NOTRE DAME OF MARBEL UNIVERSITY

GRADUATE SCHOOL
Alunan Avenue, Koronadal City, South Cotabato
Tel. No. (083)228-2368

BA 240-N

CORPORATE SOCIAL RESPONSIBILITY

CASE ANALYSIS ON CSR OF MULTINATIONAL COMPANIES

Submitted to:

RAYMUND PAUL F. BLANCO, CPA, MBA

Professor

Submitted by:

TYRONE V. INOCENTE

November 22, 2014

 NOTRE DAME OF MARBEL UNIVERSITY
GRADUATE SCHOOL
Alunan Avenue, Koronadal City, South Cotabato
Tel. No. (083)228-2368

A. COCA-COLA

Coca-Cola is an American multi-national beverage corporation and manufacturer,

retailer and marketer of non-alcoholic beverage concentrates and syrups. The company
started its business in 1886 as a local soda producer in Atlanta, Georgia selling about 9
beverages per day, It begun expanding internationally in the 1920s, selling its products
in the Caribbean and Canadian markets and subsequently moved in consecutive
decades in Asia, Europe, South America and the Soviet Union. In 2005, Coca-Cola
became the largest manufacturer, distributor and marketer of non-alcoholic beverages
in the world, selling in more than 200 countries.
Coca-cola’s corporate vision for 2020 focused on continuous business
sustainability, with emphasis on understanding the trends and forces that will shape the
business in the future and to move swiftly to maximize opportunities and mitigate risks.
This is where the company’s CSR policy Live Positively was founded upon. It
establishes seven core areas where the company set itself measurable goals to
improve the business sustainability practices. The core areas are beverage benefits,
active healthy living, the community, energy and climate, sustainable packaging, water
stewardship and the workplace. The specific goals set for each area in aims to address
the needs of the various stakeholders in the company. For the customers; to provide a
portfolio of quality beverage brands that anticipates and satisfies people’s desires and
needs, for the employees; to have a great place to work where people are inspired to be
the best they can be, for the company; to be highly effective, productive and a fast-
moving organization, for the shareowners, to maximize return on their investment while
being mindful of the overall responsibilities, for the suppliers, to have a long term
business relations and nurture a winning network, and for the environment; to be
responsible citizens that makes a difference by helping build and support sustainable
communities.
 NOTRE DAME OF MARBEL UNIVERSITY
GRADUATE SCHOOL
Alunan Avenue, Koronadal City, South Cotabato
Tel. No. (083)228-2368

Coca-Cola also has a Code of Business Conduct which provides guidelines to

employees on matters relating to competition and anti-corruption. The company has
adopted international CSR standards but these were not integrated into the Code of
Business. Every year, Coca-Cola publishes a director’s report which comprises the
annual cOmpany(activities. It includes a síall section de`icated to the CSR where it
bontains brief description of the initiatives unddrtaken by the compaoy during the yuar.
Since 2001, a separate report devoted to CsR is published and thesu revhews, which
ase pubhished every 2 years, are verified and assuråd by!a third party. This ver)fication
provides moderate assurance as to the reliabilaty of the énfor-ation reported by the
company.
Wiuh thas prqctice, it shows transparency on the xast of the coípany to divulgå to
the põblic the various CSR actitities they áre doing. This may sesult to
positive$response and illisiu participatimn to pote.tial parvners.
The compány &aced 3everal conflists i. its operations.!First was the allegatio. in
2003 wherein Coca-Cola products il India contain pesticidgs, on0a level higher than the
European standards. After various investigat)ons were!lone, it was ascertayned that
there were indeed pesticid%s3on the prndugts that fakled to mee4 phe Eõropean
sta.dards but these were safe under local standards, and it was concluded that Coca-
Cola has not violated any national laws. However, the Indian government acknowledged
the need to adopt appropriate standards for carbonated beverages. But in 2006, after
another test was conducted, a high content of pesticides was still found on the products.
There were allegations that the implementation stricter standards were blocked by
powerful interests in the government. Finally in 2008, an independent study by the
Energy and Resources Institute of India ended the long-standing allegations by
concluding that the water used in Coca-Cola was free of pesticides. However, the
institute did not test the final product which means that other ingredients could have
contained pesticides.
 NOTRE DAME OF MARBEL UNIVERSITY
GRADUATE SCHOOL
Alunan Avenue, Koronadal City, South Cotabato
Tel. No. (083)228-2368

