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4.2.2   Coca-­‐Cola


Coca-­‐Cola  is  one  of  the  most  famous  and  valuable  brands  in  the  world  (forbes.com).    

In  2005,  the  company  became  the  world’s  largest  manufacturer,  distributor,  and  marketer  of   non-­‐alcoholic  beverages  and  syrup,  and  today  Coca-­‐Cola  operates  in  more  than  200  countries   worldwide  (Coca-­‐Cola  Annual  Report,  2016,  p.  1).    

Despite  having  already  experienced  two  CSR-­‐related  conflicts,  i.e.  in  the  US  and  Belgium,  prior   to  their  scandal  in  India  in  2003,  it  seems  that  Coca-­‐Cola  did  not  learn  from  these  experiences.    

Instead  of  looking  forward  and  adapting  a  proactive  CSR  strategy  to  handle  future  potential   issues,  the  company  applied  a  reactive  CSR  strategy  to  each  conflict  and  only  focused  on  the   local  geographic  aspect.  However,  with  production  plants  all  over  the  world,  selling  more  than   29.3  billion  units  globally  in  2016,  and  with  only  18  per  cent  sold  within  the  US,  the  company   would   benefit   from   committing   to   their   CSR   initiatives   on   a   global   level   (Coca-­‐Cola   Annual   Report,  2016).  


As  the  scandal  in  India  started  in  2000  and  lasted  approximately  8  years,  the  Coca-­‐Cola  case  is   interesting  because  it  occurred  in  the  transition  period  of  the  Internet  from  web  1.0  to  web   2.0.  The  case  is  therefore  an  example  of  how  a  MNC,  like  Coca-­‐Cola,  had  to  adapt  to  the  new   reality   of   web   2.0.   Secondly,   the   case   revolves   around   the   company’s   production   and   their   environmental  impact,  which  has  become  one  of  the  Coca-­‐Cola’s  corner  stones  of  their  current   CSR.    


In  light  of  the  previous  conflicts,  prior  to  the  scandal  in  India,  Coca-­‐Cola  published  their  first   report  on  sustainability  in  2001,  called  “The  Coca-­‐Cola  Company  Sustainability  Review”.  

Despite  that  CSR  was  already  mentioned  briefly  in  the  company’s  annual  report,  the  company   chose  to  devote  an  additional  report  to  CSR  to  enlighten  stakeholders  of  Coca-­‐Cola’s  initiatives   towards  sustainable  work.    

Since  2001,  Coca-­‐Cola  has  continued  to  show  commitment  to  their  global  workforces  and  has   therefore  updated  and  published  their  sustainability  report  every  second  year  since  then.  To   make  sure  the  work  was  done  properly  and  thus  stayed  verified  and  assured,  an  independent   third  party  was  hired  to  measure  Coca-­‐Cola’s  activities,  following  the  guidelines  made  by  the      

Global   Reporting   Initiative   (globalreporting.org).   Furthermore,   in   their   annual   report   from   2002,  the  company  included  promises  to  protect  the  environment  and  stated:  “our  Company’s   commitment   to   environmental   issues   is   guided   by   a   simple   principle:   We   will   conduct   our   business  in  ways  that  protect  and  preserve  the  environment”  (Coca-­‐Cola  Annual  Report,  2002).      

The  report  emphasized  Coca-­‐Cola’s  values  of  integrity,  quality,  accountability,  diversity,  and   relationships  based  on  their  respect  for  the  local  communities  and  the  environment,  in  which   the   company   operated.   Finally,   the   report   also   stated   that   the   company   was   committed   to   achieving  their  business  goals  while  using  natural  resources  in  a  responsible  way.  Despite  the   company  best  intentions  of  creating  shared  value  between  them  and  the  local  society  in  India,   which  Porter  and  Kramer  have  argued  benefits  a  company,  Coca-­‐Cola  was  not  able  to  move   beyond  Carroll’s  second  layer  of  legal  responsibility,  thus  making  the  company  act  unethically   and  lacking  the  spirit  of  being  a  good  corporate  citizen.     Apple    

Today,  Apple  is  one  of  the  world’s  most  famous  brands  while  it  has  created  a  name  for  itself   with  innovative  products  and  technology  available  for  consumers  on  a  global  scale  (Torres  et   al.,  2012).  With  a  wide  product-­‐  and  service  range,  Apple’s  most  valuable  products  include  the   iPhone,  iPad,  and  MacBook  amongst  others  (Apple  Annual  Report,  2016).      

Even  though  the  company  manufactures  some  products  in  the  U.S.  and  Ireland,  the  majority  of   Apple  products  are  still  manufactured  overseas  by  massive  suppliers  that  primarily  operate  in   Asia.  This  means  that  the  company’s  outbound  logistics  are  predominately  from  Asia  and  from   there  products  are  sold  to  Apple’s  retail  stores,  online  stores,  and  third  parties  (Torres  et  al.,   2012).    


