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Opinion: Coca-Cola's Response Disappoints Plachimada Activists
By Narayan Lakshman
The Hindu
April 24, 2010
An activist who raised questions about groundwater exploitation
at the annual shareholders' meet says the company is misleading investors.
Activists who raised the issues of unethical groundwater use and pollution
by Coca-Cola plants in India during the soft drinks giant's annual
shareholders' meeting in Atlanta this week have expressed disappointment
with the response of Coca-Cola CEO Muhtar Kent, accusing him of misleading
investors about the problems the company had run into with regulators.
Speaking to The Hindu, Amit Srivastava of the India Resource
Centre — which campaigns for the rights of communities in the affected
areas — said that he had brought up the recommendations made on March
22 by an High Power Committee (HPC) set up by the Kerala government,
according to which Coca-Cola should be held liable for $48 million
(Rs.216.26 crore) in “damages to the community and the environment
around its bottling plant in Plachimada”.
On the discussion at the shareholders' meeting, Coca-Cola representative
Lisa Manley told The Hindu that Mr. Srivastava was a lone
voice speaking out on the matter. She said: “Mr. Srivastava did ask
a question about the Kerala committee's report… this topic was otherwise
not an issue of focus during the meeting.”
Yet, it is a fact that the Coca-Cola bottling plant in Plachimada
has been shut since March 2004 on government orders. According to
the HPC, the Kerala Agricultural University found that fodder, milk,
meat and egg samples collected from the Plachimada area contained
copper, cadmium, lead and chromium at levels considered toxic by World
Health Organisation standards.
The HPC adds that the deterioration in the quality and quantity of
groundwater and the consequent public health problems, displacement
and migration of labour and destruction of the agricultural economy
were the main problems in Plachimada identified as caused and contributed
by the Coca-Cola plant.
The company has also been involved in a controversy in Kala Dera in
Rajasthan, where groundwater resources had been declared as “over-exploited”
by the government in 1998. Yet, Coca-Cola built a new plant there
in 2000, leading to severe water shortages in at least 40 villages
in the vicinity of the plant, according to reports.
However, Ms Manley said Coca-Cola did not have all these details as
it had not been given a copy of the Kerala committee's report and
“at this point, it is simply a recommendation from a committee. The
government has not yet acted on the committee's recommendations”.
She said Coca-Cola disagreed with the recommendations, “and we will
defend ourselves against any actions that may result. As always, we
will continue to work with the proper authorities to resolve this
matter”.
Ms Manley also said that numerous investigations by the government
of Kerala had shown that the Coca-Cola system was not the cause of
local watershed issues and it was Coca Cola's view that any government
committee or panel reviewing claims should “first determine through
an established process of law whether any damage was caused to the
residents of Palakkad [the district where Plachimada is located],
and second, if such damage was caused, who was responsible.”
“It is unfortunate that the committee in Kerala was appointed on the
unproven assumption that damage was caused, and that it was caused
by Hindustan Coca-Cola Beverages,” she added.
Mr. Srivastava, however, took exception to Mr. Kent's response to
the effect that Coca-Cola “could open the Plachimada plant any time”.
This was untrue, Mr. Srivastava said, adding that he challenged them
to “try and reopen the plant tomorrow — we can guarantee that they
cannot open the plant again”.
Misleading
He emphasised that the IRC had been campaigning to get the company's
shareholders to realise that “the Coca-Cola management, including
board of directors, is misleading shareholders about the financial
and criminal liabilities that Coca-Cola is incurring in India”.
Mr. Srivastava said Coca-Cola had passed on the issue to its public
relations department, rather than seeing it as an operational issue.
But this was not a PR issue, certainly not for the communities in
Plachimada and Kala Dera, he said.
Ms Manley contested this point, telling The Hindu that managing water
responsibly was the highest priority in Coca-Cola's approach to environmental
policy and corporate social responsibility in India. She said: “Our
goal in India is to be a ‘net zero' user of groundwater, which means
we are working to create a potential recharge of the amount of groundwater
equivalent to that used in our operations in India.”
Ms Manley added that such recharge was happening through support for
rainwater harvesting, drip irrigation and other initiatives such as
helping restore traditional water storage systems that local communities
use. “By the end of 2009, we had achieved a recharge rate of 93 per
cent of the groundwater that we use throughout India and we aim to
achieve a net zero balance at the end of 2010,” she said.
However, government figures that Mr. Srivastava quoted cast doubt
on this as they suggest that “in the nine years prior to Coca-Cola's
bottling operations in Kala Dera, groundwater levels fell just 3 meters
and in the nine years since Coca-Cola has been operating in Kala Dera,
the groundwater levels have dropped 22.36 metres.”
Coca-Cola's shareholders have also been important in the debate. While
the shareholder group had been more responsive in the past and had
passed a few resolutions, Mr. Srivastava admitted that they did not
get a very positive response this time. He said the shareholders were
myopic in their views and more concerned with the company's sales,
which had been on the decline in the U.S and in Europe for some time
now.
Arguing that even in this regard there has been an injustice towards
Indian consumers, Mr. Srivastava said the reason for declining sales
in the West was that consumers “are wising up to the negative impact
of these high-sugar drinks”.
Rising sales
However, sales in countries such as India are rising and the company
itself is focusing much more on its operations outside the U.S. According
to recent reports, overall sales volume rose by three per cent in
the first quarter of 2010 “and was largely driven by an 11 per cent
increase in its Eurasian and African arm, as well as a 29 per cent
boost at its Indian business”. The sales rise came primarily from
across Asia, boasting double-digit growths in India, Vietnam and the
Philippines as new consumers developed a taste for the company's drinks,
a report explained.
But was Coca-Cola any better for the health of Indians? Mr. Srivastava
asked, noting that India had a growing proportion of diabetics and
obese in its population and this “reeks of a double standard”.
In an earlier statement, Mr. Srivastava also noted: “It is difficult
to fathom why Coca-Cola located some of its plants in water stressed
areas in India. It was either sheer incompetence on the part of the
company or sheer arrogance. Experience tells us it is a lot of both.”
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