Another controversy was the water pollution and over-extraction of groundwater

in Kerala, India. The company was accused of discharging wastewater into the fields
and river surrounding in the community. Groundwater and soil were polluted to an
extent that Indian public health authorities saw the need to post sign around wells and
hand pumps advising the community that the water was unfit for human consumption.
Local people also claimed that they started experiencing water scarcity soon after the
company started its operation. Coca-cola argued that patterns of decreasing rainfall
were the main cause of the draught conditions experienced in the area. The company
faced legal charges because of the said controversy and the brand suffered a great loss
of consumer trust and reputational damage in India and abroad.
Coca-Cola committed major lapses in the handling of the controversies
mentioned. They denied all claims and allegations and maintain that they operate with
integrity instead of showing concern towards the situation and engage with stakeholders
to resolve the problem.
The company became aware of its mistakes and gradually changes its strategy
to include damage control measures that addressed the Indian community grievances.
It created the Coca-Cola India Foundation which works with local communities and
NGOs to address local water problems. One of the breakthrough endeavors was the
rainwater harvesting project which addresses the water scarcity and depleting
groundwater levels. By returning to the ecosystem the water used in its operations, it is
expected that the company will eventually turn into a “net zero’ user of groundwater.
They also engage in projects to improve water efficiency and recycling water through
wastewater treatment.

Conclusion
The controversies that happened in India became the driving force for the
company to be an advocate in improving the supply and quality of water in the
community. It was even included as one of the core areas where specific goals are set
 NOTRE DAME OF MARBEL UNIVERSITY
GRADUATE SCHOOL
Alunan Avenue, Koronadal City, South Cotabato
Tel. No. (083)228-2368

to improve the business sustainability practices. The company has taken the proactive
approach in dealing with the local water problems through projects that can sustain
supply of quality water for a long time, through commitment to meet targets concerning
water management efficiency and assists companies in the area to develop, implement
and disclose water sustainability policies and practices.
 NOTRE DAME OF MARBEL UNIVERSITY
GRADUATE SCHOOL
Alunan Avenue, Koronadal City, South Cotabato
Tel. No. (083)228-2368

B. WALMART

Walmart is an American multinational retail corporation that operates chains of

large discount department stores and warehouse stores. Headquartered in Bentonville,
Arkansas, the company was founded by Sam Walton in 1962 and incorporated on
October 31, 1969. Walmart offers to its customers a one-stop shopping experience with
the full offering of groceries and general merchandise. It is the world’s largest company
by revenue, according to the Fortune Global 500 list in 2014 with revenues of $288
billion and profits of $6.7 billion. It is also the largest private employer in the United
States as well as being the world’s largest retailer with over 11,000 stores in 27
countries, under a total 55 different banners.
By 1988, Walmart was more profitable than its rivals Kmart, Sears and Target
and outsold them in terms of revenues by 1990. The company expanded its operations
in Mexico in 1991 and Canada in 1994. In 1998, Walmart introduced the “Neighborhood
Market” concept with three stores in Arkansas. By 2005, estimates indicated that the
company controlled about 20% of the retail grocery and consumables business.
With regards to its CSR policies and reporting, Walmart was considered as an
important emerging actor in the transformation of lawmaking in the CSR field. The
company was able to use its contractual relationships to regulate behavior among
suppliers with respect to product quality, working conditions for the suppliers’ employees
and ethical conduct. Walmart publishes its annual report on its website and it was
initially called the Global Sustainability Report, and later changed to Global
Responsibility Report in 2011 to reflect the new social and environmental dimensions
integrated into the business practices. The report points out the Successful
Sustainability model which helped Walmart to be the retail leader in the market. It also
presented the company’s financial contributions such as investment in education,
health, commitment to fight hunger, support for local farmers and access to healthier
and affordable food.
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GRADUATE SCHOOL
Alunan Avenue, Koronadal City, South Cotabato
Tel. No. (083)228-2368