The  Apple  case  has  been  chosen  due  to  the  nature  of  the  extreme  violation  against  workers  at   Foxconn  in  China,  which  resulted  in  14  employees  committing  suicide  in  2010.  Given  the  time   of  when  the  suicides  occurred,  CSR  was  an  integrated  part  of  both  Apple  and  other  MNC’s.  

Despite  Apple’s  CSR  initiatives,  such  as  their  Supplier  Code  of  Conduct,  violations  of  human   rights  occurred  geographically  on  the  other  side  of  the  globe  at  Apple’s  largest  supplier.  It  is   therefore  interesting  to  see,  if  the  development  of  social  media  contributed  to  a  measureable   impact  on  Apple.  As  the  U.S  represented  the  company’s  largest  geographic  marketplace,  with  

approximately  44%  of  the  net  sales  from  customers  inside  the  U.S,  it  would  be  interesting  to   see  if  the  American  consumers  became  aware  of  Apple’s  irresponsible  behaviour  in  China  and   whether   it   affected   the   consumers   enough   to   change   their   behaviour   towards   Apple   (Apple   Annual  Report,  2010).    


With  years  of  investment  in  CSR  prior  to  Apple’s  CSR  scandal  in  China,  at  the  Foxconn  factory,   the  company  had  for  years  published  annual  reports,  sustainability  reports,  and  updated  their   supplier  code  of  conduct  several  times.  Their  annual  reports  have  included  Apple’s  business   conduct  policy:  “Apple  conducts  business  ethically,  honestly  and  in  full  compliance  with  all  laws   and  regulations.  This  applies  to  every  business  decision  in  every  area  of  the  company  worldwide”  

(Apple’s  Annual  Reports,  2010,  2011,  2016).  

Also,  in  the  company’s  supplier  responsibility  report  from  2010,  which  was  first  published  in   2006,   Apple   stated:   “Apple   is   committed   to   ensuring   the   highest   standards   of   social   responsibility  throughout  our  supply  base.  The  companies  we  do  business  with  must  provide  safe   working  conditions,  treat  workers  with  dignity  and  respect,  and  use  environmentally  responsible   manufacturing  processes  wherever  Apple  products  are  made”  (Suppler   Responsibility   Report,   2010,  p.  3).  To  make  sure  that  suppliers  were  working  within  legal  and  ethical  responsibilities   Apple   outlined   a   supplier   code   of   conduct,   which   showed   the   specific   expectations   and   conditions  suppliers  had  to  commit  to  (Apple  Annual  Report,  2010).          

Since  Apple’s  CSR  scandal  happened  in  2010,  the  company  had  already  invested  years  in  their   CSR   initiatives.   With   statements   like   the   ones   above,   it   could   be   argued   that   Apple   predominantly   moved   their   production   to   Asia   due   the   economic   aspect   of   cheaper   labour   cost,  but  also  to  remain  competitive.    

By  adapting  to  the  market  and  competing  with  competitors  on  price,  Apple  could  have  tried  to   differentiate   themselves   by   adding   additional   value   to   the   company   and   their   corporate   citizenship.  Furthermore,  Apple’s  incorporated  CSR  could  be  seen  as  their  way  to  assess  value   creation  by  working  on  on-­‐going  opportunity  and  future  activities  for  the  company.   Volkswagen    

Volkswagen   was   founded   back   in   1937   in   Wolfsburg,   Germany,   and   is   today   the   flagship   brand  of  the  largest  auto  carmaker  in  the  world,  the  Volkswagen  Group.  The  Group  consists  of  

twelve   international   brands   and   produces   cars   for   every   consumer   segment   in   the   market.  

Like   many   average   consumer   carmakers,   Volkswagen   has   aimed   at   producing   more   environmental   friendly   cars   over   the   past   decades,   as   the   subject   of   global   warming   has   received  increasingly  focus.  But  in  2015,  Volkswagen  was  exposed  by  the  EPA  for  cheating  on   emission  test  and  admitted  to  having  installed  the  ‘defeated  software’  in  more  than  11  million   diesel  cars  worldwide.    

The  case  of  Volkswagen  is  interesting  for  a  number  of  reasons:  firstly,  it  is  one  of  the  latest   CSR  scandals  in  modern  history  and  it  is,  as  will  be  shown  in  the  analysis,  a  textbook  example   of  greenwashing.  Secondly,  Volkswagen’s  attempts  to  both  salvage  the  situation  and  apologize   have  drowned  in  the  complexity  of  web  2.0,  but  while  the  impact  of  the  case  may  have  been   more  intense,  the  time  span  was  a  lot  shorter  than  the  other  cases.    


