The Coca-Cola CompanyCarbonated Ethics

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THE COCA-COLA COMPANY- CARBONATED ETHICS History The Coca-Cola Company is the worlds largest beverage company. Along with Coke, recognized as the worlds most valuable brand, the Companys portfolio includes twelve other billion dollar brands, including Diet Coke, Fanta, Sprite, Coca-Cola Zero, Vitamin Water, and PowerAde. Globally, they are the No. 1 provider of sparkling beverages, juices and juice drinks and ready to drink teas. Through the worlds largest beverage distribution system, consumers in more than 200 countries enjoy the Companys beverages. The Coca-Cola Company began in 1886 when Atlanta pharmacist, John Pembleton created a caramel liquid formula that he later paired with carbonated water. He began to sell it at a local pharmacy and as they say the rest is history. Pemberton died in 1888 and the rights to Coca-Cola were purchased by Atlanta businessman Asa Griggs Chandler for $2,300. Chandler was the companys first CEO and lead Coca-Cola into the next century primed to conquer the beverage industry. Presently, Coca-Cola continues its hold on the beverage industry and is sold throughout the world. Coca-Cola is committed to local markets, paying attention to what people from different cultures and backgrounds like to drink and where and how they want to drink it. With its bottling partners, the Company reaches out to the local communities it serves, believing that Coca-Cola exists to benefit and

refresh everyone it touches. From the early beginning Coca-Cola has grown to the worlds most known brand, with more than 1.6 billion beverage servings sold each day. The Coca-Cola Company has an enduring commitment to social responsibility. It is focused on initiatives that protect the environment, conserve resources and enhance the economic development of the communities where they operate. Code of Conduct Due to their global presence, Coca-Cola considers integrity a fundamental component to its company. The company defines integrity as doing the right thing. The company defines code as a guideline for employees, addressing responsibilities of employees towards each other, and to customers, suppliers, consumers and government. Coca-Cola advises all employees to comply with the code and law of whichever country the employee is working in. All Coca-Cola employees, as well as outside contactors and business partners are expected to follow the code of conduct. To evaluate whether an employee is doing the right thing, CocaCola asks the individual to ponder several questions. Is it consistent with the Code? Is it ethical? Is it legal? Will it reflect well on me and the Company? Would I want to read about it in the newspaper? If the answer to any of these questions is no, the employee is to assume that the proposed action could cause a problem. If the employee has any doubt in their decision, they are encouraged to seek council from a supervisor or legal counsel. Supervisors should ensure that people under their supervision have a clear understanding of the companys code of conduct. The work environment should encourage employees to raise any concerns they may have without fearing discipline or retribution. A supervisor should not encourage employees to achieve business results at the expense of ethical conduct. If any employee raises its concern, his/her identity remains confidential, in case of

investigation; he/she has to cooperate with the investigation. Instructions are given to employees not to discuss any issue which has been raised, with other employees. If any employee makes a false accusation, it is treated as violation of code and they will be dealt with accordingly. Business and Financial Record keeping is extremely important for a company and Coca-Cola emphasizes this fact in its Code of conduct. Financial accounts, quality records, time records, reports and submissions such as benefit claim forms and resumes must all be accurate. Ensuring accuracy of records is the responsibility of everyone. The Code of Conduct points out that all employees have to be accurate while preparing information for the company. However, the possibility of human error exists; only intentional efforts to misrepresent or improperly record transactions are considered code violations. The Code of Conduct calls for the protection of the companys assets to be protected and they should not be used for personal benefit. For example, occasional personal calls and emails are acceptable but excessive personal calls are a misuse of the companys assets. Company policy may allow additional personal use of its assets, but it should be used according to local policy as intended. Coca-Cola treats theft of its assets in the same way as theft of employees assets in the workplace. Use of the companys assets outside of the responsibility of the employee requires prior written approval of the local ethics officer. To continue with asset, this approval should be renewed annually. Loans to executive officers of the company is prohibited, loans to other employees must be approved by Board of Directors or its designated committee. A few examples of Coca-Colas Assets are: Company money Company product Employees time at work and work product Computer systems and software Telephones Wireless communication devices Photocopiers Tickets to concerts or sporting events Company vehicles

