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ACCT2162 Ethics and Accountability

COCA COLA and PEPSI

Student name: Pham Thuy Vy Vy

Ta lam Han
Tieu Thien Tam
Assignment: Ethics and Accountability
ACCT2162

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ACCT2162 Ethics and Accountability

RMIT International University Vietnam

Bachelor of Commerce Program

ASSIGNMENT COVER PAGE

Your assessment will not be accepted unless all fields below are completed

Subject Code:

ACCT2162

Subject Name:

Ethics and accountability

Location where you study:

RMIT Vietnam- SGS campus

Title of Assignment:

Group assignment

File(s) Submitted:

Cocacola_Pepsi
Pham Thuy Vy Vy

Student name:

Tieu Thien Tam

Ta Lam Han

Student Number:

S3325175
S3324340
S3275812

Learning Facilitator in charge:

Samia Ibrahimo

Assignment due date:

18th April 2013

18th April 2013

Date of Submission:
Number of pages including this one:
(Please number your pages like this: 13
page 1 of 7, etc.)
2200 words (exclude references, table of content and
Word Count:
reference)
(Main Content)

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ACCT2162 Ethics and Accountability

Contents
INTRODUCTION....................................................................................................................................... 4
COMPARE AND CONTRAST POLICIES, PROCESSES AND GUIDELINES ......................................................... 5
a)

Health and Safe Work Environment: ............................................................................................... 5

b)

Fair Treatment: ................................................................................................................................. 5

c)

Ability to exercise ones conscience:................................................................................................ 6

d)

Human rights and employee rights.................................................................................................. 6

e)

Privacy and dignity ........................................................................................................................... 7

KEY STAKEHOLDER .............................................................................................................................. 7

1)

Communities ..................................................................................................................................... 8

2)

Employees ......................................................................................................................................... 8

3)

Suppliers ........................................................................................................................................... 8

4)

Consumers......................................................................................................................................... 8

5)

Investors ............................................................................................................................................ 9

ETHICS RISK MANGEMENT ................................................................................................................ 9

CONCLUSION ......................................................................................................................................... 11
REFERENCE LIST: ................................................................................................................................. 12

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ACCT2162 Ethics and Accountability

INTRODUCTION

In the beginning of twentieth century, the continuous collapse of Multinational Corporations has
arisen an alarm to the public, directors and top management about ethical issues in business
environment due to lack of ethical culture. Nowadays, code of conduct, which has been an
essential part within the business, are established to avoid ethical problems and to improve the
working environment as well as companys reputation. According to Riley, J. (2012), ethics are
moral guidelines which govern good behavior; therefore, behaving ethically is doing what is
morally right and in business it is widely regarded as good business practice.
Firstly, this report provides general comparison of workplace ethics of PepsiCo and The Coca
Cola Company in regarding to employee rights, privacy and dignity, fair treatment, health and
safe work environment and ability to exercise ones conscience. Then, the key stakeholders of
PepsiCo and the Coca Cola Company and how two corporations managed their ethics risks will
be considered.

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ACCT2162 Ethics and Accountability

COMPARE AND CONTRAST POLICIES, PROCESSES AND GUIDELINES

a) Health and Safe Work Environment:
Health and Safe Work Environment are one of the most important priorities in the ethics policy
of both companies. Both of them have the same goal to provide the health and safe work
environment for their associates and employees. However, Coca Cola and Pepsi have different
way to ensure the health and safe work environment for associates. While Coca Cola has their
own safety management safety system to manage safety, health and loss prevention, Pepsi offers
associates a comprehensive benefits package designed to help them live healthier and have a safe
work environment. For the safety management safety of Coca Cola, according to the Safety and
Health statement 2013, in order to achieve the safe work environment, its system defines a set of
operational controls, which aligned with global requirements and standards, to manage the
known risks and aspects of the operations. Moreover, this system also establishes the internal
audit process to ensure they effectively control the operations. Besides, it also engages external
audit firms to assess the manufacturing operation with safety, health and loss requirements or
applicable laws or rules. In contrast, Health and Safety statement of PepsiCo states that they offer
a range of benefits such as health care or savings for associates. With the health and welfare
benefits, its associates can access to services that deliver high-quality care to the associates and
their family but at no additional costs. Moreover, PepsiCo also provides some programs such as
Healthy Money program or Healthy Competitions to help associates improve their health.
Moreover, communication within company about health and safety also applied for employees to
share their experiences.

