Corporate Social Responsibility for Multi-nationals - Coca-Cola Company - Assignment Example

Name : xxxxxx Tutor : xxxxxxx Title : xxxxxxx Institution : xxxxxxx @2009 Corporate Social Responsibility for Multi-nationals Corporate Social Responsibility (CSR) also known as corporate citizenship, corporate social performance or sustainable responsible business refers to the balanced approach that multinational organizations use to address the economic, environmental and social issues in ways that aims to be beneficial to the people, communities and the society (International Institute for Environment and Development 2004). The strategic advisory group on social responsibility agrees that there is no authoritarian definition of CSR but all the proper definitions involve the emphasis of interrelationship between economic, social and environment issues for the benefit of man. Any of such a definition on CSR must explain the responsibility of a multinational organization to the issues of the environment. This concept has different names which all refer to the same thing but indifferent words for instance in Chile it is referred to as Entrepreneur Social responsibility while in South Africa it is referred as Corporate Social Investment. Definition and Purpose of Silent and Shadow Report Social and environment reporting is fundamentally concerned with the production of accounts of how a specific organization is acting responsibly concerning the matters of the environment and social development. These CSR reports are usually prepared by these organizations to portray the positive side of such an organization towards the public. These kinds of reports and data by individual organization to show their own social responsibility are called the silent reports (Medawar 1976). However theses accounts are not always detailed and can be bland and therefore need arises to check this. On the other hand other independent organization also may produce environmental or social reports that concern these multinational business organizations. These independent organizations are called external social audits. These reports produced by a secondary organization showing the social or environmental responsibility of other organizations are referred to as the shadow accounts (Medawar 1976). The objective of the shadow accounts is basically twofold. These external social audits acts as balancing inspection to the resources that that an organization may use to emphasize their positive contributions to environmental and social issues which may be exaggerated. Secondly these secondary organization use their information to effect change that ensures that the accountable organization becomes socially responsible and more accountable to people and the environment. The external social audits are independent of the silent accounts and comprise the publicly available non-company resources. Company Background The coca cola company is the world’s largest manufactures, distributors and marketers of non alcoholic beverage concentrates and syrup. This business multinational corporation is among the largest and the most important corporations in the USA with regard to employment and revenue generation. John Stith Pemberton invented the flagship product-coca cola for the company, in 1886. This brand name and the formulae were purchased by Asa Candler in 1889 and since then the company has expanded to all parts of the globe. Situated in Atlanta Georgia, the company’ products are available in about 500 brands 1.6 billions servings every day (The Coca Cola Company 2009). Coca Cola Company and CSR Driven by an enduring commitment to ensure that sustainable communities are built, The Coca Cola Company is focuses on initiatives that preserve the environment, enhance economic development among the communities and conserve resources in all countries that the company is under operation (The Coca Cola Company 2009). The commitment of the company to the above cause is stipulated in the 2007/2008 commitment highlights. These commitments involves respecting people, protecting the environment, effective water and other environment resources usage, supporting communities development through donations and charitable contributions by the coca cola foundation and finally by offering a wide range of safe quality products. The concept of the corporate social responsibility is now a widely acknowledged method where an organization must be accountable to the people it serves. The political and the social change as a result of the globalization have raised new questions and expectations about governance and social responsibilities. The diagram below shows the coca cola company report on the CSR expenditure for the year 2008 (The Coca Cola Company 2009). The past three decade has witnessed careful scrutiny for national and multinational organization with regards to corporate social responsibility. The coca cola company has arisen to this challenge by starting lot of initiatives in the spirit of being responsible to the community it serves. Some of the initiatives include alleviation of poverty. The management at coca cola believes that poverty can be alleviated especially in Africa by sustainable wealth creation. This is achievable through the application their unique model and expertise that ensures that community is helped. Further more the company has developed initiates aimed in other areas of community development for instance combating the spreads of world’s pandemics and endemics and addressing the obesity problem. On matter of environment conservation the company is ensuring that the environment is protected through conservation of water. Similarly the company is investing in social responsibility initiative of respecting the human life by ensuring that the child labor is completely abolished (The Coca Cola Company sec I). Silent and Shadow Account Table CSR Issue Silent Account Shadow Account Water and Watershed Protection The coca cola company watershed program is aimed at developing the practical and realistic programs towards water resource sustainability. In