Prior   to   the   exposure   in   September   2015,   Volkswagen   Group   had   published   both   environmental   reports   and   sustainability   reports   since   1995   to   compliment   their   annual   reports.  The  environmental  reports  focused  on  Volkswagen  Group’s  environmental  activities   in  Germany,  but  in  2005,  Volkswagen  Group  expanded  the  scope  of  the  report  and  started  to   include   their   long-­‐term   orientation   towards   sustainability,   values   and   innovation   (Volkswagen  Group,  2005).    

In  its  2012  sustainability  report,  Volkswagen  Group  acknowledged  that  CSR  and  sustainability   had   become   an   important   indicator,   which   both   analysts   and   investors   looked   for   when   passing   their   recommendations   and   decisions.   In   2012,   Volkswagen   Group   was   one   of   only   three   automobile   companies   listed   in   Dow   Jones   sustainability   index   and   they   had   been   named   as   one   of   the   top   100   most   sustainable   companies   in   the   world   by   the   Norwegian   insurance   company,   Storebrand.   Their   commitment,   especially   to   the   environment,   was   evident   through   their   sustainability   reports   from   2012   to   2014   where   the   word  

“environment”   has   an   average   mention   rate   of   two   per   page   in   their   160   page   reports.  

Specifically,   the   Volkswagen   Group   was   determined   to   improve   the   environment   through   better   production   and   more   efficient   products.   Consequently,   they   aimed   to   reduce   their   environmental   impact   from   its   production   operations   as   well   as   reduce   their   production-­‐

related   energy   consumption   by   25%   by   2018.   Furthermore,   they   planned   to   invest   €600   million  in  renewable  energy  such  as  solar  parks  and  hydro  plants  that  local  communities  in   emerging   countries   also   would   benefit   from.   Finally,   there   was   a   heavy   focus   on   car   design  

improvements   for   better   fuel   consumption   and   lower   CO2-­‐emissions.   More   specifically,   the   aim   was   to   lower   the   average   CO2-­‐emission   on   car   to   95g/km   by   2020   (Volkswagen,   2012,   2013,  2014).  At  this  stage  in  the  development  of  CSR,  operating  within  the  legal  boundaries  of   the  industry  and  the  country  in  which  you  operate  was  considered  by  many  to  be  a  matter  of   course.  Assuming  this,  the  Volkswagen  Group  appeared  to  live  up  to  all  the  responsibilities  of   CSR  as  they  also  considered  the  ethical  aspects  of  their  actions  as  well  as  contributing  to  local   communities.  Furthermore,  these  initiatives  could  also  be  argued  to  be  proactive  in  the  sense   that   they   aim   at   improving   both   production   and   products   and   do   it   before   legislation   is   introduced  on  these  subjects.  

The  sustainability  reports  from  2012,  2013  and  2014  contain  many  of  the  claims  that  turned   out   to   be   the   Achilles   heel   of   Volkswagen.   According   these   sustainability   reports,   the   Volkswagen   Group   have   made   promises   towards   minimising   Volkswagen’s   environmental   footprint  through  superior  environmentally  compatible  technology  (Volkswagen,  2012);  aim   to   not   only   adopt   eco-­‐friendly   practices,   but   strike   a   balance   between   three   main   factors,   economy,  ecology  and  society  (Volkswagen,  2013);  and  make  each  new  generation  of  vehicles   more   eco-­‐friendly   than   its   predecessor   (Volkswagen,   2014).   It   is   within   statements   such   as   these  that  the  element  of  greenwashing  can  be  traced  back  to  in  the  2015  Dieselgate.  

The   final   nail   in   the   coffin   was   Volkswagen’s   2015   ad   campaign   about   their   “clean   diesel”  

engines.  It  was  launched  after  their  engines  had  won  several  environmental  awards  that  had   provided   Volkswagen   with   numerous   tax   breaks   from   2009   to   2015.   Finally,   just   a   week   before  the  EPA  investigation  came  to  the  public’s  attention,  a  press  officer  at  Volkswagen  sent   an  announcement  to  the  world’s  media.  “The  Volkswagen  Group  has  again  been  listed  as  the   most  sustainable  automaker  in  the  world’s  leading  sustainability  ranking”  (Hardyment,  2015).              


Looking  at  the  various  companies’  CSR  prior  to  their  respective  incidents,  there  has  evidently   been  a  development  in  corporate  CSR  similar  to  the  development  in  theory.  The  early  CSR  in   the  four  cases  presented  above  show  how  companies  has  over  the  years  started  to  put  more   emphasis  on  CSR  in  both  their  strategy  and  various  reports.    

The   Nike   case   shows   how   the   company   was   able   to   focus   solely   on   the   economic   aspect   of   business  before  the  issue  of  working  conditions  and  human  rights  became  a  public  issue.  But   since   then,   the   three   other   cases   show   how   CSR   has   become   a   more   integrated   part   of   business.  Coca-­‐Cola  started  to  focus  on  their  stakeholders  only  a  few  years  after  Nike  decided