b) Fair Treatment:
For the fair treatment, both companies always ensure that they treat the employees fairly and
honestly in terms of salary, rights, opportunities, benefits and other conditions. Particularly, they
both implement the United Nations Guiding Principles. Moreover, they both have their own
university to train for employees and provide them opportunities to develop their careers.
However, they have different guides and processes to ensure the fair treatment. For Coca Cola,
they offer a variety of developmental opportunities for their associates, including Coca Cola
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ACCT2162 Ethics and Accountability

University (CCU), especially for high performers (Associate Training statement, 2013). They
also have a Equality Policy Statement of Coca Cola Hellenic, which emphasizes about the
discrimination, harassment, monitoring and reporting (Equality Policy Statement 2012).
Moreover, there is a annual performance review system for employees to set goals and objectives
after discussing with the managers. Moreover, Coca Cola also provide associates the opportunity
to have many e-learning online resources beyond CCU, external conferences or other education.
In contrast, according to Human Rights statement 2013, PepsiCo provides annual online training
on their Code of Conduct for the associates to ensure that they all read and understand it.
Moreover, the Human Rights Policy also ensures that the associates are not discriminated and
respected. PepsiCo also has their own universities such as PepsiCo University, Finance
University, Customer Management University and Global R&D University to train their
employees. For evaluation, they do it ethically by applying 360 Degree Feedback, which is one
of the best feedbacks that is free from bias. They also have their reward system for a variety of
performances in different jobs.

c) Ability to exercise ones conscience:

Both companies have exercises their conscience. According to Angel 2012, Coca Cola launched
the Work it out Calculator program to tell customers about the amount of calories that they
need to burn after consuming Coca Colas products. With this program, Coca Cola can help
customers know how to enjoy the drinks and improve the health. In contrast, Pepsico also gains
more health-conscience image with broad product base (Klingbeil, A 2003). They has made some
drinks that have less calories and can be drinks for diet such as: Fun for you, Better for you
and Good for you products. Besides that, according to Human Rights 2013 of Pepsico, they
also have the whistleblowers that encourage associates to report when there is discrimination,
harassment or unfair treatment.

d) Human rights and employee rights

According to PepsiCo (2012) and The Coca Cola Company (2012), both of their human rights
policies, which is created based on the guidance of the Universal Declaration of Human Rights
and other related international human rights, define how employees should conduct themselves
as representatives of the companies and also declare respectfully their responsibility to ensure
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associates rights to personal security, safe and healthy workplace, free of discrimination to
sustain their ethical workplace culture. However, there are still several differences between the
policies of two companies. Firstly, Coca Cola seems to provide more specific than PepsiCo when
the company prohibits hiring individuals under 18 years old for hazardous positions. However, in
some poor countries, it is essential for the children to work themselves to support their lives.
Actually, it will definitely violate the policies, but ethics are not like legislation, it is about
morality. Secondly, in general, PepsiCo seems to provide better ethics training for their
employees. The Coca Cola Company maintains their intranet site with information about the
guidelines, on the other hand, PepsiCo requires their employees have to complete the annual
online training on the Code of Conduct. In addition, BBoyd9 (2010) states that Coca Cola,
because of its labor violations, has to improve their ethics trainings for employees.

e) Privacy and dignity

Due to confidentiality, PepsiCo (2012) requires people who are able to access the information
related to PepsiCos business must keep those data privately as their personal secret unless there
is clear that the information have been published by PepsiCo. Similarly, the CocaCola Company
(2012) states that the company respects privacy of all employees, customers and partners,
therefore, people who handle personal data must comply with the privacy laws, only access for
business purpose and prevent unauthorized disclosure. However, PepsiCo requires a transmit
securely via encryption of personal information only to authorized parties that are responsible
for protecting its confidentiality and to report any breach of privacy or security risks exist to the
Law Department. Moreover, transferring of personal information of PepsiCos employees
internally must be abode by privacy laws of that country.

KEY STAKEHOLDER
Both businesses have made an impressive impact on millions of people through honest, open,
transparent discussion with individuals, groups and advocates who represent community,
environmental and social interests. Here, we will discuss some key stakeholders of both
companies:

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ACCT2162 Ethics and Accountability

