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Coca-Cola in India
Case Study produced by ELS
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Coca-Cola in India

The Coca-Cola Company has operated in India since 1993 through its subsidiary, the
Hindustan Coca-Cola Beverages Private Limited). Coca-Cola operates around 49 bottling
plants in India. The primary source of water for Coca-Cola bottling plants in India is
groundwater. India is already facing a water crisis in large parts of the country and as a
result of climate change and mismanagement of water resources the crisis is expected to
grow. Coca-Cola has located many of its bottling plants in drought prone areas in India,
and its bottling operations in these areas have made existing water crises even worse.

In the village of Kala Dera in the state of Rajasthan, the Central Ground Water Authority
(CGWA) declared the area’s groundwater resources as “overexploited” in 1998. Yet,
Coca-Cola built a new bottling plant in Kala Dera in 1999. In the nine years since Coca-
Cola has been operating in Kala Dera, the groundwater levels have dropped 22.36 meters.

The rapidly declining groundwater levels have taken a huge toll on the local population –
mostly farmers. Agricultural yields have declined significantly, women have to walk
longer to fetch potable water to meet the basic water needs. The quality of the
groundwater has also deteriorated in terms of smell, color and turbidity.1 Since 2003,
communities living around the Coca-Cola bottling plant in Kala Dera have organized a
campaign to demand the closure of the plant. Massive demonstrations have taken place
against Coca-Cola’s bottling plant.2 Despite the opposition, Coca-Cola has continued to
extract groundwater, and that too for almost free, paying a few hundred dollars a year.
The CGWA in 2004 also confirmed that the company not only depletes the groundwater
but also pollutes it by pumping contaminants.3

Similar to Kaladera is the situation in Mehdiganj. Coca Cola started to operate here in
2000. The community of Mehdiganj started to experience sharp drops in groundwater
levels soon after Coca-Cola started bottling operations. The groundwater levels at Coca-
Cola's bottling plant were at 23.75 meters below ground level in 2008. Independent
studies have confirmed in 2006 that in the area closest to the factory, contamination by
heavy metals was much higher than the rest of the area.4

The company defends itself by any means, and claims the water depletion is caused by
agriculture and lack of rain. That is however not enough for protesting organizations and
many universities worldwide, that are banning contracts with Coca-Cola because of
company's irresponsible attitude towards environment and human rights. The University
of Michigan demanded a third party study on Coca-Cola's water management practices in
India and Coca-Cola asked TERI, a renowned scientific institute to conduct the study.
Findings of the study in many cases confirmed the claims of affected communities. For
Kala Dera, TERI suggested that Coca-Cola shut down the plant or relocate it or get water

1 http://www.teriin.org/cocacola_report_toc.php
2 http://www.hindu.com/2004/09/29/stories/2004092902220500.htm
3 http://www.indiaresource.org/news/2004/1020.html
4 Report on environmental quality monitoring in surrounding areas of Hindustan Coca Cola bottling plant
at Mehdiganj, Varanasi; Peopless science institute, Dehra doon hazard centre, New Delhi, 2006
from surplus aquifer outside the area.5 Coca-Cola has not complied with any suggestion
as of today.

Coca-Cola in India has been already criticized for its irresponsible behavior. In 2003, one
of Coca-Cola’s largest bottling plants in India was shut down by the government because
of pollution – after a sustained campaign by the community. A government committee
has just recommended that Coca-Cola pay US$47 million as compensation for the
damages caused.6

None of this would happen to the company or the local people if more responsible
approach was undertaken. But the situation in India is complicated and possible influence
on Indian authorities is not out of question. The official that had granted the license to
Coca-Cola in Mehdiganj was caught getting bribed.7 And despite the evidence against
Coca-Cola in the case of Plachimada, a US official commented it as “unlucky for Indian
economic climate”.8 Under the pressure of economic progress, business is prior to human
rights and environment. Without a complex legal framework of corporate responsibility,
results of such approach will lead to losses in terms of environment and human rights
abuses, but also to losses on side of the companies such as bad corporate name or high
penalties.

 The case study above demonstrates why the Rights for People Rules for Business
campaign aims to hold companies legally accountable for their operations in and
outside the EU. The campaign calls for the EU and its Member States to change
European law in order to:

Ensure that companies operating in the EU are legally accountable for any harm
they cause to people and the environment in and outside the EU.

Many European companies are multinational corporations. Many others are owned by or
do business with foreign companies. Multinational corporations operate through many
subsidiaries, subcontractors and suppliers. Currently, a corporation’s headquarters makes
profits without having to consider how its companies negatively impact people’s lives
and the environment. Examples include profiting from unfair labour conditions, human
rights violations and environmental destruction.

Ensure that European companies disclose accurate information about their impacts
on people and the environment. They should be transparent about what they have
done, what they are doing and what they plan to do.

5 http://www.teriin.org/cocacola_report_toc.php
6 http://www.reuters.com/article/idUSSGE62M0AV20100323
7 http://timesofindia.indiatimes.com/Pollution-officer-caught-accepting-bribe/articleshow/4323229.cms
8 http://uk.oneworld.net/article/view/138102/1/5795
Generally, companies are not obliged to report on the social and environmental impacts
of their operations and future activities. Since there are not enough reporting rules, the
information disclosed is often misleading or incomplete. What are the impacts of a steel
mill on neighbouring farmland? How do suppliers of European fashion brands treat their
workers? Mandatory disclosure of such information would allow affected and concerned
people to hold companies to account.

Ensure that non-EU citizens, who are victims of the operations of European
companies, have access to justice in the EU.

Too often people, whose lives have been affected by companies, face many barriers in
taking legal action. For example, it is too expensive, it is very difficult to find legal
representation and sometimes impossible to obtain all required evidence. In addition, they
can face serious intimidation for taking action.

 The Rights for People Rules for Business campaign aims to change European law.
The campaign’s legal proposals have been developed by The European Coalition
for Corporate Justice.

The European Coalition for Corporate Justice (ECCJ) promotes corporate accountability
(CA) by bringing together national platforms of civil society organizations (CSOs)
including NGOs, trade unions, consumer advocacy groups and academic institutions
from all over Europe.

ECCJ represents over 250 CSOs present in 15 European countries such as FIDH and
national chapters of Oxfam, Greenpeace, Amnesty International and Friends of the Earth.

ECCJ believes CA and also Corporate Social Responsibility (CSR) mechanisms should
be based on international legal frameworks and principles, serving as the foundation for
and of corporate justice.

Overall, ECCJ aims to increase European co-operation among NGOs working on CA.
The coalition seeks to raise public awareness about the role of the European Union (EU)
in regulating companies both in and outside the EU.

Given the global reach of European companies, it is crucial to ensure that they are held
legally accountable for the impacts their operations have on people and the environment.
This can be achieved though not exclusively through the endorsement and
implementation of European and international standards. Legal standards provide the
potential to better ensure global social justice, poverty alleviation and environmental
conservation. ECCJ is convinced that turning the EU into a leading actor on CA would,
in turn, greatly influence discussions on CA and CSR at the global level.

ECCJ is convinced that a regulatory approach towards CA is needed. The EU should

establish legal measures to hold EU-based companies accountable for the costs and
impacts their operations have on people’s human rights and the environment worldwide.