Corporate Social Responsibility and Business Ethics

Social responsibility to corporate social responsibility

Social responsibility-

man to man relationship Corporate social responsibilityrelationships concerning corporations and their stakeholders

 Organizations have obligations to society beyond

their economic obligations to owners or stockholders. Social responsibility relates to an organizations impact on society

Relationship between responsibility and ethics

Responsibility-the basic concept Ethics-a discipline to define

responsibility, How to be responsible

 Bribery and kickbacks Black market sales

Typical issues of ethics in business

Corporate crime, e.g.. Price fixing Employee issues, e.g.. Rights,

illicit drug testing Product issues, e.g.. Patent and copyright violation, product defects

Why ethical problems occur in business?

Personal gains and

selfish interests Competitive pressure on profits Business goals vs. personal values Cross cultural contradiction

Corporate Social Responsibility (CSR)

Carrolls Four Part Definition

Understanding the Four Components

Responsibili Societal Examples ty Expectatio n Economic Required Be profitable. Maximize sales, minimize costs, etc. Legal Required Obey laws and regulations.
Ethical
Discretionar y

Expected
Desired/ Expected

Do what is right, fair and just. Be a good corporate citizen.

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Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright 2003 by South-Western, a division of Thomson Learning. All rights reserved

Pyramid of CSR

Corporate Social Responsibility (CSR)

CSR in Equation Form Is the Sum of:
Economic Responsibilities (Make a profit) Legal Responsibilities (Obey the law) Ethical Responsibilities (Be ethical) Discretional Responsibilities (Good corporate citizen) CSR

Coca Cola International

Make every drop count

Vision

Mission
To refresh the world in body, mind and spirit To inspire moments of optimism through our brands and our action To create value and make a difference everywhere we engage

Values
Leadership

Passion
Integrity

Accountability
Collaboration

Innovation
Quality

Company Profile
Worlds largest liquid non-

alcoholic refreshments producer. Headquarters in Georgia Atlanta, USA Flagship product, Coca-Cola Their product line Products in more than 200 countries. Employ nearly 31,000 people around the world

Powerful Brand
Interbrands global scorecard for 2003 ranked coca cola the no.1 brand in the world and estimated its brand value at $70.5 billion.

Coca Cola In Pakistan

In Pakistan there are 11 territories where Coca Cola is produced and Sold.

Coca cola in Multan

Established in 1964 Started as a franchise in 1964 but eventually

Acquired by the company (Coca-Cola International) in January 2002

CSR- two viewpoints

CSR is Inevitable Vs CSR is a Burden

Arguments for CSR

Not just profits! Power vs. Responsibility Stake holder relations

Arguments against CSR

From the shareholder

point of view
Hindrance in

maximizing profits
Tend to focus on the

economic function of business

Choosing moderate strategy

Businesses need to balance economic, legal, and social responsibilities in order to achieve long-run success. More generally, there is a often a relationship between good social and good financial performance.

Why be ethical ?
Expectation of

stakeholders To prevent harm to general public It pays to organization A sense of trust among partners Personal reason

Some statistic that shows the importance of CSR and Business Ethics

Corporate Social Responsibility The good side of picture

Corporate Responsibility

Quality Workplace rights Product portfolio Employee Health & wellness relations Value chain Diversity

Sustainable Education packaging Disaster relief Economic impact Water stewardship Environmental Sports Performance

Coca-cola and its Employees

Coca-colas top priority for the employees are
Health and safety Training and development Respect and rights

protection

Code of Conduct
Employees Must
Avoid conflicts of interest
Safeguard the company

nonpublic information Never attempt to accept bribe Fairly deal with customer and suppliers Protect the company asset Must report to the violations

Coca- cola and its Customers

More than 440,000 retail

customer
High efforts to build on

going relationships
Wal-marts supplier of

the year 2005

Coca-Cola and its Suppliers

More than 84,000

suppliers Approximately more then 11 billion investment on the suppliers (2005) Contribution to local jobs and economic growth of their suppliers

Coca-Cola and Environment

Coca Cola is implementing environmental Management System which enables them to Establish objectives and targets Work with local communities Use recycle able packaging Comply with local environmental laws

Community
Education Project Hope
Providing education to youth

in underdeveloped areas of China

Improving their infrastructure Libraries

Community (Contd)
Disaster Relief
Coca Cola has donated

$2 million for earth quake victims

Economic impact
Employ local people

Community (Contd)
Sports
Encourage more active

lifestyles
Broad-based physical

and nutrition education programs

Environment
Sustainable

Packaging
Adds value to products Working toward

competitive packaging solutions that maximize social and environmental value.