1) Communities
Both companies responsibilities are to work with communities, globally and locally since most
of the major projects have to engage with local communities in a variety of ways. Communities
are supported by both companies contributing to not-for-profit group and dedicating to improve
peoples lives. The availability of employment and other economic opportunities, local
environmental issues such as water stewardship, obesity, and the companys contribution to local
social investment are the main expectations of communities for both companies.
2) Employees
Employees are one of the key stakeholders that have significant impact on the business. Both
companies have developed high standards workplace in order to meet the expectations of
employees, by complying with United Nations Universal Declaration of Human Rights. Ensuring
our associates are happy, healthy, treated fairly and with respect is at the core of both companies
business values and success. Moreover, an open work environment with addressing expectations
such subjects as child labor, forced labor, free of discrimination, health and safety workplace are
described in our Human Rights Statement and Workplace Rights Policy.
3) Suppliers
Suppliers are an essential part of the businesses who provide us goods and services at
competitive prices in order to make reasonable profits. Suppliers must be chosen by their
integrity, workplace security and safe environment. Commitment to sustainability to our
suppliers are placed in Supplier Corporate Social Responsibility Assurance Program, which
includes our Supplier Code of Conduct, Sustainable Packaging Policy and Sustainable
Agriculture Practices. Suppliers also place high expectations on both companies in which will
provide them the best conditions as well as follow their companys code of conduct.
4) Consumers
Same as other industry, consumers are always the most important part of every existing business.
Both companies have made significant effort to offer customers a wide range of products that
deliver great taste, nutritional value, convenience and affordability. The consumers expectations
for which products they would use has increased, due to the fact that they are having several of
choices and more health-conscious. As a result, the products launch out in the market must meet

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the standards of health and safety. From the ingredients used in manufacturing to the sources of
water, all are matters of concern to consumers.
5) Investors
The investor is also another essential part of developing. Both companies are trying to produce
more of a return for their investors, based consistent financial growth in the marketplace and
consistent financial results. Investor judge mostly their expectations for companies based on the
amount of return they receive. Long-term view and appropriate invests that can strengthen the
brands, develop capabilities and pursue new opportunities may bring investors more good than
their expectations.

ETHICS RISK MANGEMENT

Ethics risk can consist many areas, such as failing to meet stakeholders expectation, and both
companies have been efficiently dealing with their risks. The first ethics risk will be discussed is
the quality of products to customers. Most of soft drinks nowadays are reported be a major
contributor to obesity and both companies admitted that issues to be the issue of generation
(Tinker, B, 2013). PepsiCo has launched a program called Together Counts encourages
families to involve in exercising together to help prevent obesity, while Coca Cola is joining a
campaign "reinforcing its efforts to work together with American communities, business and
government leaders to find meaningful solutions to the complex challenge of obesity." (Tinker,
B, 2013). It also dedicates $5 million to build fitness centres among schools in the US.
Moreover, both will list calorie content on the front of its beverage containers, vending machines
and fountain equipment by the end of 2012. Another quality issue is caramel coloring. According
to a research by Center for Science in the Public Interest, it was discovered that caramel coloring
contains potential cancer-causing compounds. After that new research, both companies has
release disclosure news claiming that their caramel coloring are safe and has been tested.
According to reuters.com (2012), Coke and Pepsi asked their suppliers to alter their
manufacturing process to meet the requirements aiming to limit people's exposure to toxic
chemicals. Both companies are having good management departments that can have immediate
change in order to manage risk efficiently.

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Another risk need to be concerned is using child labor.In 2004, Coca Cola has been reported to
use products from suppliers that exploiting child labor in El Salvador. This has gone against
Coca Colas suppliers guidelines, which states that their suppliers must not use child labor as
defined by local law. In this issue, Coca Cola failed to meet the expectations of communities
about protecting human rights. This also show that Coca Cola failed to have a committee that can
judge the process of their business. However, according to CNN.com, in September 2010, Coca
Cola Foundation has joined a coalition of the local government to prevent children from working
in sugarcane fields. On the other hand, in order to deal with issue from supplier, PepsiCo use
their Supplier Corporate Social Responsibility (CSR) Risk Evaluation and Management Program
to educate suppliers, validate compliance and facilitate continuous improvements within our
supply chain (pepsico.com, 2013).
In order to manage risk efficiently, PepsiCos shareholders request that company should establish
Risk Oversight Committee of the Board of Directors. They have acknowledged that risk such as
bottle water quality, could negatively ruin their reputations and expectations of public. However,
the Board thinks that creating a separate committee is not necessary because the board has
already taken steps to fulfill the responsibilities of managing risks. On the other hand, CocaCola shareowners have chosen the Board to oversee their interests and risk. They are in charge
of managing risk, through strong internal processes as well as internal controls. Purposeful and
appropriate risk-taking is essential for the Company to be competitive on a global basis and to
achieve the objectives set forth in its 2020 Vision (Proxy statement, 2012).

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CONCLUSION
In conclusion, Coca Cola and PepsiCo are two big company that have their own policies,
processes and guidlines to ensure the employee rights, privacy and dignity, fair treatment, health
and safe work environment and ability to exercise one's conscience in the work place. Both
companies have the key stakeholders like consumers, employees and communities. In order to
manage the ethics risk, they both have some campaigns to support and ensure the integrity,
fairness, honesty and responsibility.