 Proprietary information Company trademarks Certain information is considered non-public information and the code of conduct calls for strict confidentiality. Including everything from contracts and pricing information, marketing plans, technical specifications and employee information. It is any information that the Company has not disclosed or made generally available to the public. This information should not be disclosed to anyone, except when disclosure is required for business purposes. There is a section of the code of conduct devoted to conflicts of interest. Conflicts of interest can vary in number and occurrence so the company asks the employees to use their conscience and common sense. When they are unsure, they are encouraged to seek guidance. The code reads Act in the best interest of The Coca-Cola Company while performing your job for the Company. A conflict of interest arises when your personal activities and relationships interfere, or appear to interfere, with your ability to act in the best interest of the Company. Some conflicts of interest could be: Outside Investment- the Company asks its employees to avoid investments in the ownership of stocks of a competitor, customer or a supplier which might appear to affect decision making. Outside Employment, Speeches and Presentations- Generally Coca-Cola allows employees to be employed by other entities provided that id does not interfere with the employees ability to perform their job at Coca-Cola. Employment by with a competitor, customer or a supplier is strictly not allowed. Relatives and Friends- This deals with employees whose relatives are either employed by or have invested in a competitor, customer or a supplier. If the relatives deal with Coca Cola then the issue has to be approved by the Ethics Officer. In addition, personal relationships at work must not influence the ability of the employee to act in the best interest of the Company, and must not affect any employment relationship. Employment related decisions should be based on qualifications, performance, skills and experience. Gifts, Meals and Entertainment - The employees have been suggested not to accept gifts, meals or entertainment, or any other

favor, from customers or suppliers if doing so might compromise, or appear to compromise, their ability to make objective business decisions in the best interest of The Coca-Cola Company. Employees should not accept gifts for promising something in return for a customer or supplier. They also should not accept any cash or cash equivalent gift. Employees may accept Logos, pens and T-shirts. They can also accept symbolic gifts such as trophies and statues. They may also take advantage of certain discounts made available to them. The company policies state that nothing should be offered to government officials directly or indirectly in return of a favor. A prior permission has to be taken from the companys legal counsel before providing anything of value to a government official. Bribes are also strictly prohibited. The responsibility for administering the code of business conduct rests with the Ethics and Compliance Committee. This committee is comprised of senior leaders representing the corporate governance functions. Those found violating the code are dealt with by the committee. The Company strives to impose discipline that fits the nature and circumstances of each Code violation. The Company uses a system of progressive discipline, issuing letters of reprimand for less significant, first-time offenses. Violations of a more serious nature may result in suspension without pay; loss or reduction of merit increase, bonus or stock option award; or termination of employment. When an employee is found to have violated the Code, notation of the final decision, and a copy of any letter of reprimand, is placed in the employees personnel file as part of the employees permanent record. All new employees are made to sign an acknowledgement form confirming that they have read the Code of Business Conduct and agree to abide by its provisions. All employees are required to make similar acknowledgements on a periodic basis. Failure to read the Code or sign the acknowledgement form does not excuse an employee from compliance with the Code. The Company maintains an Ethics & Compliance intranet site with additional information about the Code, other policies and guidelines, training, and other ethics and compliance matters. Ethical Dilemmas Although Coca Colas Code of Ethics is extensive and thorough,