conjunction with the world wildlife foundation the company is in the process of protecting the five freshwater river basins (The Coca Cola Company sec I). This is in order to have more security in future of this renewable resources taking into consideration that the products of the company use water as the most important raw material. In order to achieve this company undertook a water risk survey that enabled the company to have an overview of problems of water within its global network. Then the company has worked with the communities around these watersheds by showing them how this resource can be conserved for the benefit of everybody. For instance in china the company aims to inspire better governance and sustainable river management of Yangtze river which provides approximately 36% of china’s fresh water resources (The Coca Cola Company sec I). The coca cola company fully realizes that water is one of the most important products for their operational functions and therefore they have taken measures to conserve water sources in the countries which they operate. Unfortunately the company had been experiencing problem of water shortage partly due to poor management of the commodity and partly due to a change in climatic pattern. However blame had been laid on the Coca Cola Company due to allegations of irresponsible management of water and utilization procedure in India. In 2004 The Kerala company in India has been banned from extracting water for bottling operations by the court. This follows the realization that the company w had been using unfairly the proportion of water in the area therefore endangering the local communities (Ethical Corporations 2003) The company had overlooked the needs of the community around where it was operating therefore undermining the concept of the corporate social responsibility. The company denied the claims and repealed the orders but this was too late because two other companies were closed for water mismanagement and pollution issues. The assessment done by the company on its water management policy found flaws in itself but continued to ignore the recommendations of the study it paid for (Plachimada 2009). Environmental Protection The coca cola company uses energy and this contributes to emission at the bottling plants worldwide and also at the head office. To realize the organization mission the organization is investing in renewable source of energy to reduce carbon emissions in the air that destroy the ozone layer and lead to global warming. The energy efficiency guidance manual displays practices that are being implemented to reduce green house gas emissions by 10% and prevent up to five hundred thousand metric tones of green house gas emissions. (The Coca Cola Company 2009). By starting this environmental conservation measure right from the head quarters the company is setting a precedent to other organizations that environmental protection is the role of every business organization and that role must be played now (the coca cola company 2009). In the report by the ethical corporation (2009) titled coca cola’s reporting in need of refreshment this external social audit institution seeks to find out if the coca cola company is doing enough in addressing the problem of the climate change. The coca cola climate strategy statement reads: ‘working to grow the business and not the CO2 emissions of our manufacturing operations.’ The statement in itself is ambitious and can lead to beneficial resultant effects on the environmental conservation if commitment is put into it. However the coca cola company is not achieving this since the total greenhouse gas emission for 2007 reached 4,920,000 metric tones of carbon dioxide. This figure showed an increase of 0.06 million metric tones from the previous year. Furthermore the figure the company gives in the carbon disclosure project of about 7,200,000 metric tones for both the direct and the indirect emissions. This indicates enormous negative effect that the company still has on the climate. Coca cola does not give insights on how the energy it uses is generated and therefore information does not exist on the amount of emissions arising from this energy formation or use. Unless the company perform a research to reveal the potential areas of environment protection opportunity it is likely that strides will not be made towards Donations and charities The coca cola company is responsible in offering the highest quality products in either the products it manufactures or any other product in form of donations. The company makes sure that the beverages manufactures contains chemicals in their right amounts and that hygienic conditions are maintained through out the production or manufacturing process. On the other hand the materials donated as charities must be of the best quality such that the community will accrue full benefits from it (The Coca Cola Company 2009) The company has been accused of giving the Indian farmers a sludge it claimed was a fertilizer. The product was found to contain high amounts of cadmium and lead which are poisonous chemical when taken by humans. These chemicals could also cause pollution and are said to have devastating consequences on the environment.