the domestic issues and its impacts, rather than giving money f or short term alleviation of problems. Social entrepreneurship will be much more ef f ective f or almost everyone. 6. Reporting and disclosure T he requirement f or transparency and accountability will demand improved reporting and disclosure. But, reporting must be very interactive and usef ul, and should be used to disclose the complete truth about a company's operation. T he new model of reporting must include the engagement of stakeholders, as it might be a new dynamic type of disclosure. Using on-line interaction with dif f erent groups of stakeholders, they can give their opinion on disclosed inf ormation and leave the comments in special blogs in on-line f orums on "hot topics". Owing to such implementation, the company will know which area is more af f ected by business or where the company can make a large contribution.
7. Regulations f rom government Most of the developing countries suf f er f rom the unethical behaviour of multinational companies due to their weak legislation system. Local governmental authorities do not monitor the multinational's operation or even def end them, arguing their benef its to the domestic economies. As practice shows, many voluntary approaches tackling social and environmental challenges have limited success. T he new requirements must be implemented by government concerning the issues like environmental, labour rights, f air payment and much more. Regulations must be mandatory f or all types of business activities and those likely to come f rom security regulators and institutions tasked with tackling health and saf ety. 8. Product responsibility T he companies should ensure that the produced products and goods are saf e, healthy and provide a high quality. Recent issues by Nestle or Coca-Cola India raised concern over product contents. Companies should take improved measures to ensure that a range of saf ety processes are in place. Better product quality will not raise the boycotts of products and of brands by consumers and consequently, will positively af f ect on the company's reputation. 9. Other types of initiatives Since CSR becomes an integral and important part of business operation, every huge multinational company should demonstrate that they have positive impacts on the communities where they operate. It must be so called pro-poor community investments projects in health, saf ety, education, sport and other programmes. Involvement in community lif e must be regular and not just af ter hazardous consequences. Such community investment strategies will increasingly involve climate change adaptation and responses to environmental challenges. Contributing to the poverty alleviations and health initiatives should be on the agenda of every business enterprise.
Conclusion
Corporate Social Responsibility represents the new challenge f or multinational business corporations. T here is now a growing consensus which pushes multinational companies towards sustainable development. Many companies have realized the importance of implementing Corporate Social and Environmental responsibility practices into business process, especially in developing countries. However, it is also evident that the companies are very slow in translating CSR at corporate level to visible sustainable actions at community level. Businesses have to take economic, social and environmental responsibilities seriously. Business activities should be held towards minimising social and environmental costs and impacts, while simultaneously maintaining or raising the f inancial costs. Undoubtedly, multinational corporations like Coca-Cola are capable of making signif icant direct and indirect contributions to the communities where they operate. From the case studies it is obvious that CSR initiatives are the response to the stakeholders' activisms and pressure f rom non-governmental organizations. For example scandals regarding unethical practices of multinationals have f ocused signif icant attention on the companies' commitments towards ethical and socially responsible behaviour. As a result, multinational corporations are expected to address or even more, solve social and economic issues, especially in developing countries. Otherwise, activists and non governmental organizations can target corporations perceived to be socially irresponsible. Public demonstrations, boycotts, shareholders resolutions and severe critics towards companies are nowadays, widely used as a call f or changes in global business practices. Continued deterioration of public health and environmental conditions will def initely grow the public awareness about such challenges leading to exerting added pressure on the multinational corporations. While establishing CSR concepts, multinational companies can generate important advantages not only f or the host country, but also f or the companies themselves and their home economies. Taking a CSR step f orward in the context of developing countries is likely to require actions f rom multinational corporations. It is obvious that it will require ef f orts and collaborations with community, non
governmental organizations and local authorities. In addition, f or improved social and environmental responsibilities, the f ollowing will be usef ul: stakeholder engagement, regulations f rom local governments, developing a comprehensive Code of Conduct, partnership with non governmental organizations and others. T he multinationals should accept that they play a crucial role in the livelihoods of many people, developing countries in particular. Hence, the main objective of their business must be benef iting both itself and society as well as decreasing negative social and environmental impacts. Corporate initiatives must be "bef ore prof it" rather than "af ter-prof it". If worldwide, well known brands show their commitment towards sustainability, other medium and small companies will f ollow suit and try to adopt mainstream CSR policies within their operations. Need an essay? You can buy essay help f rom us today! Custom essay QUOT E ORDER a custom essay