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Corporate Social Responsibility – Coca-Cola Company

Corporate Social Responsibility – Coca-Cola Company

Business organizations are escalating their focus on social responsibility to improve people’s welfare and the planet. Some of the most significant socio-economic problems addressed through CSR include gender parity, environmental protection, and local, national, and international poverty. One of the reasons firms engage in corporate social responsibility is for optics purposes, that is, to improve their image among customers and stakeholders. By improving their image in the eyes of stakeholders and customers, their bottom line will likely improve because customers are thrilled that they are making a difference. Besides, stakeholders are most likely to invest in companies with a solid ethical culture. CSR also positively impacts productivity since it bolsters employees’ morale by attaching a sense of purpose to their work. This paper will delve into Coca-Cola’s CSR initiatives and their impact on the community, the organization, and its employees.

Coca-Cola’s CSR Initiatives

Coca-Cola’s CSR Spending

Coca-Cola uses the Coca-Cola Foundation, a body commonly referred to as the ‘charitable arm’ of the company, to undertake CSR initiatives globally. The body partners with local bottlers, governments, NGOs, and other partners to facilitate Coca-Cola’s CSR activities. The company commits 1% of its annual operating income to CSR activities (Ogola & Dreer, 2012). In 2008, for instance, Coca-Cola spent a whopping $82 million to finance charitable programs globally (Ogola & Dreer, 2012). These funds were distributed to different communities based on need and urgency. While there are many firms that participate in CSR, Coca-Cola’s initiative is outstanding because the company has actually committed a percentage of its revenue to CSR. Incorporating CSR spending into a company’s bottom line indicates that CSR is core to such a company.

Sustainable Agricultural Supply Chain

Agricultural supply chain sustainability is crucial to Coca-Cola Company’s CSR programs since the company relies heavily on farm ingredients. Therefore, the integrity and quality of farm inputs will depend on successful and thriving farming and related ecosystems. Coca-Cola is working closely with its suppliers and supply chain partners to ensure that it upholds sustainable agricultural supply chains. For instance, the company sustainably sourced 64% of its global priority ingredients to a standard leader (Coca-Cola, n.d.). Leader standard, in this case, implies that such supplies were company-approved and third-party-approved, implying that they satisfy the company’s principles for sustainable agriculture. Also, Coca-Cola sources a wide range of ingredients, including sugarcane, corn, coffee, fruits, soybeans, and tea, from a complex global supply chain network (Coca-Cola, n.d.). Coca-Cola ensures that these ingredients are produced in a manner that respects farmworkers’ rights and their ecosystem in line with its principles for sustainable agriculture.

The need to uphold farmers’ rights seems far-fetched, but it is justified if scandals that hit some of the world’s largest multinationals are anything to go by. Like most multinational companies, Nike outsources its labour from developing countries to leverage cheap labour (Merk, 2015). The practice led the company to establish sweatshops, and factories where employees worked many hours whilst receiving meager pay. The practice damaged the company’s image in the eyes of its stakeholders and customers. Nike later improved the employees’ terms and rights, but the incident served as a lesson to multinational companies that ignore the rights of supply chain partners (Merk, 2015). It is worth noting that Nike took responsibility for the mistakes of a third-party factory, an indication that companies should take responsibility for what happens along their core supply chain networks.

Climate Action

Coca-Cola is committed to climate conservation in line with its aggressive CSR policy. From an internal perspective, the company is committed to reducing its greenhouse gas emissions and adopting renewable energy, among other initiatives. First, beverage manufacturers aim to reduce their absolute greenhouse gas emissions by 25% based on scientific targets (Coca-Cola Sustainability Report, 2022). Consistently, the company is putting in place technology and science-based solutions to achieve net zero emissions by 2050 (Coca-Cola Sustainability Report, 2022).

Also, Coca-Cola targets vulnerable groups such as women and the poor most affected by climate change’s devastating effects. In particular, developing countries in Sub-Saharan Africa, parts of South America, and Asia are affected directly by industrial activities in the Western world (Coca-Cola Sustainability Report, 2022). To that end, Coca-Cola commits most of its efforts to counter climate change in such countries. In Mexico, for instance, Coca-Cola partnered with the Nature Conservancy to construct a watershed project to collect water for use in irrigation activities and other local needs (Coca-Cola Sustainability Report, 2022). The successful project formed the foundation for future sustainable interventions, including dam construction, rainwater harvesting, and plant nurseries.

Coca-Cola’s Ethical Standards

A vast body of research shows that Coca-Cola has a solid ethical culture despite a few limitations in some business areas. To show its commitment to ethics, Coca-Cola deploys ethics officers in every local business unit to ensure ethical compliance and conduct investigative audits to alleviate bribery cases and corruption in general (Coca-Cola, n.d.). Besides, the company actively pursues sustainable activities aimed at ensuring societal good. For instance, the effort to conserve watersheds is part of a broader company initiative aimed at improving the well-being of communities in its operational areas and across the world. It is worth noting that Coca-Cola operates in 200 countries, and a percentage of revenue in each location goes to fund CSR initiatives (Coca-Cola Sustainability Report, 2022). All CSR initiatives are part of the company’s ethical culture.

However, Coca-Cola faces serious labor rights issues that have prompted an onslaught of trade unions across the globe. For instance, in 2019, the International Food Union (IFU) severed a 15-year-old relationship with Coca-Cola, accusing the company of intimidating union officials and undertaking disciplinary action against union members working at the company (Ethical Consumer, 2019). Trade unions are crucial to ensuring universal employee rights are respected globally. However, transnational cooperation between trade unions and multinational companies is at a crossroads. While some multinational corporations want to comply with established global standards, national trade unions pose an unwelcome intervention by requiring these companies to comply with jurisdictional standards (Marginson, 2016). To that end, Coca-Cola can best alleviate its conflicts with trade unions by collaborating universal labor rights with the local jurisdictional labor rights requirements to avoid conflicts.