(Ethical Corporation 2009) Respecting people The coca cola company is dedicated to respecting all the workers, stakeholders and customers around the world by treating them fairly, listening to their dissatisfactions and in assisting them if need arises. In Columbia it has been dedicated at protecting the rights of the workforce. The company has engaged in community support programs that aid victims of the conflicts and promote and help children get education (The Coca Cola Company 2009) The administrators at a bottling plant in Colombia have been intimidating and engaging in violence against the workers. Though the lawsuit has removed the coke from the case the union groups are not satisfied that the coca cola company bears no responsibility (Ethical Corporation 2009). Discussions on the CSR Despite the above shadow account by the external audit organization the coca cola company has established the philanthropic arm called the coca cola foundation that aims at making this multinational business organization become responsive to the citizenship needs and the needs of the communities which they operates. This coca cola foundations works in conjunction with the local community, government and non governmental organization to support projects that are relevant to the requirements of the company. For instance in 2008 this foundation contributed a total of $ 82 million on community development projects as shown by the diagram below. The Argument as Pertains to Corporate Social Responsibility Critics of the corporate socials responsibility continue to argue about the concept and what principle should govern it. This is because the chief reason for a business establishment to be in operation is for the purpose of making profits for the proprietors and the shareholders. Similarly the definition of corporate social responsibility is slowly being transformed to reflect that argument. There exists some agreement that the definition which states that Corporate Social Responsibility is more of how a company can make money rather than how it can give the money. Atkins (2006) argues that the role of Corporate Social Responsibility to many multinational business organizations is a great challenge since some feel that it is not their work to protect the environment and assist the community after all they are paying tax to the government. These business multinationals have ethical roles to care for the communities and the environment and therefore there needs to be proper regulations that pertain to corporate social responsibility.. Arguments put forward claims that a business multinational organization must not act as the government by doing acts of welfare to the community at the expense of the company’s profit that can be used for other purposes for instance expansion. On the other hand proponents argue that Corporate Social Responsibility is not only beneficial to the community but also profitable and propels advancement and growth of these organizations. In fact actions of social responsibility should aim at complementing the works and the responsibilities of the government. Any such action of social responsibility should be relevant to the community (Friedman 1970). The governments of nations worldwide should give guidelines on the Corporate Social Responsibility code of conduct and in so doing the multinational companies will be provided with legal framework on their operations. The corporate social responsibility is not restricted to the acts of goodwill towards the community. It may also involve making considerations for the surrounding communities before important decision are made. Some terms related to CSR As we have seen earlier there exist a variety of definition on CSR, but while the wordings vary in all these definitions, the elements remains basically the same and all deals with the people that an organization has an interdependence with which are the stakeholders (Ann et al. 2006). A stakeholder can be defined as a person or a group of persons who can influence an organization or whose organization has influence upon either now or in times to come. We have also seen that the corporate social responsibility works towards a sustainable development. Sustainable development refers to the development practices that that are able to meet in today’s practices without affecting future generation. This definition is emphasized by the equity, environmental justice, stewardship and intergenerational equity. Another term wor6h mentioning is the socially responsible investments (SRIs). This refers to the inter-link amongst personal values, investment decisions and the societal concerns. The link provides a way that brings the activities and the results achieved by the corporation at par with the investment mandate of the organization. Finally we define the triple bottom line which is the economic, social and environment aspects of the activities of the corporation. The incentives and the disincentives for a company to engage in CSR CSR is the heart of good governance of an organization. From the company’s perspective corporate governance is about maximizing the company’s resources to meet the organization financial and other legal and contractual obligations (OECD 1999). The definition includes the role of the board of directors to balance the interests of the shareholders with those of other stakeholders like the communities, customers, investors and the suppliers. This is important in order for the company to achieve long term sustained value. This approach has the benefit of recognizing the broad aim of optimizing the shareholders value while being fair to the interest of these stakeholders. Some people are of the opinion that a multinational organization is a profit making machine and therefore social issues are peripheral to the challenges of the corporate, management. Proponent of this approach however thinks that such an approach where company mitigates its social impacts is not in any way relevant. The argument that the sole reason for the existence of an organization is to increase wealth can be traced back to 1970s where Milton friend and said that ‘there is only one social responsibility of the business: to optimize resources for activities aimed at increasing profits. This view has however been dismisses by environmental and human rights organizations who have observed that social issues are not tangential to the business of multinational organizations but are fundamental to it. A recent survey on the standpoints of the corporate executive drawn form these multinational organization shows that they overwhelmingly embrace the fact that the role of the multinational business organizations stretches beyond meeting the financial obligations to shareholders. Furthermore supporters of the corporate social responsibility are of the view that the alertness of an organization to respond to the social issues in addition to being in dialogue with the stakeholders