Corporate social responsibility (CSR) promotes a vision of business accountability to a wide range of stakeholders, besides

shareholders and investors. Key areas of concern are environmental protection and the wellbeing of employees, the community
and civil society in general, both now and in the future.

The concept of CSR is underpinned by the idea that corporations can no longer act as isolated economic entities operating in
detachment from broader society. Traditional views about competitiveness, survival and profitability are being swept away.

Some of the drivers pushing business towards CSR include:

1. The shrinking role of government

In the past, governments have relied on legislation and regulation to deliver social and environmental objectives in the
business sector. Shrinking government resources, coupled with a distrust of regulations, has led to the exploration of voluntary
and non-regulatory initiatives instead.

2. Demands for greater disclosure

There is a growing demand for corporate disclosure from stakeholders, including customers, suppliers, employees,
communities, investors, and activist organizations.

3. Increased customer interest

There is evidence that the ethical conduct of companies exerts a growing influence on the purchasing decisions of customers.
In a recent survey by Environics International, more than one in five consumers reported having either rewarded or
punished companies based on their perceived social performance.

4. Growing investor pressure

Investors are changing the way they assess companies' performance, and are making decisions based on criteria that include
ethical concerns. The Social Investment Forum reports that in the US in 1999, there was more than $2 trillion worth of assets
invested in portfolios that used screens linked to the environment and social responsibility. A separate survey by Environics
International revealed that more than a quarter of share-owning Americans took into account ethical considerations when
buying and selling stocks. (More on socially responsible investment can be found in the 'Banking and investment' section of the
site.)

5. Competitive labour markets

Employees are increasingly looking beyond paychecks and benefits, and seeking out employers whose philosophies and
operating practices match their own principles. In order to hire and retain skilled employees, companies are being forced to
improve working conditions.

6. Supplier relations

As stakeholders are becoming increasingly interested in business affairs, many companies are taking steps to ensure that their
partners conduct themselves in a socially responsible manner. Some are introducing codes of conduct for their suppliers, to
ensure that other companies' policies or practices do not tarnish their reputation.

Some of the positive outcomes that can arise when businesses adopt a policy of social responsibility include:

1. Company benefits:

 Improved financial performance;

 Lower operating costs;
 Enhanced brand image and reputation;
 Increased sales and customer loyalty;
 Greater productivity and quality;
 More ability to attract and retain employees;
 Reduced regulatory oversight;
 Access to capital;
 Workforce diversity;
 Product safety and decreased liability.

2. Benefits to the community and the general public:

  Charitable contributions;
 Employee volunteer programmes;
 Corporate involvement in community education, employment and homelessness programmes;
 Product safety and quality.

3. Environmental benefits:

 Greater material recyclability;

 Better product durability and functionality;
 Greater use of renewable resources;
 Integration of environmental management tools into business plans, including life-cycle assessment and costing,
environmental management standards, and eco-labelling.

Nevertheless, many companies continue to overlook CSR in the supply chain - for example by importing and retailing timber
that has been illegally harvested. While governments can impose embargos and penalties on offending companies, the
organizations themselves can make a commitment to sustainability by being more discerning in their choice of suppliers.

The concept of corporate social responsibility is now firmly rooted on the global business agenda. But in order to move from
theory to concrete action, many obstacles need to be overcome.

A key challenge facing business is the need for more reliable indicators of progress in the field of CSR, along with the
dissemination of CSR strategies. Transparency and dialogue can help to make a business appear more trustworthy, and push
up the standards of other organizations at the same time.

The Global Reporting Initiative is an international, multi-stakeholder effort to create a common framework for voluntary
reporting of the economic, environmental, and social impact of organization-level activity. Its mission is to improve the
comparability and credibility of sustainability reporting worldwide.

There is increasing recognition of the importance of public-private partnerships in CSR. Private enterprise is beginning to reach
out to other members of civil society such as non-governmental organizations, the United Nations, and national and regional
governments.

An example of such a partnership is the 'Global Compact'. Launched in 1999 by the United Nations, the Global Compact is a
coalition of large businesses, trade unions and environmental and human rights groups, brought together to share a dialogue
on corporate social responsibility.

The 'Working with NGOs' section offers some insights into the way businesses and lobby groups are working together to mutual
benefit.

Management training plays an important role in implementation of CSR strategies, and there is a growing number of
conferences and courses available on the subject. Organizations that provide such training include Global
Responsibility, Business for Social Responsibility and the Corporate Social Responsibility Forum.
This case is about Coca-Cola's corporate
social responsibility (CSR) initiatives in India.
It details the activities taken up by Coca-Cola
India's management and employees to
contribute to the society and community in
which the company operates.

Coca-Cola India being one of the largest

beverage companies in India, realized that
CSR had to be an integral part of its corporate
agenda. According to the company, it was
aware of the environmental, social, and
economic impact caused by a business of its
scale and therefore it had decided to
implement a wide range of initiatives to
improve the quality of life of its customers, the
workforce, and society at large.

However, the company came in for severe criticism from activists and environmental experts who
charged it with depleting groundwater resources in the areas in which its bottling plants were located,
thereby affecting the livelihood of poor farmers, dumping toxic and hazardous waste materials near its
bottling facilities, and discharging waste water into the agricultural lands of farmers. Moreover, its
allegedly unethical business practices in developing countries led to its becoming one of the most
boycotted companies in the world.

Notwithstanding the criticisms, the company continued to champion various initiatives such as
rainwater harvesting, restoring groundwater resources, going in for sustainable packaging and
recycling, and serving the communities where it operated. Coca-Cola planned to become water
neutral in India by 2009 as part of its global strategy of achieving water neutrality. However, criticism
against the company refused to die down. Critics felt that Coca-Cola was spending millions of dollars
to project a 'green' and 'environment-friendly' image of itself, while failing to make any change in its
operations. They said this was an attempt at greenwashing as Coca-Cola's business practices in India
had tarnished its brand image not only in India but also globally. The case discusses the likely
challenges for Coca-Cola India as it prepares to implement its new CSR strategy in the country.

Issues:

» Analyze the CSR strategy adopted by Coca-Cola India.

» Understand the issues and challenges faced by Coca-Cola with regard to its sustainability initiatives
in India.

» Analyze the underlying reasons for the growing criticism against Coca-Cola in India and explore
ways in which the company can address this issue.

» Understand the concept of greenwashing and discuss and debate whether Coca-Cola is serious
about its water sustainability initiatives.