they have had their fair share of ethical dilemmas to deal with. In fact Coca-Cola was one of the first companies affected by SarbanesOxley Act Whistleblowers Act of 2002. Congress passed the Sarbanes-Oxley Act in response to recent widespread corporate misconduct. This act was intended ..to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes. Former Employee Matthew Whitley filed a claim with OSHA stating that he was fired after disclosing accounting irregularities. Whitley was hired by the Coca-Cola Company in 1992 and remained with the company for approximately eleven years. Whitley began his career with Coke as an auditor for the corporations Fountain Division and later became its Finance Director. During his tenure with the Coca-Cola Company, Whitley made a number of discoveries that concerned him. In March 2001, he came across an unusual expense report while conducting a routine audit: a fountain official had claimed reimbursement for $4500 worth of Burger King Value meals. Whitely further claimed that more than 80,000 of the companys frozen beverage machines nationwide were defective and contaminating slush drinks with metal residue. Coke supposedly knew about the defective machines but did nothing to correct the problem. Whitley also claimed that Coca-Cola discriminated against minority employees by holding them to a higher standard than white employees. Whitley sent a detailed memo containing the allegations to Coke President Steve Heyer. One week later, Whitley received what he claimed to be the worst performance evaluation of his career. This poor evaluation came just one month after Whitley had been praised by his manager for good performance. Whitley ultimately settled his claims with the CocaCola Company for $540,000, of which $300,000 covered legal fees. He received a payout of $100,000 plus $140,000 in severance benefits. It is clear the circumstances of the Whitley case shows that internal complaints at Coca-Cola were not handled properly. Employers should incorporate policies that support the whistleblower act into their existing ethics programs. Furthermore, they should document examples of the types of activities that should be reported and make it clear that employees have a duty to

report questionable activities. The Cokes Code of Conduct clearly states that Company considers its ethical standards as obligations and requests its employees, to raise the concern issue promptly, before it becomes a violation of law or a risk to health, security or companys reputation. Also, the Code further states that Any retaliation against an employee who has raised a concern honestly, is treated as violation of code. Other employees should treat him/her with courtesy and respect. However, this code was not followed in the Whitley case. When he reported the issue to his supervisor he immediately received a low performance rating and was treated poorly by fellow employees. If it wasnt for the whistleblower act, Mr. Whitley would not have received the justice he deserved. To piggy back the success of their carbonated drinks and also to become more health conscious, Coca- Cola jumped into the water business when it launched Dasani water. Changing tastes had forced the firm to branch out into new market sectors, notably fruit juices, power drinks, iced tea, coffee and, of course, bottled water - the fastest-growing new market of all. Dasani is sold and distributed in several countries. In February 2004, Dasani was launched in Britian. However, almost immediately, it was pulled from the market due to a cancer scare and consumer revolt. In spite of Coca-Cola's claims that its 'NASA-approved reverse osmosis multi-barrier filtration system' created water so pure it was better than the real thing, consumers complained that they were technically paying for tap water. Ultimately, illegal levels of cancercausing bromated chemicals were discovered and Coca-Cola had no choice but to recall 500,000 bottles and abandon the drink's launch. The Dasani scandal cost the company millions of dollars and it suffered a tremendous hit to its reputation. The Dasani crisis is a case of a giant that is so desperate for growth that it appears things are being overlooked. Coke are master marketers, they can sell pretty much anything - even tap water in the right market - but sometimes they get so caught up in the marketing that they lose touch with reality. In this case, the steps Coca Cola took in manufacturing far missed expectations of doing things right but the way they recognized the ethical issue and decided in ethical terms to act accordingly was quite acceptable.

In 2003 The Center for Science & Environment (CSE) in India found pesticide levels in drinks produced by Coca-Cola to be much higher than permitted. CSE found that the Indian produced Coca Cola soft drink products had 30 times the level of pesticide residues permitted under European Union regulations. Coca Cola challenged the CSE study and the testing methodologies used, however Indian parliamentary committee backed up CSE's findings, and a government-appointed committee was tasked with developing the world's first pesticide standards for soft drinks. Coca-Cola denied responsibility for all this and has fulfilled all their obligations laid out by CSE. The Coca Colas code of standard claims that any issue or concern that can be a violation of law or risk to health, must be immediately reported and taken care of, by an employee. But when such a concern is being raised by an authorized semi-government agency, the Company has gone as far as asking for the CSEs credibility and did not take the claim serious enough. Thus, it is clear that the Indian mangers did not stick to Code of Ethics and thus, in turn damaged the long-known reputation of the company. After getting banned from a few states of India, Coca- Cola appealed to High Court and won the appeal. Today, people are drinking Coke again. But the question still remains that how justified was the Company in politicizing the issue? Shouldnt Coca-Cola be more transparent and receptive to people in health-related matters. By any theory of ethics, the entire Company stands at stake. There is no question of an ethical dilemma in this case because the right to health is a core human value that should not be compromised at any cost. Coca- Cola has had its fair share of problems around the world involving human rights violations, most notably in Columbia. Family members of union activists have been abducted and tortured. In many cases union members were fired because they had been attending union meetings. The company has pressured workers to resign their union membership and contractual rights, and fired workers who refused to do so. The delegation faced more trouble with the repetitive allegations that the paramilitary violence against the workers was done with the knowledge or rather at the order of company managers. This was alleged since the amount of physical