In October 2005, Walmart announced that it would implement several

environmental measures to increase energy efficiency. The primary goals include
spending $500 million a year to increase fuel efficiency in Walmart’s truck fleet by 25%
over three years and double it within 10 years, reduce greenhouse gas emissions by
20% in seven years, reduce energy use at stores by 30%, and cut solid waste from the
stores by 25% in 3 years. The company’s goal is to be a good steward for the
environment and ultimately use only renewable energy sources and produce zero
waste. Walmart also spent nearly a year working with outside consultants to discover
the company’s total environmental impact and find where they can improve, and also
created its own electric company in Texas, Texas Retail Energy with plans to supply its
stores with cheap power purchased at wholesale prices.
Walmart has faced many obstacles and adversities over the years. It was viewed
that these legal and social challenges have acted as important reasons for the
development of its CSR policy. Two relevant cases were the Walmart Stores Inc v.
Dukes et al and the press reports accusing Walmart of using child labor.
The Walmart Stores Inc v. Dukes et al case was filed due to allegations of gender
discrimination among female employees in Walmart. It would have been the largest
class action lawsuit in US history estimated to comprise more than 1.5 million women,
including all women employed in Walmart nationwide at that time. The company
obtained a favorable judgment from the US Supreme Court stating that the millions of
plaintiffs and their claims did not have enough in common. But the case did not end
there because in October 2011, an amended lawsuit was filed limiting the class to
female Walmart employees in California. This suit is expected to be the first of many
additional class-action lawsuits against the retailer at the state or regional level.
Meanwhile, another controversy that struck Walmart was the allegation of child
labor in Bangladesh. Children aged 10-14 years old were found to be working in the
factories for less than $50 dollars a month, making products of Walmart for export to
Canada. Walmart ceased business with the said factories immediately as it is their
policy at that time to cut ties with suppliers who violate child labor. Critiques stated that
 NOTRE DAME OF MARBEL UNIVERSITY
GRADUATE SCHOOL
Alunan Avenue, Koronadal City, South Cotabato
Tel. No. (083)228-2368

this was the worst possible response to reports of child labor and other sweatshop
abuses since this will only discourage workers from telling the truth to factory auditors
for fear of losing their jobs and encourages suppliers to hide abuses or subcontract
work to other factories thaw will escape inspection. In response to these issues,
Walmart generated its first general report, Report on Ethical Sourcing, which includes
quality standards for suppliers, customers and associates. The zero tolerance policy for
underage workers was changed. The suppliers are given a chance to change its
practices and correct it during follow-up audits. Failure to comply after the follow up
audit will result to permanent ban from Walmart production.
Currently, Walmart publishes a full and complete report on CSR issues called the
“Global Responsibility Report” which covers the three dimensions of People, Planet and
Profit. The report emphasizes gender equality and a diverse workforce. The company
also created the Advisory Board on Gender Equality and Diversity which aims to provide
equal and enhanced opportunities for all in top leadership roles. This policy generated
an increase in female officials and managers from 23,873 employees in 2005 to 25,246
in 2010. Walmart also supported initiatives on global economic empowerment for
women. The company increased sourcing from women-owned businesses and
launched a dedicated women-owned product marketplace on walmart.com. They also
implemented training program for nearly 1 million women in various factories,
processing facilities and in the agriculture value chain.

Conclusion
Walmart was both reactive and proactive in dealing with the conflicts the
company has faced. They dealt the class suit on gender discrimination by contesting all
charges and at the same time implemented various CSR measures and policies to
prevent discrimination. Issues on child labor were addressed by adopting
stringent measures to ensure that violations are identified immediately and appropriate
actions are done.