From approximately 2005 to the early 2010s, Coca-Cola faced an emerging issue: i

Question

From approximately 2005 to the early 2010s, Coca-Cola faced an emerging issue: its corporate
impact on water quality, availability, and access around the world.
The Coca-Cola Company (TCCC) was the world’s largest beverage company. The company
operated in more than 200 countries, providing 1.7 billion servings a day of carbonated
beverages, juices and juice drinks, bottled water, and ready-to-drink coffees and
teas. The company also partnered with more than 300 bottlers, independent companies
that manufactured various Coca-Cola products under franchise. Seventy percent of the
company’s revenue came from outside the United States.
Water was essential to Coca-Cola’s business. The company and its bottlers used around
82 billion gallons of water worldwide every year. Of this, about two-fifths went into finished
beverages, and the rest was used in the manufacturing process—for example, to wash bottles,
clean equipment, and provide sanitation for employees. Water supplies were also essential to
the production of many ingredients in its products, such as sugar, corn, citrus fruit, tea, and
coffee. Coca-Cola’s chairman and CEO put it bluntly when he commented that unless the
communities where the company operated had access to water, “we haven’t got a business.”
In 2003, Coca-Cola was abruptly reminded of the impact of its water use on local communities
when the Center for Science and the Environment, a think tank in India, charged
that Coca-Cola products there contained dangerous levels of pesticide residues. Other
activists in India charged that the company’s bottling plants used too much water, depriving
local villagers of supplies for drinking and irrigation. Local officials shut down a Coca-
Cola bottling plant in the state of Kerala, saying it was depleting groundwater, and an
Indian court issued an order requiring soft-drink makers to list pesticide residues on their
labels. In the United States, the India Resource Center took up the cause, organizing a
grassroots campaign to convince schools and colleges to boycott Coca-Cola products.
Water was also emerging as a major concern to the world’s leaders. In the early 21st
century, more than 1 billion people worldwide lacked access to safe drinking water. Water
consumption was doubling every 20 years, an unsustainable rate of growth. By 2025, onethird
of the world’s population was expected to face acute water shortages. The secretary
general of the United Nations highlighted water stress as a major cause of disease, rising
food prices, and regional conflicts, and called on national governments and corporations to take steps to addres the issue.

Coca-Cola undertook a comprehensive study, surveying its global operations to assess its
water management practices and impacts. It also reached out to other stakeholders, including
the World Wildlife Fund, the Nature Conservancy, the humanitarian organization CARE,
and various academic experts, to seek their advice. As the leader of TCCC’s water stewardship
initiative explained, the company also “sat down with each of our top bottlers, all of our
operating groups, and really walked through all aspects of water and really understood
where they were coming from and reached consensus though a very deliberate process.”
In 2007, TCCC announced an aspirational goal of water neutrality , “to safely return to
nature and to communities an amount of water equal to what we use in all our beverages
and their production, by the year 2020.” This goal would be accomplished in three ways:
reduce, recycle, and replenish. The company said it would reduce its own use of water by
running its operations more efficiently. It would discharge water used in manufacturing
only if it were clean enough to support aquatic life—treating its wastewater itself where
local authorities were unable to do so. Finally, the company would replenish the balance of
the water it used (for example, as an ingredient in bottled beverages) by participating
in various water conservation projects globally, such as river conservation, rainwater
collection, and efficient irrigation.
As the water neutrality initiative proceeded, Coca-Cola moved to measure and publicly
share its results. In 2011, the company reported that it had reduced its “water ratio” (the
number of gallons of water used per gallon of product produced) by 13 percent from baseline
levels. It estimated that 39 percent of its facilities were using recycled water, and
23 percent of the water used in finished products had been replenished through community
water projects. The company also sought to measure the benefits of more than 300 partnerships
with governments and nonprofit organizations around the world, ranging from building
water treatment facilities in Colombia, to restoring watersheds in Thailand, to
improving sugarcane irrigation in Australia. Coca-Cola estimated in 2011 that these conservation
projects had replenished the equivalent of 31 percent of the water used in its
finished beverages, although it acknowledged that its methodologies for accurately quantifying
water benefits were still evolving.

Questions

What was the public issue facing The Coca-Cola Company (TCCC) in this case?  Describe the “performance-expectations gap” found in the case - what were the stakeholders’ concerns, and how did their expectations differ from the company’s performance?

In your opinion, did TCCC respond appropriately to this issue? Why or why not?

Explanation / Answer

1.      What was the public issue facing The Coca-Cola Company (TCCC) in this case? Describe the “performance-expectations gap” found in the case - what were the stakeholders’ concerns, and how did their expectations differ from the company’s performance?

The public issue can be seen as an issue which has the equal and mutual concern for both the organization and its shareholders. In general, these issue includes a larger number of topics and these issues have the capabilities of affecting a number of organization, groups, and many individuals have their concerns related to these issues. Public issues are generally continuous in nature-there can b a varied opinion among the different groups related to dealing with these issues. These kinds of issues quite commonly have some public policy or legislative implications. .” In this case, the relevant issue is public concern about the quality, safety, and availability of fresh water.

A performance –expectations gap can be seen as a gap between the things which is being done by a firm, what it wants to do and the expectations of the stakeholders. In the case presented, there is a huge gap between the operations of Coca-Cola and the expectations of stakeholders. There are a number of activists who accused the company to deplete the local water supplies in India where the company have a number of bottling plants by diverting water for its own use. Apart from this, the accusations of contamination of Coca-Cola drink with the pesticides were also raised. In fact, the issue of increased water scarcity in many of the regions of the world has been raised by many world leaders. It is a common expectation that the company should only use that quantity of water which is allocated to it and will provide the safe products to its customers and thus there is a conflict as come stakeholders have the opinion that the product of the company is unsafe and it is over utilizing the underground water for its operations

2.      In your opinion, did TCCC respond appropriately to this issue? Why or why not?

By declaring the goal of water neutrality, the right steps were taken by the company. This is the policy whereby company promised to the community that it would return the water which is being used by it. This will be done by reducing its water usage, cleaning and recycling water, and contributing to water conservation projects. The commitments of the company can be seen as appropriate as it is able to handle the concerns of stakeholders and can be seen a long-lasting and comprehensive. It is quite clear from the case that by 2011substaintial progress have been made by the company towards accomplishing its goals of water neutrality.

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