makes them has a competitive advantage over those with such disregards. Involvement of a company in solving social issues that have direct effect on the corporate performance generates value-creating opportunities. Lack of involvement in social issues for the aim of just minding the shareholders value may paradoxically hinder an organization from maximizing this shareholders value. The ‘business is business’ approach leads to emphasis on short term performance while neglecting the long term opportunities and issues that included the societal pressures, customers trust, and investment innovation. For the purpose of ethics and enlighten self interests the company should handle these issues with words and deeds. Therefore there is significant incentive for a company to Book Review: No Logo, No Space, No Choice, No Jobs, In the book No Logo, No Space No, No Choice, No Jobs Naomi Klein gives an entertaining account of business trends and culture. The author gives an account of branding, changes in the labour markets, changes in the nature of works over time, growth of corporate power and the resultant backlash. Although she uses the already existing concepts she accumulates a broad range of materials together to produce an overview that creates awareness on the important issues of business organisation. Klein traces the origin of branding campaign to the 1980s and relates it to clothing manufacturing multinational companies like GAP, NIKE and Hilfiger. She gives her account of having been label obsessed during her teen days. She gives an example of the Hilfiger Company during 1999 when they launched the advertisement campaign for the stones’ no security tour (Klein 2000). She attributes this to rigorous advertisement and identity marketing done by these companies that targeted minorities, feminists and each generation of people. In the book she vividly describes the youth appropriation and the indie culture which is the ‘hunting of cool’, the penetration of the Channel one, Pepsi and Coke advertisement into schools and the universities. The advancement of the concept of branding is inter-linked with the growth in the advertisement and the consolidation of the corporate power. She gives the examples of companies like the Wal-Mart and the Starbucks to show the expansion of super brands and franchise. She shed light on the processes of mergers and synergies with special emphasis on the branded villages and superstores giving Walt Disney as an example. She take into consideration the corporate censorship which is the control of media and distribution channels and how protection of trademark fades into the harassment of the critics and how the multinational organisation can appease repressive nations. The part three titled No Jobs looks to the relationships of labour and working conditions. An example of cases where labour force is under tight control is The Cavite Export Processing Zone in the Philippines (Klein 2000). Workers in this company are kept under what she describes as sweatshop conditions. On the other hand in the United States labour force has experienced a trend whereby the workforce has been undergoing casualization. Companies like the Mc Donald’s and Microsoft corporations are no more interested in job creation for communities but are only interested in creating money for the shareholders. The books finalises this part by looking at the backlash effects as a result of these changes. Other effects discussed include adjusting and culture jamming, anti corporate activism, street movements and brand based promotions in shell Mc Donald’s and Nike (Klein 2000). She concludes this part by looking at the similarities and differences between consumerism and citizenship in fight for the global; commons. In the No Logo says how she has been attracted to the shiny surface of the pop culture. Unlike other parts of the book this part is not elaborate and the authors only reveal issues without explanation. For instance the account given on the corporate mergers only states the developing lack of trust by the US trade commission. In this account the author does not differentiates between logos, trademarks, patents and copyrights with respect top the companies like say Nike or Microsoft. She also does not shed light ion the political solutions like the finance reforms and the trade treaties signed by the United States of America or the labour laws in the Philippines. In conclusion the author states that the there are some ideas that cannot be co-opted by the corporate marketing since they are not fundamentally expressed through style and attitude. PART A: NUMBER OF WORDS 1893 PART B: NUMBER OF WORDS 615 (Some basic instruction if required here) Bibliography International Institute for Environment and Development (IIED) 2004, the ISO and Corporate Social Responsibility: Perceptions and Definitions of Social Responsibility, International Institute for Sustainable Developments, Manitoba, Canada. Medawar, C 1976, The Social Audit: A Political View, Accounting Organizations and The Society, 1(4) 389-394. The Coca Cola Company 2009, The Coca Cola Company Fact Sheet: Behind The Brand. 2009. Viewed 13 Aug, 2009 The Guardian 2002, Coca Cola in India Accused of Leaving the Farms Parched and the Land Poisoned. Ethical Corporation 2003, Lesson for Other Companies from Coke’s Indian Pesticide Crisis. The Coca Cola Company 2009, Watershed Protection: Partnership to Conserve Critical Water Basins, Atlanta, Georgia. Plachimada, A 2009, India Resource Centre: Communities Seek Closure of Plant in Water Scarce Areas, India Resource Centre, India, 12 Aug. 2009 http://www.indiaresource.org/news/2009/1024.html OECD 1999, Principles of Corporate Governance, Paris. Klein, N. (2000). No Logo: No Space, No Choice, No Jobs, Harper Collins(Some basic instruction if required here) The Coca Cola Company 2009, The Coca-Cola Company: Retooling Its Atlanta Headquarters To Conserve Natural Resources, Combat Climate Change. Viewed 13 Aug, 2009. http://www.thecocacolacompany.com/presscenter/nr_20070420_corporate_reduce_energy_consumption.html Read More