access that these paramilitaries had to Coca Cola bottling plants would not have been possible without company knowledge and by their approval. To add to the heaps of trouble, the company officials admitted that they had not at any time tried to probe into the relation between the paramilitary and the plant managers or even tried to look into what ties were there between them. The involvement of Coke in this scandal is further strengthened by its previous reputation of filing criminal charges against all those union workers who had tried to speak about the companys relation with the paramilitary. All these allegations led to a lawsuit being filed in 2001 by the International Labor Rights Fund and the United Steelworkers of America in US courts against Coke. This lawsuit represented the Columbian trade union and the workers or union leaders who were victims of the horrendous violence at the bottling factories located in parts of Columbia. However in 2003, one of the federal courts, in which the case was taking place, dismissed the charges against Coke because it felt the companys relation with the owners of the bottling plants where Coke bottles were produced were not substantial enough to hold the company responsible for all such atrocities. ANALYSIS AND CONCLUSION According to the Code of Ethics followed by Coke Raising Concerns is one of the main aspects where in the Company considers its ethical standards as obligations and requests its employees, to raise the concern issue promptly, before it becomes a violation of law or a risk to health, security or companys reputation. However, in the ethical dilemmas described the company gave no freedom to its employee to express their concerns over anything. It was a clear case violation of the Code of Conduct. Another of the important factors considered in the code of ethics is Confidentiality and Investigation where in if any employee raises its concern, his identity remains confidential, in case of investigation, and he has to cooperate with investigators team. Instructions are given to employees not to discuss any issue which he or she has raised, with other employees. It may be possible that the company may not be able to inform the employee about the outcome of the investigation to employee. In the Columbian case,

Coke violated its own established code of ethics as the people who had raised their concerns were far from being kept confidential. They were threatened, kidnapped and murdered. Coke as an operating force in Columbia failed to follow the principles of virtue ethics to emerge as a market leader whom people espouse. It may have not faced serious damages, as all the lawsuits got quashed; however, it was known by everyone that the culprit for all the mess was none other than Coke itself. The union members, or rather any employee of the company has a right to express his or her view about what he or she may feel is right or wrong within the company. However, Coke ensured that all those who went against the company in some way or the other were treated with severity. This end was not justified. Global companies like Coke, who have an elaborate and descriptive code of ethics, are rarely seen to follow it. Whenever, however, they do follow it, there are media replications of it to bring about the good will of the company. However, when they violate it, all attempts are directed at hiding their atrocities, misdeeds etc. The ethical issues raised prove that Coca-Cola must continue to improve its Global image and continue to enlighten its employees on appropriate ethical behavior. It is my opinion that the code of ethics implemented by coke is not suitable for a company of its size. Some of the ethical dilemmas faced by Coke can not be easily outlined in a code of ethics. It must be brought directly to the front line employees in the form of constant and consistent in-service and training. Due to its global presence the company must never stop ensuring that each country they have established business in is monitored as closely if not more closely then they are monitored in the states. Conducting this case study I have learned what has been come apparent throughout this course, that a code of ethics on paper is just that and if it not transferred to reality, companies like Coca-Cola will continue to have ethical problems surface. REFERENCES Coca-Cola and water in India Burnett Margaret & Welford Richard, Dec2007, Vol. 14 Issue 5, p298-304, 7p 'Killer Coke' or Innocent Abroad? By: Foust, Dean, Smith, Geri,

Woyke, Elizabeth, BusinessWeek, 00077135, 1/23/2006, Issue 3968 http://www.coca-cola.com/ http://www.globalspec.com/reference/48631/203279/criticism-ofcoca-cola-s-culture http://www.associatedcontent.com/article/497859/coca_cola_its_ethi cal_implications.html http://imaginecorporation.blogspot.com/2009/08/ethical-issuesconcerning-coca-cola-in.html