Coca-Cola Continues Unethical and Dishonest Practices in India

Company Must Follow Recommendations of Company Funded Study:
Shut Down Kala Dera Bottling Plant

By Amit Srivastava
India Resource Center
September 12, 2008

San Francisco: It is said that those who don't learn from the mistakes of the past are destined to repeat them.

It seems that the Coca-Cola has not learnt any lessons from Plachimada - a village in the state of Kerala in India where the community-led campaign has shut down its plant since March 2004.

The manner is which the Coca-Cola company has decided to deal with another community-led campaign in India - in the village of Kala Dera in the state of Rajasthan - is indicative of the arrogance and impunity of the company that has landed it in trouble before.

And Coca-Cola in India is in for a rude awakening, again.

Kala Dera - Thirsting from Coca-Cola

Kala Dera is a large village outside the city of Jaipur where agriculture is the primary source of livelihood. Coca-Cola started its bottling operations in Kala Dera in 2000, and within a year, the community started to notice a rapid decline in groundwater levels.

Unusable Well in Kala Dera Confirms Depleted Water Levels
Unusable Well in Kala Dera Showing Depleted Water Level
For farmers, loss of groundwater translated directly into loss of income. For women, it meant having to walk an additional 5 to 6 kilometers just to fetch water to meet the basic daily needs of the family. For many children in Kala Dera, it meant leaving schools to provide a much needed helping hand doing household chores since the women had additional burdens.

The community in Kala Dera organized itself to challenge the Coca-Cola company for the worsening water conditions - through extraction and pollution - and demanded the closure of the Coca-Cola bottling plant.

The company, in usual fashion, denied any wrongdoing, blaming "outsiders" for the increasing local community opposition.

Forced Assessment Validates Community Concerns

The community of Kala Dera, as well as the villages of Plachimada and Mehdiganj in India that are opposing Coca-Cola bottling plants, have enjoyed significant international support. And most notable in lending support have been college and university students across the globe, and in particular, the US, UK and Canada - some of Coca-Cola's larger markets.

One of the successful campaigns was at the prestigious University of Michigan in the US, which, after a sustained student-led campaign in which the India Resource Center represented the India issues, placed the Coca-Cola company on probation on January 1, 2006. The university also mandated that Coca-Cola agree to an independent assessment of its operations in India if it ever wanted to do business with the university.

The assessment, paid for by Coca-Cola and conducted by the Energy and Resources Institute (TERI), only looked at six bottling plants in India and was released in January 2008.

The assessment was a scathing indictment of Coca-Cola's operations in India.

Validating the concerns of the communities campaigning against Coca-Cola, the assessment noted that Coca-Cola approached its operations in India from a "business continuity" perspective that ignored the impacts on the community.

Stop Using Groundwater in Kala Dera

Some of the most disturbing findings in the assessment concerned Coca-Cola's bottling plant in Kala Dera.

Confirming that Coca-Cola's bottling plant in Kala Dera operated in an "overexploited" groundwater area and the Coca-Cola's bottling plant had "significant impacts", the assessment noted that "the plant's operations in this area would continue to be one of the contributors to a worsening water situation and a source of stress to the communities around."

The assessment made four recommendations with regard to the Coca-Cola bottling plant in Kala Dera, making it clear that Coca-Cola could no longer utilize the overexploited groundwater resource in Kala Dera:
  1. Transport water from the nearest aquifer that may not be stressed
  2. Store water from low-stress seasons
  3. Relocate the plant to a water-surplus area
  4. Shut down this facility

The community in Kala Dera, needless to say, welcomed the recommendations.

Unfortunately, they still wait for Coca-Cola to make good on the recommendations made by the assessment that Coca-Cola itself paid for.

Coca-Cola's Response - Unethical and Dishonest

Coca-Cola has had seven months to respond to the findings on Kala Dera. We have not seen much action on the part of Coca-Cola that address the concerns raised in the assessment. In fact, what we have seen much of, is an unethical and dishonest campaign by the Coca-Cola company in an attempt to misrepresent the issues.

Continued Misery in the Face of Certainty

Kala Dera lies in an overexploited groundwater area and access to water has been difficult. Summers are particularly intense in the area, and summers are when water shortages are most acute.

Ironically, summer months are also when Coca-Cola reaches its peak production, and it is in the summer months that the Coca-Cola bottling plant in Kala Dera extracts the most water, making already existing water shortages even worse.

Farmer in Kala Dera Shows Increased Electric Bill from Pumping Water
Farmer in Kala Dera Shows Increased Electric Bill from Pumping Water from Depleted Groundwater
At the very least, the Coca-Cola company could have stopped extraction of water this summer, knowing very well the conclusions of the assessment.

With facts in hand, the Coca-Cola company has chosen to continue its operations, knowingly contributing to the misery of thousands of people.

On the one hand, Coca-Cola talks a good talk about being a good corporate citizen.

Yet, it continues to deplete groundwater causing undue hardships to the community even after it has been told to stop doing so, that too by a study funded by the company itself.

Criminal Negligence or Straight Incompetence?

Prior to locating a bottling plant in Kala Dera, Coca-Cola is supposed to have conducted an Environmental Impact Assessment that looks at a variety of current conditions and potential impacts if the plant is built and operated.

The Coca-Cola company has refused to share the environmental impact assessment it conducted for Kala Dera (or any other plants in India), citing "legal and strategic confidentiality" reasons.

However, the Central Ground Water Board of India had already assessed the groundwater in and around Kala Dera to be "overexploited" in 1998.

