CSR AND PROFITS Essay

Corporate social responsibility refers to an organization’s initiatives to weigh and accept responsibility for the corporation’s impact on the environment and society it serves. The structure of the themes in this essay will include the perceived benefits of CSR, the cost of CSR activities, the impact of CSR activities on organisational brand and ultimately the impact of effective and ineffective DSR policies on a company’s profits. These themes will be addressed with a focus on the Coca-Cola Company. CSR, the abbreviated form of Corporate Social Responsibility, is otherwise referred to as corporate citizenship and involves sacrifice by the company, which is expected to extend some of its finances towards promoting positive environmental and social change (Matten & Moon, 2004). The Coca-Cola Company is a good example of an organisation that has invested colossal amounts of money into CSR activities.

To critically analyse the relationship between CSR activities, or Corporate Social Performance, and organizational profits, this paper will conduct a case study on Coca-Cola in the context of CSR. Four models of corporate social responsibility that will be used to analyse Coca-Cola’s CSR performance include economic responsibility, which is a company’s first responsibility, legal responsibilities which refer to the requirements the law places on the company, ethical responsibilities which refer to practices the company adheres to because it is the right thing to do ,and philanthropic responsibilities. Philanthropic activities include initiatives that benefit the community. CSR activities that lie under these models will be discussed- the article will reveal what Coca-Cola has been doing over the years based on the company’s sustainability reports.

According to a study by the Economist Intelligence Unit (EIU), corporate responsibility is essential for the long-term wellbeing of corporations despite the struggles involved in profiting financially from socially responsible policies and practices. The company has shown great progress in its CSR goals. According to Coca-Cola’s 2016/2017 Corporate Social Responsibility Report, Coca-Cola has reduced the content of carbon dioxide in its products by about 15%, and donated more than $100 million across hundreds of countries. Also, a significant proportion, about 60% of it its cans and bottles that were released into the market were recovered and recycled or refilled through the company’s efforts. The company’s 5by20 program also resulted in the economic empowerment of about 1. 7 million women (Coca-cola, 2016). Other changes that the company has implemented to improve its products for the sake of its customers is to diversify its products.

The corporation has recognized the need for different drinks for the purpose of increasing the customer’s options, other than soda. The list of alternative products from the company include coconut water, organic tea, purified water and grab-and-go coffee. Half of Coca-Cola’s expenditure on raw materials is taken up by agricultural ingredients. In recognition of the fact that healthy agricultural supplies are vital to the well-being of the environment, communities and company economics, Coca-Cola has directed immense efforts in the direction of sustainable sourcing. The company acquired more than 2 million coolers, vending machines, and fountains that were free of harmful hydrofluorocarbon products since 2009. In 2016 alone, the company introduced than 600,000 similar hydrofluorocarbon free machines into the market. Also, Coca-Cola has taken an extra step in using plastics that have a more tolerable footprint on the environment-it has embarked on using plant-based packaging ( at least 30% of plant material in its packaging) instead of plain PET plastic.

Currently, Coca-Cola’s carbon emissions, as spread out through its production, storage and distribution processes include significant contributions that the company has perennially been progressively on cutting down. About 34% of its emissions arise from refrigeration, about 20% arise from packaging, while about 15% of its emissions arise from the manufacturing process. Moreover, Fortune ranked Coca-Cola as the 6th most admirable brands in the world. As far as brand image is concerned, Coca-Cola has largely been successful. The question remains on whether these CSR as effective for profits as they are valid for brand development. However, Coca-Cola’s failures in terms of its CSR policy are best illustrated in the struggles of Coca-Cola India. In 2016,a Coca-Cola plant was accused of polluting village water in Kerala, India and of failing to compensate the affected population.

The fact that Tamil Nadu has a population more significant than that of UK goes to show just how failure to consider environmental well-being can affect a company’s profits. Moreover, the factory that Coca-Cola was forced to shut down in India because of its negative impact on the environment was valued at $ 25. A figure that goes to show that failure of CSR policy to keep a company in line with expectations of the community regarding environmental impact can lead to a significant financial loss. Also, the Indian NGO, centre for Science an Environment, published a report in 2003 that elicited protests and campaigns against Coca-Cola (Karnani, 2014). The NGO reported findings that indicated an exceedingly high presence of pesticides in Coca-Cola’s products that were being sold in India (Hills & Welford, 2005).

00 core. Coca-Cola also suffered an estimated 40-30% decrease in operating margin beginning from fiscal 2014. Some of the challenges facing Coca-Cola India for instance are as a result of many factors including increasing customer preference for healthier beverages and food. A significant weakness of Coca-Cola’s product has been its excessive use of sugar in its products and high reliance on carbonated beverages, especially in the case of India (Karnani, 2014). Therefore, it is apparent that Coca-Cola has been performing well regarding CSR internationally but has performed poorly in some regions, especially India. Some of its most notable marketing campaigns include the Twitter Vending Machine of August 2015- the vending machine would give branded gifts to those who tweeted the hashtag “Choose Happiness.

” Another notable campaign was the America themed cans. Also, the debranding campaign which involved writing names of drinkers on Coca-Cola bottles significantly increased the company’s sales. In fact, the company is said to have sunk $4 billion into advertising. It is interesting to note that this amount is significantly higher than what Coca-Cola spent on CSR activities in the same year. In total, Coca-Cola India lost hundreds of millions of dollars due to fines and closures of operations. It is important for organizations to adjust to new territories (Anderson & Bieniaszewska, 2005). The losses were because of conflict with the community because of its hazardous release of waste material into the environment, pollution of water and overexploitation of water resources. The boycotting of Coca-Cola products because of the adverse effect of the company on the environment also saw its revenues plummet.