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REFERENCE LIST:
Angela 2012, Work it out Calculator from Coca Cola: a healthy conscience or a marketing
ploy?, plus-size-magazine.com, viewed 19 April 2013, < http://www.plus-sizemagazine.com/work-it-out-calculator-from-coca-cola-a-healthy-conscience-or-a-marketing-ploy1062>
Associate Learning & Development, homepage, pepsico, viewed 17 April 2013, <
http://www.pepsico.com/purpose/talent-sustainability/associate-learning-and-development.html>
BBoyd9 2010, Unethical Companies: Coca-Cola, WordPress, Ethical Footprint, viewed 17
April 2012, <http://ethicalfootprint.wordpress.com/2010/04/28/unethical-companies-coca-cola/>.
Equality Policy Statement 2012, homepage, coca-colahellenic, viewed 17 April 2013, <
http://en.coca-colahellenic.rs/Towardssustainabilit/Ourapproach/Sustainopolicies/>
Geller, M 2012, Coke, Pepsi make changes to avoid cancer warning>, reuters.com, viewed 17
April 2013, < http://www.reuters.com/article/2012/03/09/us-coke-pepsiidUSBRE82814V20120309>
Health & Safety, homepage, homepage, pepsico, viewed 17 April 2013, <
http://www.pepsico.com/Purpose/Talent-Sustainability/Health-and-Safety.html>
Human Rights Statement 2013, homepage, coca-colacompany, viewed 17 April 2013, <
http://www.coca-colacompany.com/our-company/human-rights-statement>
Klingbeil, A 2003, Pepsi seeks more health-conscience image with braod product base,
http://the.honoluluadvertiser.com, viewed 18 APril 2013, <
http://the.honoluluadvertiser.com/article/2003/Aug/09/bz/bz12a.html>
Lah, K 2012, Life not sweet for Philippines' sugar cane child workers, edition.cnn.com,
viewed 16 April 2013, < http://edition.cnn.com/2012/05/01/world/asia/philippines-child-labor>
PepsiCo Supports First Lady's Initiative to Help Reduce Childhood Obesity 2013, homepage,
pepsico, viewed 18 April 2013,< http://www.pepsico.com/PressRelease/PepsiCo-Supports-FirstLadys-Initiative-to-Help-Reduce-Childhood-Obesity02092010.html>
PepsiCo 2012, Global Code of Conduct, PEPSICO, viewed 17 April 2013,
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<http://www.pepsico.com/company/global-code-of-conduct.html>.
Policies, homepage, pepsico, viewed 16 April 2013, <
http://www.pepsico.com/Purpose/Overview/Policies.html>
PR Newswire, 2013, Healthy Weight Commitment Foundation Launches National FamilyCentered Campaign to Curb Obesity, viewed 17 April 2013, <
http://www.prnewswire.com/news-releases/healthy-weight-commitment-foundation-launchesnational-family-centered-campaign-to-curb-obesity-121492714.html>
Safety & Health, homepage, coca-colacompany, viewed 17 April 2013, < http://www.cocacolacompany.com/our-company/safety-health>
Supplier Expectations 2013, homepage, coca-colacompany, viewed 17 April 2013, <
http://www.coca-colacompany.com/our-company/suppliers/supplier-expectations>
Supplier Standards 2013, homepage, pepsico, viewed 18 April 2013,<
http://www.pepsico.com/purpose/responsible-sourcing/supply-chain.html>
Sustainability Report 2011/2012, Coca-Cola, viewed 17 April 2013, < http://www.cocacolacompany.com/sustainabilityreport/global-challenges.html#section-we-know-its-not-allabout-us>
Talent Sustainability 2013, homepage, Pepsico, viewed 17 April 2013, <
http://www.pepsico.com/purpose/talent-sustainability/human-rights.html>
Tinker, B 2013, Coca-Cola weighs in on obesity fight, edition.cnn.com, viewed 17 April 2013,
< http://edition.cnn.com/2013/01/14/health/coke-obesity>
The CocaCola Company 2012, Code of Business Conduct: Acting with Integrity Around the
Globe, CocaCola Journey, viewed 17 April 2013, <http://www.cocacolacompany.com/investors/code-of-business-conduct>.
Riley, J. 2012, What are business ethics?, Introduction to Business Ethics, tutor2u, viewed 17
April 2013, <http://www.tutor2u.net/business/strategy/business-ethics-introduction.html>.

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