The Impact of Organizational Ethics and Corporate Social Responsibility

Employees

Employees are regarded as the most crucial resource in an organization. Findings show that CSR positively impacts employees’ motivation, satisfaction, commitment, and loyalty. To that end, business leaders may use CSR to build a resilient workforce, which is currently happening at Coca-Cola Company. The impact of CSR on employee motivation may be understood through the self-determination theory, which defines motivation into intrinsic and extrinsic motivation. Intrinsic motivation refers to the non-material motivation resulting from CSR activities (Gond et al., 2017). Employees feel a sense of purpose working for companies that do good to the community, and this keeps them engaged as they seek to help the community.

Also, Coca-Cola’s CSR activities have increased job satisfaction at the company. One of the reasons why companies with aggressive CSR initiatives like Coca-Cola are likely to retain employees is because employees feel a sense of job satisfaction. An employee derives a sense of identity by being part of a large company that invests back in the community (Gond et al., 2017). This reinforces the point that employees are motivated not only by financial and material benefits but also by intrinsic motivation, which plays a key role.

Community

Communities also benefit immensely from large corporations’ CSR initiatives. One way the local and international communities benefit from CSR initiatives is through direct project investments done in the community. For instance, Coca-Cola’s initiative to construct watershed plans in Mexico benefited the local community significantly. Water conserved through the watershed plan has encouraged locals to participate in irrigation farming and improve their livelihoods (Coca-Cola Sustainability Report, 2022). Besides, CSR, in some cases, increases investment opportunities for the local community. Since Coca-Cola uses 1% of its entire revenue on CSR, there is no doubt that some resources create investment opportunities for the local community. One area that presents immense investment opportunities is joining the company’s massive supply chain network to supply Coca-Cola with the ingredients used in the company’s production processes.

Company

CSR benefits the company as much as it benefits the local community. To that end, one of the benefits of CSR to the company is that it bolsters its brand equity. Research shows that customers will act favourably toward companies that give back to the community instead of those that produce quality products. Customers have become aware of the changes a company may have on the community and are willing to patronize such companies to make further positive changes. Given Coca-Cola’s aggressive CSR strategy, the company has built solid brand equity, which keeps customers coming.

Another benefit of CSR to the company is that it improves investor relationships. A study by Boston Consulting Group shows that investors place an 11% premium on companies with positive CSR over those lacking CSR initiatives (Walter, 2020). CSR initiatives improve how investors view companies as they perceive them to be financially responsible. Coca-Cola has partly maintained strong investor relationships by participating in CSR.

Conclusion

Coca-Cola’s ethical standards and CSR initiatives are partly responsible for the company’s success. From the outset, the company commits part of its operational revenue to finance charitable initiatives. Also, the company is committed to reducing greenhouse gas emissions and adopting renewable energy solutions based on scientific targets. Coca-Cola also ensures a sustainable supply chain by ensuring third-party suppliers who supply the company with farm ingredients respect labor rights. Subsequently, Coca-Cola’s CSR initiatives positively impact employees, the company, and the community. Employees working with an organization with an aggressive CSR strategy are motivated to be productive since CSR attaches a sense of purpose to their work. As a result, low employee turnover is likely due to increased job satisfaction. The community also benefits directly from CSR initiatives as they leverage the investment opportunities created. Finally, Coca-Cola benefits from enhanced customer and investor trust by practicing CSR.

References

Coca-Cola Sustainability Report. (2022). The Coca-Cola Company 2022 Business & Sustainability Report. https://www.coca-colacompany.com/content/dam/company/us/en/reports/coca-cola-business-and-sustainability-report-2022.pdf#page%3D43

Coca-Cola. (n.d.). Coca-Cola Sustainability Initiatives | Coca-Cola SG. Www.coca-Cola.com. Retrieved July 26, 2023, from https://www.coca-cola.com/sg/en/sustainability

Ethical Consumer. (2019, March 14). Coca-Cola Company, The | Ethical Consumer. Ethical Consumer. https://www.ethicalconsumer.org/company-profile/coca-cola-company

Gond, J. P., El Akremi, A., Swaen, V., & Babu, N. (2017). The psychological micro-foundations of corporate social responsibility: A person‐centric systematic review. Journal of Organizational Behavior38(2), 225-246.

Marginson, P. (2016). Trade Unions and Multinational Companies: A multi-level challenge (No. 103). Warwick papers in industrial relations.

Merk, J. (2015). Global outsourcing and socialisation of labour: the case of Nike. Handbook of the International Political Economy of Production, 115-31.

Ogola, F. O., & Dreer, T. (2012). Market Share as an indicator for corporate social responsibility (CSR)             spending: The study of Coca-Cola’s market. African Journal of Business Management6(6), 2234.

Walter, G. (2020, July 16). Your Supply Chain Needs a Sustainability Strategy. BCG Global. https://www.bcg.com/publications/2020/supply-chain-needs-sustainability-strategy

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Question 


Corporate Social Responsibilityy

Corporate Social Responsibility

Select an organization and research its ethics and view on corporate social responsibility. Are there programs or initiatives in place to contribute to the community in some way? Discuss the impact of organizational ethics and corporate social responsibility as connected to the community and organization, the employees, and the company.

Your assignment must be at least three pages in length. Use at least one outside source to support your explanation. Your assignment should be formatted in accordance with APA style. All sources used must be referenced; paraphrased and quoted material must have accompanying citations and be cited per APA guidelines.

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