Environment
Environmental

Performance
Aspire to environmental

excellence Focus on environmental efforts on the three area: water use; packaging; and energy use & climate protection.

Unethical practices The Bad Side of the Picture

Health effects Business practices Environmental issues & Case Studies

Corporate Social Responsibility (CSR)

CSR in Equation Form Is the Sum of:
Economic Responsibilities (Make a profit) Legal Responsibilities (Obey the law)

Ethical Responsibilities (Be ethical)

Discretional Responsibilities (Good corporate citizen)
CSR

Acidity
Osteoporosis.

Tooth decay

Benzene
Heat and light convert

calcium benzoate into benzene Unequal level of benzene

 Monopolistic Mexican shopkeeper defeats

Coke Discriminatory World War II

Pesticide use
High pesticide in indias drink than

in other EU

Water use
9 liters of water to produce one liter

of coke and of coke it is 3.33 liters water contamination decreasing water level in Kerala

Coke paints the Himalayas red

Coca-Cola and Pepsi have been asked by India's

Supreme Court to explain why they have plastered adverts on the side of the Himalaya mountains

Criticism on Coca Cola

in Colombia A case

Coca cola in Colombia

More then 70 years in business Employs more then 2000 Colombians. 5000 retailers.

Volatile Environment
Internal conflicts in Colombia

Unions
Despite the volatile environment

coca cola has provide safe and stable economic opportunities.

Coca cola and Unions

Union members 31%

Relations with Unions.

On average, wages for Coca-Cola workers are

two to three times higher than the minimum wage.

Employees Benefit
Cola cola provides its employees with Emergency cell phones Transportation services Secure Housing Additional security for union leaders 24 hour hot line

Home transportation House loans

Home improvement loans Loans for union facilities improvements Job changes Communication support

Shift changes

Government relations

Paid leaves Unpaid leaves Transfers

Security training Plant security Transportation

Critisim
Coca Cola Company is a killer

Hires paramilitary agents to kill union leaders

Is Against the Unions

Case of Adolfo de Jesus Munera Lopez

Case of Isidro Segundo Gil

 In April 1997 the company's plant chief Emilio

Hernandez secretly requested the Colombian authorities to take action against Munera accusing him of being a rebel sympathizer. In the case of gil's murder it is said that he negotiating a pay raise a week before his murder.

Union members killed in coke

Date 1989 4/8/94 4/20/94 Employee's name Avelino Achicanoy Coca cola plant Pasto Jose Elaseasar MancoDavid Carepa Luis Enrique Giraldo Arango Carepa

4/23/95 12/5/96
12/26/96 6/21/2001 8/31/2002

Luis Enrique Gomez Garado Carepa Isidro Segundo Gil

Jose Librado Herrera Osorio Oscar Dario Soto Polo Adolfo de Jesus Munera Lopez

Carepa
Carepa Monteria baranquilla

Protests

Court Ruling
The court ruled out that their was no solid

evidence that would prove that the Coca Cola Company and the Colombian bottlers were involved in the murders of the union members. Conclusion

Ethical Issues In INDIA

Coca Cola In India

India's leading soft drink until 1977. Return of coca cola in 1993. In 2005, Coca-Cola and Pepsi

together held 95% market share in India.

Coke 'Drinks India Dry'

Company has

located bottling plants in "drought prone" areas. Sinking water table in Rajasthan.

Creating water shortages

Villagers are forced

to travel long distances in search of water, in Kudus village in Maharashtra

Coca-Cola: Poisoning Water, Land and People

Coca-Cola and other drinks pay

nothing for the water that they use in India. CPCB found excessive levels of lead and cadmium in all of the Coca-Cola waste. Company was distributing its toxic waste to farmers, as fertilizer!

 Selling Drinks with High

Are The Indians Immune To Pesticides?

Levels of Pesticides in India, including DDTsometimes 30 times higher than EU standards. Rejection of shipment made in India by US Food and Drug Administration on at least 10 occasions since 2005.

Protests

 Mehdiganj, March 4,

2003,protest of thousands villagers in Gurgaon. New Delhi, October 4, 2006,1,500 villagers protested at the Parliament of India. Demands of the protesters.

Coca Colas Response To The Crisis

August11, 2006, Coca Cola confirms that they meet

the criteria set by EU. There is no issue with the quality and purity of our products. Our beverages provide not only great taste and refreshment, but absolute quality every bottle, every can, every day, everywhere said Rick Frazier, vice president of Technical Stewardship, The Coca-Cola Company.

Where is Coke standing

The Coca-Cola business system has a tradition of giving back to the communities it serves

Still the company is

facing a lot of issues in third world countries