The Coca-Cola company started operations in 2000 - two years after the Indian government agency had already found it to be "overexploited".

Did the Coca-Cola company know that the groundwater was overexploited and still built and operated its plant?

If the company knew that the Kala Dera groundwater area was overexploited, then starting a water intensive plant borders on criminal negligence, if not criminal negligence itself.

And how could the company, which describes itself as a "hydration" company, not know that the Central Ground Water Board of India had already assessed the groundwater as overexploited?

Misrepresenting Facts

In reaching out to the media and the public regarding the scathing TERI assessment, the Coca-Cola company has misrepresented the facts on several occasions.

Coca-Cola Forced to Agree to Assessment

The Coca-Cola company says that it "voluntarily participated" in the assessment even though the University of Michigan insisted that Coca-Cola agree to an assessment if it wanted to do business with the University of Michigan.

The company goes on further to state that "our voluntary participation in the TERI assessment reflects our commitment to transparency and continuous improvement."

If Coca-Cola were committed to transparency, we would suggest they make a good start by sharing the Environmental Impact Assessment that they conducted for Kala Dera and rest of the bottling plants in India.

And as for their commitment to "continuous improvement", Coca-Cola should start with implementing one of the four recommendations made by the assessment in regards to the Coca-Cola bottling plant at Kala Dera.

Coca-Cola Fails to Mention Shut Down Plant Recommendation

In its letter to the University of Michigan after the assessment, the company fails to mention the fourth recommendation made by the assessment - to shut down the bottling plant.

Coca-Cola Does Not Meet its Own Standards

In the same letter, the company states that their plants "on an overall basis are meeting our own more stringent internal standards."

One of the shocking findings of the assessment was that of the six plants surveyed, in not one did the plant meet the Coca-Cola company standards for waste management, known as the TCCC standards! What is the point of having Coca-Cola company standards if not a single plant meets them?

Coca-Cola Not in Compliance with Government Regulations

In the same letter, the company states that "its bottlers are in compliance with the standards of relevant India government and regulatory agencies."

Again, the assessment found that the treated effluent discharge at none of the six plants surveyed met all the standards of the relevant Indian government and regulatory agencies. The assessment states that the treated effluent discharge at the plants "mostly met the effluent discharge requirements".

Mostly, at least from the last definition we checked, does not mean all.

Corporate Social Responsibility - A Scam?

While there have been no genuine initiatives on the part of Coca-Cola to correct its mistakes in Kala Dera, the Coca-Cola company has stepped up its corporate social responsibility spending to announce to the world that it is a green and socially responsible company. Such an effort, however, rings hollow when it comes to India.

Rainwater Harvesting - Dilapidated and a Bluff

With great fanfare, the company continues to announce its rainwater harvesting initiatives in India, even going as far as to announce that the company will become "water neutral" in India by 2009.

There are some serious concerns about Coca-Cola's claims on rainwater harvesting.

Coca-Cola Sign - "Kala Dera - A Dream" Next to Dilapidated Recharge Shafts
Coca-Cola Sign - "Kala Dera - A Dream" Next to Dilapidated Rainwater Recharge Shafts
In Kala Dera, the company has announced that it has recharged five times the amount of water it has used. When asked to back it up with numbers, Coca-Cola does not provide any. In fact, in the letter to the University of Michigan, Coca-Cola states that they "will install measuring devices that will verify the amount of water recharged."

If they do not have measuring devices installed to verify the amount of water recharged, how can they make a claim of recharging five times the water that they have extracted?

People across Rajasthan are well versed in rainwater harvesting, and many communities have been harvesting rainwater long before Coca-Cola started. In fact, the Coca-Cola company started rainwater harvesting initiatives in India as a response to the growing campaigns against its water mismanagement.

The community in Kala Dera has long maintained that Coca-Cola's rainwater harvesting structures do not work.

Even the TERI assessment, which looked at Coca-Cola's CSR initiatives in Kala Dera, notes that "all the recharge shafts that were randomly visited were found to be in dilapidated conditions."

"Coca-Cola is bluffing people with its rainwater harvesting. The problem is that the rainfall in the area is too low, and the amount of rainfalls fluctuates a lot from year to year and within every year. We get a maximum of 30 days of rains every year, and eighty percent of those rains come in just two or three days. Rainwater harvesting is simply not efficient," says Dr. M.S. Rathore, a prominent natural resource expert with the Institute for Development Studies in Jaipur whose work was also referenced by the assessment.

Finding dilapidated water recharge shafts, an intermittent, low and unpredictable rainfall pattern, a prominent hydrologist from the area saying it won't work, and Coca-Cola not even having installed water recharge meters yet claiming that they have recharged five times the water they use - surely something is out of order.

And it is based on their rainwater harvesting initiatives that the Coca-Cola company has announced that they will become water neutral in India by 2009- that they will recharge more water than they use from the groundwater resource.

Thanks, but no thanks. Coca-Cola's rainwater harvesting systems are shoddy, their intentions even more suspect, and their claims preposterous.

Indeed, if they are so confident about their rainwater harvesting initiatives, let them use just the rainwater to meet all their production needs in India.

Coca-Cola must follow the recommendations made by the TERI assessment with regard to Kala Dera and immediately cease tapping any further into the groundwater resource.

Until then, the community of Kala Dera and the International Campaign to Hold Coca-Cola Accountable will continue to increase the pressure on the Coca-Cola company.

Amit Srivastava is the Director of India Resource Center, an international campaigning organization based in San Francisco, USA.

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